Market price approach to simple user cost

Abstract

There are two main approaches to measuring Owner Occupied Housing: the flow of services approach (covering rental equivalence and user cost) and the net acquisition. They use market price information for price measurement in the calculation of consumer's use of own housing. This paper describes these methods and treats extensively the simple user cost used for the calculation of owner occupied housing in Iceland. This method measures expenditure shares based on sticky real interest rate and depreciation. The price change of property is measured by a constant quality price index for all properties sold.