Slovenia - House Price Index





Slovenia: House Price Index

Mnemonic HPI.ISVN
Unit Index prv. qt.=100, NSA
Adjustments Not Seasonally Adjusted
Quarterly 2.8 %
Data 2019 Q1 100.6
2018 Q4 103.5

Series Information

Source Statistical Office of the Republic of Slovenia
Release Housing Price Index
Frequency Quarterly
Start Date 3/31/2007
End Date 3/31/2019

Slovenia: Real Estate

Reference Last Previous Units Frequency
Building Permits Aug 2019 462 549 #, NSA Monthly
Non-residential Building Permits Aug 2019 296 336 #, NSA Monthly
Residential Building Permits Aug 2019 166 213 #, NSA Monthly
House Price Index 2019 Q1 100.6 103.5 Index prv. qt.=100, NSA Quarterly
House Price Index for Existing Homes 2019 Q1 128.19 127.47 Index 2015=100, NSA Quarterly
House Price Index for New Homes 2019 Q1 125.84 117.7 Index 2015=100, NSA Quarterly
Building Completions 2018 7,933 6,588 # Annual
Housing Starts 2018 13,681 12,131 # Annual
Non-residential Building Completions 2018 5,424 4,051 # Annual
Non-residential Housing Starts 2018 7,358 6,133 # Annual
Residential Building Completions 2018 2,509 2,537 # Annual
Residential Housing Starts 2018 6,323 5,998 # Annual
Dwelling Stocks 31 Jan 2018 852,181 # 365 days

Release Information

The source, The Statistical Office of the Republic of Slovenia, produces a house price index. This index monitors the quarterly price movements of dwellings sold to domestic and foreign households.

The Statistical Office of the Republic of Slovenia (SORS) reports a number of house price indices as follows:

- price indices of total dwellings

- price indices of newly built flats, family houses, and total dwellings

- price index of  existing flats, family houses, and total dwellings

- Sales of total dwellings

- Sales of newly built flats, family houses, and total dwellings

- Sales of  existing flats, family houses, and total dwellings

Observation units

Observation units are existing flats and family houses;  their selling (transaction) prices. In new housing observation units are transaction prices of newly built flats.

Data collection

Data for existing dwellings is collected by the Real Estate Market Register, set up by the Surveying and Mapping Authority of the Republic of Slovenia (GURS) 

Data on newly built flats and family houses are collected by SORS with questionnaires completed by real estate developers and investors.

Coverage

The coverage of existing flats is complete. The sale of dwellings must be reported by real estate agents, notaries and the Tax Administration of the Republic of Slovenia.

The source gathers around 50% of all newly-built dwellings data and uses this sample for calculations.

Definitions and explanations

From the source:

Dwellings: newly built and existing flats; and newly built and existing family houses.

Existing flat: a residential unit in a multi-dwelling building, which is not sold for the first time and for which a real estate transaction tax has to be paid at sale. Normally an existing flat is more than three years old. For index calculation, transactions of flats (apartments) used for tourism purposes are not taken into account.

Existing family house: a one-dwelling or a two-dwelling building for permanent residence. For calculating the price index, houses for leisure and recreation are not taken into account.

Newly built flat: a residential unit in a multi-dwelling building, which is being sold for the first time and is not older than three years.

Newly built family house: a one-dwelling or a two-dwelling building, which is being sold for the first time and is not older than three years.

As regards physical characteristics, for newly built flats and family houses the same criteria as for existing flats and family houses are applied. A building is treated as new if it is not sold more than three years after it was built or if it is sold for the first time.

Calculation

To calculate the indices, the source uses a hedonic regression model. For data on flats, or apartments, the source uses the "characteristics price index" method to calculate coefficients using selected characteristics of each dwelling as variables. For calculating the price index of family houses, the source instead uses method called the "re-pricing index". The "re-pricing index" method allows the source to calculate the index even with a small number of transactions in the current quarter. For more information regarding these methods, please see the source website.



Only final data is published.

The Statistical Office of the Republic of Slovenia (SORS) started to develop house price indices in 2006 within the Eurostat pilot project on Owner Occupied Housing, whose goal is to develop a larger number of house price indices as follows:

-        price indices of existing flats and family houses

-        price indices of newly built flats and family houses

-        price index of newly built family houses built by private owners  (self-builders)

-        additional transaction costs price index

-        major repairs and maintenance costs price index 

-        index of other current costs arising from ownership of dwellings

 

These indices should serve for calculating the independent total house price index and should also be used for evaluating the living costs of owner-occupied households within the harmonised consumer price index at national and EU levels. The development of appropriate indicators for the field of real estate prices was promoted by the European Central Bank for monitoring financial stability in the EU. The development of the real estate price index at SORS coincided with the adoption of the Real Estate Recording Act, which envisaged the calculation of the real estate price index. This should be the basis for regular annual corrections of real estate value after estimation on the basis of mass valuation of real estate.

 

SORS’s development work and co-operation with Eurostat is still going on. The legal basis for calculating and transmitting house price indices is still being developed by Eurostat. Further changes and improvements of the described methods for calculating indices in accordance with agreements at the EU level are therefore possible.

