Price indices for residential premises in small areas on the example of a selected market in Poland

The discussion about the real estate price indices in Poland dates back to the beginning of the transformation period. Despite the statutory regulations, the creation of these indices continues to face formal, organizational as well as methodological obstacles. The methodology for building these indices, despite the rich foreign experience in this area, is also not established. The proposed article refers to the Nobel Prize winner from 2013 prof. Robert Shiller, who pointed to the need to build house price indices in homogeneous areas, for example, due to the level of urbanization, population size and based on them, the construction of aggregated price indices for larger areas. The foundation of the construction of property price indices in this concept is the definition of a typical home, which is a permanent reference point in subsequent periods of the study. In the proposed article discusses the problem of constructing price indices of housing in small areas, indicating a typical dwelling in trading on the secondary market. On this basis, an attempt was made to determine the price index for a small area, i.e. a homogeneous area due to the price-setting factors important for the residential real estate market. Each transaction is described by a set of several quantitative and qualitative features. Price indices will be determined to take into account the methodology used to determine them in the literature. The research hypothesis concerning the discrepancy of the indices values will be verified using various criteria for selecting the spatial extent of the studied area. The obtained results are a contribution to further research on other local markets and for other types of real estate.