Hedonic price index for apartments: an analysis of data from Belo Horizonte (Brazil), from 1995 to 2012

Abstract

This paper presents the more commonly used methods of hedonic estimation and applies them to a fiscal data base from Belo Horizonte, Brazil, 1995-2012. The results of the price indexes from the various estimations suggest a pronounced real estate appreciation from 2005 to 2012. Increasing real estate financing (after the statutory lien legislation of 2004), falling interest rates and growth in real family income contributed to the positive performance of the real estate market in the period. Results also indicate that real estate prices continued to increase despite the world financial crisis of 2008/2009 possibly due to countercyclical policies implemented by the Brazilian Government. These results help to shed light on the potential use of hedonic price models and a fiscal database to construct an official housing price index for Brazil in the future.

Keywords:
Real estate market; Hedonic price model; Prices indices. Belo Horizonte