Federal Department of Home Affairs FDHA Federal Statistical

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Rented dwellings

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Rented dwellings Rent : v amount paid by a household to occupy a dwelling owned by another private household, a private firm or public authorities v includes tax (if any), excludes subsidies Survey : household survey, landlord survey, register ? Methodology will depend on the «type» of rental market (free market, regulated market, mix of both) Regional Workshop on Consumer Price Indices, Minsk 2019 2

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Need of a constant quality index Goal : measure pure rent change Rent determining characteristics • Area of structure/area of land • Location • Age • Type (detached, semi-detached, muti-family/multi-unit) • Number of bedrooms, bathrooms, garage, distance to amenities, etc Regional Workshop on Consumer Price Indices, Minsk 2019 3

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Methodology Fixed basket principle at dwelling level (matched model) : follow the rent of the same dwelling over time • + Easy to apply, same principle as other products in the basket • - Treatment of quality change ? • - Arrival of new dwellings in the market or new dwellings in the sample ? Regional Workshop on Consumer Price Indices, Minsk 2019 4

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Methodology Fixed basket principle at dwelling type level : follow the average price of «homogeneous» dwelling types + Allows new dwellings (new to the market or new to the sample) to enter the cluster at any time - Homogeneity of the cells ? - Quality differences inside the cells ? Regional Workshop on Consumer Price Indices, Minsk 2019 5

Federal Department of Home Affairs FDHA Federal Statistical Office FSO An example of stratification of rented dwellings Age / nb rooms 1 room 2 rooms 3 rooms 4 rooms 0 -5 years old 6 -10 years old 5 rooms 6 rooms 2‘ 800. - 950. - 11 -20 years old + 20 years old ans 850. - 3 rooms 1990 850. - 1‘ 450. - 6 rooms 2017 2’ 800. - Regional Workshop on Consumer Price Indices, Minsk 2019 2 rooms 2011 950. - 4 rooms 1995 1’ 450. - 6

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Stratification • Stratification of rented dwellings according to the major rent-determining characteristics • Data need : rent and the characteristics used for stratification • Can be combined with other methods (hedonics) • Quality control limited to the characteristics used for stratification Regional Workshop on Consumer Price Indices, Minsk 2019 7

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Stratification • • • The cells or stata must be as homogeneous as possible Sufficient number of observations in each cell No control for quality change within strata Effect of renovations and depreciation Weights Regional Workshop on Consumer Price Indices, Minsk 2019 8

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Hedonic regression to quality adjust the non matched observations 1 Tn i y l n O T-1 A d T-1 n a T in T Only in B Previous period T B C Current period Regional Workshop on Consumer Price Indices, Minsk 2019 9

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Hedonic regressions “A hedonic regression is a regression equation in which observed rents on the left-hand-side are explained by the quality characteristics of dwellings on the right-hand-side” (IMF). The rent of dwelling is function of its characteristics such as area of structure and land, location, age, type, number of bedrooms, bathrooms, garage, distance to amenities, etc. Regional Workshop on Consumer Price Indices, Minsk 2019 10

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Hedonic regressions • Time Dummy Method • Characteristics Prices • Hedonic imputation method • Hedonic Repricing Estimated model : Regional Workshop on Consumer Price Indices, Minsk 2019 11

Federal Department of Home Affairs FDHA Federal Statistical Office FSO Summary • How does your rental market work ? • In order to take into account the dynamics of the market, the sample should be renewed • Quality adjustment : a very important issue when renewing the sample Regional Workshop on Consumer Price Indices, Minsk 2019 12