Hedonic indexes for public and private housing in Costa Rica

We present the first hedonic house price indexes for Costa Rica at the national and provincial level, and for both the public and private sectors. Our indexes, which focus on building costs, show that the real quality-adjusted price of new residential structures rose by 10 percent over the period 2000-2013. Important differences emerge when we compare the public and private sectors. The average quality of private housing rose strongly during our sample period, while the average quality of public housing fell. Recipients of public housing therefore became worse off. The fall in quality was matched by a fall in price in the public sector, and hence generated cost savings for the government. Also, by estimating separate hedonic models for the public and private sectors, we show that public sector housing would not be produced more cheaply in the private sector. In this sense the public sector seems quite efficient.