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Eurostat-OECD Compilation guide on land estimations

image of Eurostat-OECD Compilation guide on land estimations

The repercussions of the 2007–2008 financial crisis have acted as an impetus to improve the quality and availability of statistical information. One such initiative addresses the importance of compiling a complete accounting of a nation’s wealth, and especially the wealth of households. This is of particular importance in view of the housing market’s role in the financial crisis in several countries.

The most valuable item on the households’ balance sheet is usually housing wealth which is composed of the value of the dwelling and its underlying land. Many countries experience difficulties in valuing land and in particular separating the value of the land from the value of the structure. To assist countries, the Eurostat-OECD compilation guide on land estimation represents the first comprehensive overview of conceptual and practical issues related to the compilation of the balance sheet item land in the national accounts, in total and by institutional sector.

The Eurostat-OECD compilation guide on land estimation was prepared by the Task Force on Land and other non-financial assets under the joint leadership of Eurostat and the OECD. Representatives from various European Union (EU) and non-EU OECD countries were represented as well as the European Central Bank.

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Indirect estimations of land

Chapter 5 described how the value of land can be directly estimated by multiplying the area of each parcel of land by an appropriate price. However, it might be difficult to collect separate (and reliable) price information for the estimation of the land without any structures or crops. One of the challenges in estimating the value of land underlying structures or crops is that often only information is available on real estate that is sold on the market (i.e. the combined value). Thus, if separate information on the price of land without structures or crops is not available then an indirect estimation method could be used.

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