1. r.trojanek@ue.poznan.pl MEASURING DWELLING PRICE CHANGES IN POLAND WITH THE APPLICATION OF THE HEDONIC METHOD

2. The main aim of this paper is to: identify price changes in the secondary housing market with the use of simple and hedonic methods in the years 2008-2012 in the five biggest cities in Poland. Introduction

3. The subject scope: Dwellings’ price changes on secondary housing market, involving both property rights and cooperative property rights for private accommodation. Only dwellings located in multifamily buildings were analyzed. The time scope: 2008-2012 The spatial scope: Cracow, Lodz, Poznan, Warsaw, Wroclaw

4. Hedonic methods Methods of the construction of house price indexes may be divided into two groups: simple methods (those which do not control of quality) Simple methods include methods based on the average and the ones based on the median. complex ones (those which control of quality, at least partly). Complex methods encompass: the hedonic regression method, the resale method, the weighted average method and the hybrid one.

5. Hedonic methods The essence of the hedonic method lies in the assumption that the price of heterogeneous goods may be described with its attributes. The equation may be recorded in the following way (1): where: P – price of a good β – regression coefficient X – attribute of a good (value driver) u – random error.

6. Hedonic methods House price indexes based on the hedonic regression may be built in two main ways: on the basis of the equations of dwelling prices constructed for each of the periods under analysis or on the basis of one equation of dwelling prices constructed for two or more periods. where: – time dummy variable (it takes the value 1 if a given observation was in period τ; otherwise it takes zero).

7. Results of the research The data asking prices originally included over 500,000 offers of dwellings for sale in the years 2008-2012. as a result of methodological selection the size of the database was reduced to 290,000 dwellings for sale (43,296 offers in Cracow, 31,088 offers in Lodz, 33,411 offers in Poznan, 154,559 offers in Warsaw and 30,887 offers in Wroclaw).

8. Results of the research

9. 4. Results of the research

10. Dwelling price indexes in Cracow in 2008-2012 (1 st quarter of 2008 = 100)

11. 4. Results of the research Dwelling price indexes in Lodz in 2008-2012 (1 st quarter of 2008 = 100)

12. 4. Results of the research Dwelling price indexes in Poznan in 2008-2012 (1 st quarter of 2008 = 100)

13. 4. Results of the research Dwelling price indexes in Warsaw in 2008-2012 (1 st quarter of 2008 = 100)

14. 4. Results of the research Dwelling price indexes in Wroclaw in 2008-2012 (1 st quarter of 2008 = 100)

15. 4. Results of the research Conclusion: simple methods may bias the results of other research hedonic indexes are more stable indexes based on these methods, in case of this research, show different results if the database does not allow to use complex methods, it is better to estimate average price or median price of 1 square metre

16. THANK YOU VERY MUCH FOR YOUR ATTENTION