Understanding Commercial Property Price indexes
Published: September 2013
The type of database used for the measurement of commercial property price indexes (CPPIs) dictates the potential weaknesses in the resulting indexes and limitations of the methods available for measuring the indexes. Two major types of data are appraisals of the value of properties and recorded transaction prices. The former is based on expert judgement and may have problems of smoothing and lagging transaction prices. The latter is based on actual transactions and may have sample selectivity bias and limited sample sizes for these heterogeneous properties. These issues are examined.