# Simulating property price index

I am trying to write a Monte Carlo simulation to calculate risk associated with some property based products. What is the most reasonable stochastic process to model property price index? Do people simulate is together with some other factors? (GDP, consumer confidence, stock prices, etc.)?

Because I am after risk, I need to work in the real measure (as opposed to risk-neutral).

Also this is needed for academic work, so please mention any citable materials if relevant.

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Hi Grzenio, welcome to quant.SE and thanks for posting your question. Models of property prices have not been discussed here before to my knowledge, so hopefully there are some knowledgeable folks around. Thanks for broadening the range of questions. –  Tal Fishman Dec 20 '11 at 22:47