Australian House Prices: A Comparison of Hedonic and Repeat‐Sales Measures*

Abstract

House prices are difficult to measure due to changes in the composition of properties sold through time and changes in the quality of housing. I explore whether these issues affect simple measures of house prices, and whether regression‐based measures provide an accurate alternative to measuring pure house price changes in Australia. Using unit record data for Australia's three largest cities, regression‐based approaches provide a more accurate estimate of pure price changes than a median, and are comparable, with around half of the variation in prices growth explained. These results confirm that regression‐based measures are useful for measuring house price changes in Australia.