ABSTRACT
Introduction A house is a complicated commodity because it is long-lived, each house is slightly different if only in terms of exposure to sunshine, and every house has a slightly different location. The long-lived nature of a house means that interest rates (discount factors), rates of depreciation and maintenance effort are crucial to current value. Housing comes with two payment schemes: renting versus owning. In addition, the business cycle in most countries appears sensitive to rates of production of new housing. Housing is a large component of the standard bundle in the consumer price index and has not proved easy to measure (Diewert et al. 2009).
