Log in Join Now

Login to your account

Email *
Password *
Forgot your password?

Create your account

First Name*
Last Name*
Password *
Verify password *
Email *
Already have an account? Log in

House Price Index: Why is it so important for real estate investors?

art hpi

If you ever invested in real estate or are just interested in this sector, you have probably heard about HPI. No wonder, as HPI, or House Price Index, is widely used by investors when they are evaluating real estate assets in different countries. So what is it, why is it so important and how exactly can it help investors to select the right properties? Let's find out.


Basically, HPI is a broad measure of how house prices move in a particular country or a region1. It shows the fluctuations in real estate prices over a certain period of time. The period over which HPI is measured and reported may be different: by quarter, month,  year, or even  decade.


HPI is very significant as it acts as an excellent analytical tool for evaluating past house price trends. As a result, an investor can make an approximate prediction of what could be happening with real estate prices in each particular country or city in the next month, quarter, or year. HPI can be helpful in estimating changes that concern rates of overall mortgage defaults, prepayments, national house affordability and so on1. Thus, an investor can estimate approximately how an economic crisis or economic growth experienced by a particular country impacts the overall cost of residential properties there. For example, the economic development of a country usually results in positive movements in the real estate market and creates new investment opportunities. As a result, based on the information given by an HPI, an investor can make an informed decision; for example, if he or she may choose to invest in the German real estate market due to its stable HPI in the past few years.

 

3Invest in 2

 


If we break down the HPI and try to determine how it is calculated, we will see that it is based on different variables. These variables include conventional and conforming mortgages approved over a period1. The mortgages selected are usually based on single-family properties. This gives investors an opportunity to receive a defined picture of the HPI in that country/region.


As you can see, HPI is indeed very important for the evaluation of real estate prospects. We advise every investor to carefully examine it when they invest in a new country and choose a real estate object thoughtfully, and from an analytical point of reference.

 Learn More

 

Sources

  1. https://www.investopedia.com/terms/h/house-price-index-hpi.asp


Disclaimer

This article is for information only and does not amount to advice or a recommendation to invest in Property Bundle.  Any personal opinions expressed are the views of RealtyBundles at the time of publication, are subject to change and should not be interpreted as advice or a recommendation or relied on. RealtyBundles CFP ltd. does not provide financial, investment  or tax advice and does not represent that any opinions contained in this article or any investment opportunity is suitable for you, including but not limited to those contained in the Article.

You agree to make your own independent decision on the financial and investment information available throughout the Website and we recommend that you conduct your own research into the available offerings before making an investment decision. If you are in any doubt about the contents of an investment offer we recommend you seek independent professional advice.

Where any estimates, forecasts or projections have been made, these are what the RealtyBundles believes to be reasonable as of the date of this document. Any statements may involve known or unknown risks, uncertainties and other important factors, which could cause actual performance to differ from those expected, as such they are not reliable indicators of future performance and should not be relied upon. Past performance is not a reliable indicator of future results.

No representation is made or assurances given that such statements or views are correct. Investors must determine for themselves what reliance (if any) they should place on such statements, views or forecasts, and no responsibility is accepted by RealtyBundles in respect thereof.

RealtyBundles has taken all reasonable care to ensure that the facts stated are true and accurate in all material respects and that there are no other material facts whose omission would make any statement of fact or opinion misleading.

Users of our website should be cautious about any of the data provided  and should consider the source of any such data as various factors may influence or factor into the financial analysis or opinion.

The accuracy, completeness or timeliness of such Information cannot be guaranteed and is subject to change without notice.