UNECE Workshop on Consumer Price Indices

Session 8: OOH-Turkish Experiences

Presentation by Cengiz Erdoğan, TurkStat

October 10-13 Istanbul, Turkey

OOH-Turkish Experiences

A durable good is therefore defined as one which may be used repeatedly or continuously over a period of more than a year, assuming a normal or average rate of physical usage. A consumer durable is a good that may be used for purposes of consumption repeatedly or continuously over a period of a year or more.

OOH-Turkish Experiences

There are 3 main methods for dealing with the durability problem:  Ignore the problem of distributing the initial cost of the durable over the useful life of the good and allocate the entire charge to the period of purchase. This is known as the

acquisitions approach

and it is the present approach used by Consumer Price Index statisticians for all durables with the exception of housing.

OOH-Turkish Experiences

 The

rental equivalence

or

leasing equivalence approach

In this approach, a period price is imputed for the durable which is equal to the rental price or leasing price of an equivalent consumer durable for the same period of time.

.

 The

user cost approach.

In this approach, the initial purchase cost of the durable is decomposed into two parts: one part which reflects an estimated cost of using the services of the durable for the period and another part, which is regarded as an investment, which must earn some exogenous rate of return.

OOH-Turkish Experiences

The net acquisition approach is the change in the price of newly purchased owner occupied dwellings, weighted by the net purchases of the reference population. This is an asset based measure, and therefore comes close to (preferred) measure of inflation as a change in the value of money, though the change in the price of the stock of existing houses rather than just of net purchases would in some respects be even better. It is, moreover, consistent with the treatment of other durables.

OOH-Turkish Experiences

COICOP/HICP 04.2

04.2.1

04.2.1.1

04.2.1.2

04.2.1.2.1

04.2.1.2.2

04.2.2

04.2.2.1

04.2.3

04.2.4

04.2.4.1 04.2.4.3

Content Preferred price indicator Potential source of expenditure weight Owner occupied housing

Acquisition of newly built dwellings

Dwellings in blocks of flats, terraced houses and turn-key ready houses "Self built" houses

Land Construction costs Price index for newly built dwellings Land price index Construction price index (subset) Construction statistics/National Accounts Land registry statistics/National Accounts Construction statistics/HBS/Special surveys

Acquisition of second-hand dwellings from other sectors

Acquisition of second-hand dwellings

Major repairs and conversions

Price index of second-hand houses (subset) Construction price index (subset) Dwelling stock statistics Construction statistics/HBS/Special surveys

Other costs relating to owner occupied housing

Transfer costs (asset transfer tax etc.) Other costs (ground rent etc.) Price index of second-hand dwellings, price index of newly built houses House price statistics Ground rent index (CPI?) Household expenditure survey/Housing corporation statistics

OOH-Turkish Experiences

Turkey has an experience of rental equivalence approach. This approach is used in 1994 Based CPI.

In the 1994 Based CPI, the rate of OOH was % 77,1 while the rented houses rate was %22,9.

In the field work, data collectors were trying to find rented houses which have the similar specifications with Owner’s houses in that area Currently, OOH cost is not covered

Main Difficulties in

OOH-Turkish Experiences

Turkey has big rural areas where people have their own houses. The main difficulty is to find rented houses to impute OOH.

The weight given to rent (actual rent + imputed) is bigger than the actual rent payment.