 

These methodological explanations refer to:

-          price indices of existing flats and family houses

-          total price index of existing dwellings

-          price indices of newly built flats and family houses

-          total price index of newly built dwellings

-          total price index of existing and newly built dwellings

 

Observation units are existing flats and family houses; actually their selling (transaction) prices. In new housing observation units are transaction prices of newly built flats.

 

For existing (and partly also newly built) flats the basic data collection is organised via the so-called Real Estate Market Register, which was set up on 1 January 2007 by the Surveying and Mapping Authority of the Republic of Slovenia (GURS) on the basis of the Real Estate Recording Act. Before 2007 the source of data on real estate transaction prices was the Record on the Real Estate Transaction Tax at the Tax Administration of the Republic of Slovenia (DURS). Data on real estate transactions for the Real Estate Market Register are reported by notaries, real estate agents and DURS. 

Data on newly built flats and family houses are collected by SORS with questionnaires within two special statistical surveys directly from investors.  Reporting units in the statistical survey are those investors that within two years before the reference year obtained a building permit at the administrative unit for more than 20 housing units and investors that are identified as such by SORS on the basis of their sales information in the media.

A part of data on the prices of newly built flats and family houses are taken over by SORS from the Real Estate Market Register. New housing in this source is dwellings that were sold not later than three years after being built.   

 

As a rule, the coverage of existing flats is complete. The sale of dwellings must be reported by real estate agents, notaries and the Tax Administration of the Republic of Slovenia.

 

With the statistical survey we cover around 30% of transactions of newly built flats and family houses. Another 20% of data on transactions of new housing are obtained from the Real Estate Market Register. The price indices of newly built dwellings are thus calculated from a 50% non-stratified sample of all new housing.

 

 

Dwellings: newly built and existing flats; and newly built and existing family houses.

 

Existing flat: a residential unit in a multi-dwelling building, which is not sold for the first time and for which a real estate transaction tax has to be paid at sale. Normally an existing flat is more than three years old. For index calculation, transactions of flats (apartments) used for tourism purposes are not taken into account.

 

Existing family house: a one-dwelling or a two-dwelling building for permanent residence. For calculating the price index, houses for leisure and recreation are not taken into account.

 

Newly built flat: a residential unit in a multi-dwelling building, which is being sold for the first time and is not older than three years.

 

Newly built family house: a one-dwelling or a two-dwelling building, which is being sold for the first time and is not older than three years. 

 

Transaction prices: contractually agreed sales prices. In existing flats all taxes and contributions are excluded, while transaction prices of new housing include the value added tax. Transaction prices of family houses normally include the value of land that belongs to the house. Transaction prices of newly built flats normally include the value of a garage and parking places that belong to the flat if they are subject of a single sales contract.

 

Hedonic method: a two-phase procedure for calculating the price index. In the first phase characteristics of real estate that influence its price formation are valued by means of regression analysis. In the second phase statistical parameters from the regression analysis are used in one of the known formulas used for index calculation.

 

Existing dwellings

From all transactions of dwellings, only market transactions for which all appropriate data on real estate characteristics are available are taken into account. Thus all transactions that are related to inheritance and other kinds of transfer of ownership between relatives are eliminated.  Combined transactions (i.e. seveeral dwellings being sold within one sales contract and the individual prices can not be determined) are eliminated as well. Transactions of dwellings, that are used as holiday homes are eliminated too (when sold for the first time such new constructions are taxed with a 20% VAT, while “normal” dwellings are taxed with an 8.5% VAT).

 

For calculating the price index of flats we only use transactions of flats:

-          that are larger than 17 m2 but smaller than 250 m2,

-          that were constructed less than 200 years ago but more than three years ago,

-          whose average price per square metre of usable floor area is not lower than EUR 300 EUR but not higher than EUR 6,000.

 

For calculating the price index of family houses we only use transactions of family houses:

-          that are larger than 40 m2 but smaller than 300 m2,

-          that were constructed less than 200 years ago but more than three years ago (newly built houses are excluded),

-          whose average price per square metre of usable floor area is not lower than EUR 300 EUR but not higher than EUR 5,000,

-          whose associated building plot is not larger than 4,000 m2.

 

Newly built flats and family houses

As regards physical characteristics, for newly built flats and family houses the same criteria as for existing flats and family houses are applied. A building is treated as new if it is not sold more than three years after it was built or if it is sold for the first time. 

 

Data processing and index calculation

The basic processing of data on transactions of dwellings, which are recorded in the Real Estate Market Record, is performed by GURS, where all non-market transactions and the so-called “combined” transactions (in which several real estate or real estate with accessories that can not be individualised are sold) are eliminated and for all transactions some agreed characteristics of real estate that are not reported by reporting units are determined from available sources of spatial data. These characteristics are: exact location of real estate, determined with coordinates (geocode), information on the building in which the dwelling is located (number of dwellings in the building, floor, number of rooms in the dwelling, equipment with water, electricity, sewage and heating), information on legal status of the buyer and seller, and information on the net floor area of the dwelling and information whether or not it was sold via a real estate agency.

