Broadly, there are two ways to measure the value of property-based assets

direct measures of property value and equity-based measures. Direct

property measures
are based on periodic appraisals or valuations of the actual properties in a
portfolio
by surveyors, while equity-based measures evaluate the worth of properties
indirectly by considering the values of stock market traded property
companies.
Both sources of data have their drawbacks. Appraisal-based value measures
suffer
from valuation biases and inaccuracies. Surveyors are typically prone to
smooth
valuations over time, such that the measured returns are too low during
property
market booms and too high during periods of property price falls.
Additionally,
not every property in the portfolio that comprises the value measure is
appraised
during every period, resulting in some stale valuations entering the
aggregate valuation,
further increasing the degree of excess smoothness of the recorded property
price series. Indirect property vehicles property-related companies traded
on
stock exchanges do not suffer from the above problems, but are excessively
influenced by general stock market movements. It has been argued, for
example,
that over three-quarters of the variation over time in the value of stock
exchange
traded property companies can be attributed to general stock market-wide
price
movements. Therefore, the value of equity-based property series reflects
much