BB to calculate house price index

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The central bank has started work on calculating the country’s House Price Index (HPI) on a regular basis.

In March 2016, the research department of the central bank has taken the initiative to construct ‘Residential Property Price Index (RPPI)’ for Bangladesh with the technical assistance of the International Monetary Fund (IMF).

“Thereafter, Bangladesh Bank will calculate HPI on regular basis by applying Laspeyeres and Hedonic method by using information/data from authentic sources,” said the central bank said in its latest annual report.

It was of the view that HPI is an important indicator for the policymakers in framing fiscal and monetary policies.

The central bank mentioned that the house price indices can be used as a macroeconomic indicator of economic growth, an input to estimate the value of housing as a component of wealth, a financial stability or soundness indicator to measure risk exposure, a deflator of the national accounts and an input for the consumer prices, among a number of important ones.

For the last few years, it added, the housing sector has appeared as a crucial sector of the national economy and contributing around 8 per cent of the Gross Domestic Product (GDP).

This sector along with its backward linkages industries also directly added Tk 3.0 billion annually to the national exchequer, which is around 12-14 per cent of the economy.

Bangladesh Bank (BB) found that many Asian countries like China, India, Thailand and Vietnam have already started calculating HPI.