 

Data on characteristics of sold real estate, processed in this way by GURS, are further enriched at SORS with data on the following characteristics of the location of real estate: tourist attraction of the area in which the real estate is located, value of regional gross domestic product per capita in the region in which the real estate is located, wealth of people in the neighbourhood in which the real estate is located, whether the real estate belongs to urban or non-urban area, and distance of the real estate from the main road (expressway, motorway, regional road).

 

The next step is data processing according to the so-called hedonic principle. The core of this approach is multiple regression analysis of real estate characteristics influencing price formation.

 

For estimating the impact of a certain real estate characteristic on its price several regression models can be used. For analysing the dependence between the real estate price and the real estate characteristics, SORS is using a logarithmic linear function shown here:

 

 

On the left-hand side of the equation is a dependent variable – a logarithm of the sales price of real estate ln p, and on the right-hand side is first the constant, followed by the term with the sum of regression coefficients for each explanatory (independent) variable z (i.e. real estate characteristics), while the last term of the equation  is the remainder. 

 

In regression analyses of individual types of real estate the following characteristics of dwellings are used as explanatory variables for the real estate price (regression models):

 

Existing flats in the municipality of Ljubljana:

-          usable floor area

-          net floor area

-          age

-          wealth of the neighbourhood in which the flat is located

-          distance from the main road less than 100 m (yes/no)

 

Existing flats outside the municipality of Ljubljana:

-          usable floor area

-          net floor area

-          age

-          wealth of the neighbourhood in which the flat is located

-          regional gross domestic product (for 2006) per capita of the region in which the real estate is located

-          tourist attraction of the area in which the real estate is located, measured with the number of tourist beds in the municipality in which the real estate is located

-          flat was sold with the assistance of a real estate company (yes/no)

-          flat is located in the area of a statistically defined urban settlement (yes/no)

 

Newly built flats in Slovenia:

-          usable floor area

-          net floor area

-          wealth of the neighbourhood in which the flat is located

-          regional gross domestic product per capita of the region in which the real estate is located

-          tourist attraction of the area in which the real estate is located, measured with the number of tourist beds in the municipality in which the real estate is located

-          flat has a parking space in a garage (yes/no)

-          flat has a parking space in the basement floor (yes/no)

-          flat has an atrium (yes/no)

 

Existing family houses in Slovenia:

-          usable floor area

-          net floor area

-          wealth of the neighbourhood in which the house is located

-          regional gross domestic product per capita of the region in which the real estate is located

-          tourist attraction of the area in which the real estate is located, measured with the number of tourist beds in the municipality in which the real estate is located

-          age

-          size of the building plot on which the house is located and which is part of the sales contract for the house

-          house was sold with the assistance of a real estate company (yes/no)

-          house is located within an urban area (yes/no)

-          house is located within a non-urban area (yes/no)

 

Newly built family houses in Slovenia:

-          usable floor area

-          net floor area

-          construction phase (third, fourth, fifth) of the house from the sales contract

-          wealth of the neighbourhood in which the house is located

-          regional gross domestic product per capita of the region in which the real estate is located

-          tourist attraction of the area in which the real estate is located, measured with the number of tourist beds in the municipality in which the real estate is located

-          size of the building plot on which the house is located and which is part of the sales contract for the house

-          house was sold with the assistance of a real estate company (yes/no)

-          house is located within an urban area (yes/no)

 

Regression coefficients of individual real estate characteristics indicate the impact of individual characteristics on the formation of the total real estate price. The next step is the final calculation of the price index according to the selected method, i.e. characteristics price index, which is based on the use of calculated regression coefficients in the formula for the Laspeyres index. The basis for weighting in the formula is average values of real estate characteristics in the fourth quarter of the previous year. This formula is used for calculating price indices of flats.

 

For calculating the price index of family houses (existing and newly built), in 2010 instead of the “characteristics price index” method the so-called “re-pricing index” was introduced. In older literature this index was also known as the »quality adjustment index«. Statistical data on family house price indices published so far by SORS were therefore revised and calculated in accordance with the new formula.

 

The »re-pricing index« is a Jevons-type formula which is part of the hedonic methods of calculating price indices. For calculating average prices of goods, the geometric mean of “raw”, input prices of real estate is used in contrast to the Laspeyres formula in which for calculating average prices of goods the arithmetic mean is used. The “re-pricing index” formula has a welcome characteristic that for balancing the differences in the quality of houses between comparable periods reference data on house characteristics from a much longer period of observation can be used than for the “characteristics price index” formula. In the latter only the characteristics of sold houses from the current quarter and the base quarter (reference quarter is the last quarter of the previous year) are used. For calculating the existing house price index according to the “re-pricing index” formula, the reference are data on the characteristics of houses sold in 2007 and 2008, i.e. eight quarters in total. Therefore, price indices calculated according to this formula do not change as much as price indices calculated according to the “characteristics price index” formula. The reference period for calculating the price index of newly built houses is 2008 (four quarters).

A good characteristic of the “re-pricing index” method is that it enables the index calculation even with a small number of transactions in the current quarter.