Housing and cost of living: Application to the Spanish regions

► The treatment of housing in indices such as the Spanish Consumer Price Index (CPI) makes it impossible to measure the real impact of housing on the cost of living. ► This issue is especially relevant at the regional level, where differences in housing markets are very substantial. ► We construct a cost of living index that takes into account owner-occupied housing, especially mortgage payments, in a measure of the cost of living in Spain. ► We verify that our cost of living index and the CPI do not follow the same path over time.