Real estate price index: A hedonic approach

An apartment price index for Metropolitan Lima is estimated using the hedonic pricing methodology. For this purpose, three variants of the methodology are used (the time-binary variables method, the characteristics method, and the imputation method). The indices calculated using these three methods yield similar results. It is also shown that there has been no significant variation in the characteristics of the apartments or in the valuations of these characteristics. The features most highly valued by buyers are the number of parking spaces and the number of bathrooms. Finally, the indices calculated based on hedonic regressions are found to be similar to the median index currently calculated and published by the BCRP.