The treatment of Owner Occupied Housing in a Consumer Price Index is complex and there are a number of alternative methods. This paper will briefly examine some of the various theoretical approaches employed. It will review the current efforts underway at EU level, to develop a harmonised approach to the treatment of owner occupied housing and to create a common methodological framework for the development of house price indices at EU level and to derive a series of Owner Occupied Housing indices. Using Ireland as a case study, the paper will outline the current treatment of housing within the national CPI. This is based on the payment principle and measures the change in average mortgage interest repayments.This concept is easier to understood than more theoretical concepts such as rental equivalence. The paper will outline the work undertaken by CSO Ireland to develop a new national house price index (HPI). This new index serves both a national data need and allow serves us to comply with new EU requirements for a HPI and the development of Owner Occupied Housing indices. The paper will simulate the impact of substituting the current mortgage interest element of the CPI with the inclusion of House Prices based on the net acquisition principle. It will also highlight the key developments which have taken place in the Irish housing market, where prices have fallen rapidly since they reached a peak in 2006/2007 and the impact of this. Finally the paper will draw a number of conclusions and point the way forward for Ireland.
Keywords: Prices; Owner occupied housing; Ireland; cpi
Biography: Paul J Crowley is a Senior Statisitican in the Central Statistics Office and has worked there for 18 years. He is Head of Price Statistics and International Relations. In Prices he has overall responsibility for Consumer Prices, Industrial Producer Prices, Services Prices, House Prices and International Price Comparisons (PPPs). As Head of International Relations he is responsible for the high level coordination of EU and International Relations and as part of that role is the Project Manager for the World Statistics Congress in Dublin.