(Translation from Original Japanese Version)

Japan Real Estate InstituteHome Price IndicesCalculation Methodology

Revised on JANUARY 27th, 2015

Table of Contents
１. Introduction ............................................................................................................... 2
２. Synopsis ..................................................................................................................... 3(1) Overview ........................................................................................................................................ 3(2) JREI Home Price Indices Series .................................................................................................. 3(3) Data Used for Calculating JREI Home Price Indices ................................................................ 3

３. Calculation Method ................................................................................................... 4(1) Calculation of Index Values ......................................................................................................... 4(2) Calculation of Composite Index of Tokyo Metro Area ................................................................ 5

４. Other Notes ................................................................................................................ 5(1) Publication..................................................................................................................................... 5(2) Reminder ....................................................................................................................................... 5(3) Contact........................................................................................................................................... 5Copyright © 2015 Japan Real Estate Institute. All rights reserved.

1１. Introduction
・The Japan Real Estate Institute (“JREI”) calculates and publishes the JREI Home Price Indicesbased on sales price data compiled by the Real Estate Information Network for East Japan inaccordance with the methodology described in this document. However, when an event that is not
specified in this document occurs, or if JREI judges that it is difficult to use the methodology
described in this document, JREI may use an alternative method of index calculation that isdeemed appropriate.

・The copyright of this document is owned by JREI. Any copies, reprints and reproductions of thewhole or any part of this document are prohibited in any forms without the prior approval of JREI.
This document was prepared solely for the understanding of indices calculated and published byJREI. Information expressed in this document is subject to change without notice and in thosecases JREI shall assume no obligation to update any recipients of this document. JREI shallaccept no liability or responsibility for any loss or damage arising from the use of all or part of thisdocument.

・This translation may be used only for reference purposes. This English version is not an officialtranslation of the original Japanese document. In cases where any differences occur between thistranslation and the original Japanese version, the Japanese version shall prevail.

Copyright © 2015 Japan Real Estate Institute. All rights reserved.

2２. Synopsis(1) Overview
・ The JREI Home Price Indices are calculated based on the analysis of price changes in therepeated transactions of pairs of similar condominium units 1 . Transaction data of existing
condominium units in Tokyo Metro Area that were compiled by Real Estate Information Networkfor East Japan are used for the index calculation.
・ The base index date is January 2000 and the base index value is 100.0. The index value of eachmonth is calculated based on repeat sales data up to the end of the month and is published twomonths later (e.g., the index value of March 2011 was published in May 2011.).
・ Index values could be revised when the information of sample data was corrected by the Real
Estate Information Network for East Japan. However, such revision is limited to index values in
the last two years (e.g., when the index value was calculated in May 2011, index values between
April 2009 and February 2011 were examined for possible revision while those before March2009 were left as they were.)(2) JREI Home Price Indices Series
・ The following five indices are calculated as the JREI Home Price Indices:
JREI Home Price Index (Existing Condominium, Composite of Tokyo Metro Area)
JREI Home Price Index (Existing Condominium, Tokyo Prefecture)
JREI Home Price Index (Existing Condominium, Saitama Prefecture)
JREI Home Price Index (Existing Condominium, Kanagawa Prefecture)
JREI Home Price Index (Existing Condominium, Chiba Prefecture)
・ JREI Home Price Index (Existing Condominiums, Composite of Tokyo Metro Area) is a weighted
average of the four prefectures.

(3) Data Used for Calculating JREI Home Price Indices・ Sample Assets: Existing Condominium (Newly built condominium data are not used for index
calculation.)・ Survey Areas: Tokyo, Saitama, Kanagawa, and Chiba Prefectures・ Data Items: Sales Date, Sales Price, Location, Completion Date, etc.

1JREI determines whether or not two condominium units are similar enough to be included assamples in terms grade and size by looking at their location, completion date and so on. Repeat sales
data of the same condominium unit are excluded from samples in the following two cases: (i) the unit
was extended or renovated before the second sale; and (ii) the two transactions took place in a shortperiod of time.
Copyright © 2015 Japan Real Estate Institute. All rights reserved.

3３. Calculation Method(1) Calculation of Index Values
・ The JREI Home Price indices are calculated by the repeat-sales method, which estimates index
values from the repeated sales of two similar condominium units. The price of a condominium unit
is conjectured by a regression model when there is not a transaction of the property in a certain
time period. An example for the calculation using this method is as follows:<Sales Price>
Period 0
Property 1
N/A
Property 2
40
Property 350

Period 1
2042
N/A

Period 222N/A62

Property 1Property 2
Property 3
TotalIndex Value(Period 0 =100)

Period 0184050108100

Period 1
204255116
107.4(=100×116/108)

The price in Period 1 is statisticallyestimated from the sales prices inPeriods 0 and 2.

Period 2
2249
62
132
122.2
(=100×132/108)

Property 3
Property2

Property1

Period０

Period１

Period２

When calculating index values, the time interval of repeat sales is taken into account as the weight forthe property. Specifically, the weight of repeat sales with a longer interval should be lower because
the property price is more likely to be affected by physical and environmental changes during theinterval.

Copyright © 2015 Japan Real Estate Institute. All rights reserved.

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(2) Calculation of Composite Index of Tokyo Metro Area
・ The JREI Home Price Index (Existing Condominium, Composite of Tokyo Metro Area) is aweighted average of the JREI Home Price Indices of Tokyo, Kanagawa, Chiba, and Saitama
Prefectures. The aggregate value of all existing condominium units of each prefecture is used asthe weight.
・ The aggregate value of all existing condominium units is calculated by multiplying the number ofexisting condominium units by their average price.
・ The number of existing condominium units is taken from the Housing and Land Survey by theMinistry of Internal Affairs and Communications. This survey is conducted every five years. The
most recent survey was undertaken for FY 2008. The average price of existing condominium units
is the average price of sales data collected by the Real Estate Information Network for East
Japan.

４. Other Notes(1) Publication
・ The JREI Home Price Indices are posted on the JREI website on the last Tuesday of each month.
・ The indices are published every month for the period from June 1993 to two months prior to themonth.

(2) Reminder
・ The JREI Home Price Indices are intellectual properties of JREI, which holds all the rights
regarding the indices including calculation methodology, publication, and usage. Reproduction,editing, and translation of the indices are prohibited.
・ For quoting or reprinting all or part of the indices, please obtain the permission of the Japan Real
Estate Institute in advance.
・ While the contents of the indices have been rigorously checked, we shall accept no responsibilityfor any damage or loss suffered as a result of any inadvertent inaccuracy of the indices.

(3) Contact
Research Division, Japan Real Estate InstituteE-mail: jrei-homepriceindex@imail.jrei.jp

Copyright © 2015 Japan Real Estate Institute. All rights reserved.

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