House Price Index (IPAB) for Existing Dwellings

What is the IPAB Index?

The IPAB (Indice dei Prezzi delle Abitazioni) is the official house price index published by Istat. It measures the evolution over time of residential property prices in Italy, distinguishing between new dwellings and existing dwellings.

The IPAB is a nominal index, meaning it reflects price dynamics in current euros and therefore includes the effect of general inflation. It does not adjust for changes in the overall price level of the economy (e.g., CPI).

Unlike simple averages of listing or transaction prices, the IPAB index is designed to capture pure price dynamics, net of changes in the composition and quality of the housing stock. This makes it conceptually closer to a “constant-quality” price index.

Why IPAB differs from average prices

Raw average prices (e.g., €/m² from listings or transactions) can be heavily distorted by composition effects. For example:

• More high-end properties sold in a given period → average price increases, even if underlying prices are unchanged
• Geographical mix shifts (e.g., more transactions in central areas)
• Changes in dwelling characteristics (size, age, energy class, amenities)

The IPAB index corrects for these effects using statistical techniques such as:

• Hedonic adjustments: controlling for observable characteristics of properties
• Stratification: grouping transactions into homogeneous segments
• Weighting schemes: ensuring representativeness across regions and dwelling types

As a result, IPAB reflects price variation for comparable properties over time, whereas average prices reflect both price changes and shifts in the underlying market structure.

Interpretation

Because of this construction, IPAB is the preferred metric for:

• Macroeconomic analysis of the housing market
• Comparisons across time and regions
• Deflating nominal real estate values (when combined with a general price index)