Objective Housing Sales and Rent Prices in Representative Household Surveys: Implications for Wealth, Inequality, Housing Market and Affordability Statistics

M. Denisa Naidin
Luxembourg Institute of Socio-Economic Research (LISER) & University of Luxembourg

Sofie R. Waltl
University of Cambridge & Vienna University of Economics and Business

Michael H. Ziegelmeyer
Banque centrale du Luxembourg (BCL)

Abstract

Many economic analyses require hypothetical but realistic sales and rent prices for properties representative for the housing stock and reflecting current market conditions. To achieve this, we replace subjectively reported prices in a representative household survey in Luxembourg by objectified hedonic imputations informed by observable market data. Thus, we propose a powerful tool for assessing the health and affordability of housing markets, compiling housing-related statistics and simulating hypothetical scenarios. This approach also enables us to test for the reliability of survey responses. When switching to objectified values, we detect shifts in the wealth distribution, large regional variation in market indicators and striking affordability concerns: only 18% of Luxembourg’s renters could theoretically afford purchasing their inhabited dwelling given current market conditions. Further, participants’ tendency to mis-estimate market values strongly correlates with tenure length and type, dwelling type, income and wealth.

JEL Codes: C83; R21; R31.
Keywords: Representative Surveys; Housing Sales and Rent Markets; Housing Wealth; Affordability; Housing Statistics; Measurement Errors.

This research benefits from funding by the FNR Luxembourg National Research Fund, CORE Grant No. 3886 (ASSESS). This article uses data from the Luxembourg Observatoire de l’Habitat and the Luxembourg Household Finance and Consumption Survey. The views expressed are solely those of the authors and may not be shared by the data providers nor the BCL or the Eurosystem. An earlier version of this article circulated as “Objectified Housing Sales and Rent Prices in Representative Household Surveys: the Impact on Macroeconomic Statistics”.

Dissemination

Naidin, M.D., Waltl, S.R. and Ziegelmeyer, M.H. (2024). Objective Housing Sales and Rent Prices in Representative Household Surveys: Implications for Wealth, Inequality, Housing Market and Affordability Statistics. Review of Income and Wealth, 72(1):e12692. https://doi.org/10.1111/roiw.12692

Policy Brief: Naidin, M. D., Waltl, S., & Ziegelmeyer, M. H. (2022). Objectified Housing Sales and Rent Prices in Representative Household Surveys: the Impact on Macroeconomic Statistics. SUERF Policy Brief, No 432.

Poster: [ASSA 2022]

Presentations: [National Bank of Slovakia Research Webinar][2021 Economic Statistics Centre of Excellence (ESCoE) Conference on Economic Measurement][European Central Bank (DG Statistics)][Banque centrale du Luxembourg][2021 User workshop of the Eurosystem Household Finance and Consumption Survey, European Central Bank][Meeting of the Expert Group on Distributional Financial Accounts][2022 ASSA Virtual Annual Meeting][2022 LISER seminar][2022 Austrian and Slovenian Statistical Days at TU Graz][37th General Conference of the International Association for Research in Income and Wealth, STATEC, Luxembourg][Workshop on Residential Housing Markets: Perceptions and Measurement, Luxembourg][Workshop on Wealth Inequality and Social Mobility, Vienna][8th annual conference of the Society for Economic Measurement, University of Milano-Bicocca, Italy]