Iceland - House Price Index





Iceland: House Price Index

Mnemonic HPI.IISL
Unit Index Mar2000=100, NSA
Adjustments Not Seasonally Adjusted
Monthly 1.61 %
Data Mar 2024 735.48
Feb 2024 723.82

Series Information

Source Statistics Iceland
Release Residential property market price index [HPI]
Frequency Monthly
Start Date 3/31/2000
End Date 3/31/2024

Release Information

For Iceland, a residential price index (HPI). For the capital area (Reykjavik) is broken out for single-flat and multi-flat houses.

The residential property market price index is distributed as part of the consumer price index, under "indices for analysis." The indices are sub-items from the CPI based on housing sales contracts collected by the Registers Icelands.

  • Measurement: Fixed-base value index relative to March 2000 (Index Mar2000=100)
  • Adjustment: Not seasonally adjusted (NSA)
  • Native frequency: Monthly
  • Start date: Uniformly 2000m3
  • Geo coverage:
    • Country
    • Capital area (IISL_RCAP)
    • Outside capital area (IISL_OCAP)
  • All concept-geo pairs exist: No

The source writes:

A yearly review to the base of the index and annual results from the expenditures survey ensure the accuracy of measurements as well as the high reliability of the index.

A very extensive price collection every month and a high level of itemization of groups included in the measurement further contribute to accuracy.

According to the act on the consumer price index nr. 12/1995 the index measures change in the prices of private consumption. The index was named the cost of living index before 1995 and has been calculated on different bases since 1914. The index has been based on household expenditure surveys since 1939. It is revised annually since the year 1997. Since March 2002 the annual results from the continuous HES are used for these revisions. The index base is May 1988=100 and the results of the base revisions are chained each year. The results for detailed subindices March 1997=100 are also published in accordance with the COICOP classification. An overview of the different index bases, methods and calculations are found in Icelandic Historical Statistics, table 12.15, p. 628. Estimations have been made of the development of prices from 1849 to 1914 and the results are found in Icelandic Historical Statistics labelled General Price Index found in table 12.25, p. 637.

Theoretically speaking, there are two leading types of index calculations: fixed base indices and cost of living indices.

In a fixed base price index consumption patterns are kept constant and usually the index is of Lowe type. Special cases of a Lowe index are Laspeyres with an older base or Paasche index with a new base. Superlative indices are symmetric and reflect theoretically a true cost of living index by taking into consideration both old as well as new base.

Five methods of calculation are used for the base of the consumer price index:

  • Relative of geometric mean prices (Jevon) for calculating approx. 56% of the expenditures in the base.
  • The weighted relative of geometric mean prices on groceries, extending to approx. 18% of the expenditures.
  • A Lowe, or relative of average prices (Duot), covering approx. 21% of the index.
  • A superlative index (Fisher), figuring in approx. 1% of the expenditures.
  • Indices comprising approx. 4% of the index.

Price collection takes place for at least one week in the middle of a month (from January 2008 onwards). Until year 2007 the prices were collected the two weekdays of the month. The time is prescribed by law pertaining to the consumer price index.

Moody's Analytics supplements

For the national total index, we construct a seasonally adjusted counterpart.

The source writes:

A yearly review to the base of the index and annual results from the expenditures survey ensure the accuracy of measurements as well as the high reliability of the index.

A very extensive price collection every month and a high level of itemization of groups included in the measurement further contribute to accuracy.

In the calculation of an index various errors can arise:

Sampling errors (coverage errors, non-response errors): If the goods available or the sampled companies do not reflect the population accurately.

Measurement errors: Can occur during price collection for example due to inaccurate product descriptions, inaccurate marking in stores and insufficient or wrong answers from respondents.

Processing errors: Errors can occur during the entering and processing of data.

Methodological errors: Different methods of calculating indices cause different errors. Superlative indices are symmetric and thus include quantities from two different time periods. The problem is that information about weights in the current period is seldom available until afterwards and it is difficult to calculate them timely. They are different from fixed base indices, which either use older weights (Laspeyres) or new weights (Paasche). Bias in a cost of living index is based on an index value, which is compared to a theoretically true cost of living index in each period. Superlative indices reflect a true cost of living index and a Laspeyres index is normally upwards biased, while a Paasche index is downwards biased.

Errors due to quality change: If quality change to goods or services is not taken into consideration when evaluating price change inflation can be over- or underestimated.

Errors due to substitution: For example if the consumption patterns of households change in such a way that more is bought from outlets where prices are low, but the sample of outlets remains unchanged, so that reduction in prices due to this is not measured in the index, an error can occur due to substitution in household shopping that need to be corrected. Outlet substitution occurs if a good is not available in a store and has to be bought in another outlet, and care is taken of that in the index calculation. If weights for goods remain unchanged but consumption patterns change an error can occur due to item substitution. Such substitution can be at the elementary level and also between basic headings and an example of this is if the price of fish rises much but the price of meat drops. Then household consumption will move to meat from fish (assuming normal price elasticity) but this change to consumption is not measured immediately in the fixed base index. However, a geometric mean corrects for item substitution at the elementary level and with frequent rebasing errors due to substitution in indices are significantly reduced.

About the source

Hagstofa Íslands (Statistics Iceland) uses two language-centric domain names, hagstofa.is and statice.is, respectively.

Further reading

Data at the source:

Analysis at the source:

  • Dec 2011 - Initial version.
  • 3 Aug 2023, Phillip Thorne - Properties, Moody's Analytics supplements, Further reading.