Mexico Will Soon Unveil New Housing Price Index (Update1)

Sept. 18 (Bloomberg) -- Mexico’s government plans to create an index to measure housing prices, similar to the index co- created by Yale professor and economist Robert Shiller, Deputy Finance Minister Alejandro Werner said.

The index will provide better pricing information to financial markets and offer a new tool to develop and hedge financial products linked to mortgages, Werner, 42, said in an interview in New York. While Mexico’s stock market has an index that tracks the shares of its six largest homebuilders, called Habita, it doesn’t have a comprehensive index for home prices.

“To give more support to the housing market and to financial products associated with housing, we’ll be introducing a price index for housing in Mexico,” Werner said.

The index may allow the country to better measure the performance of its housing markets and keep track of the severity of declines. The Case-Shiller index tracks home prices in 20 U.S. cities and has been used to measure the real-estate crisis that triggered the worst recession since the 1930s.

The Mexico City-based Sociedad Hipotecaria Federal, an agency in charge of developing Mexico’s mortgage market, will officially announce the creation of the index Sept. 29, according to its press office.

The index will probably boost funding for Mexico’s mortgage market by offering investors more transparency and helping analysts make better forecasts, said Christian Papayanopulos, an analyst at Grupo Financiero IXE SA in Mexico City.

‘Hot or Depressed’

“It will serve investors to know how prices have been moving in a particular segment of the population or state, or if the market is hot or depressed,” Papayanopulos said.

Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.

Having a housing price index “is a major asset that drives consumer spending and that matters for the mortgage market,” Case said in a telephone interview today. “If you have more data that prices have been volatile in the past, then you have more data to make a rational decision.”

The Habita index rose 1.8 percent to 600.12 yesterday, the highest in more than a year. The index fell 0.9 percent to 595.03 today at 3:27 p.m. New York time.

To contact the reporters on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net

To contact the editor responsible for this story: Fred Strasser at fstrasser@bloomberg.net