Constructing Building Price Index Using Administrative Data

Improving the accuracy of deflators is crucial for measuring real GDP and growth rates. However, construction prices are often difficult to measure. This study uses the stratification and hedonic methods to estimate price indices. The estimated indices are based on the actual transaction prices of buildings (contract prices) obtained from the Statistics on Building Starts survey information from the administrative sector in Japan. Compared with the construction cost deflator (CCD), calculated by compounding input costs, the estimated output price indices show higher rates of increase during the economic expansion phase after 2013. This suggests that the profit surge in the construction sector observed in that period is not fully reflected in the CCD. Furthermore, the difference between the two “output-type” indices obtained by stratification and hedonic methods shrinks when the estimation methods are precisely configured.