Historical valuation series considered in determining the average value of real estate collateral

Considering that institutions may rely on comparable real estate valuation indices to fill in periods where no formal property revaluation exists, in order to construct the required equally distant interval valuation points, is there any requirement or expectation to extend the historical series beyond the minimum three data points, covering the full reference period (e.g., six years for RRE and eight years for CRE)?  The reasoning underlying this question is illustrated in the following example: RRE: Case 1 - Exclusive reliance on three data points derived from formal property revaluation exercises Period 0: Property value at origination Period 1: -- Period 2: -- Period 3: First formal property revaluation Period 4: -- Period 5: -- Period 6: Second formal property revaluation RRE: Case 2 - Use of real‑estate price valuation indices to construct the historical period Period 0: Property value at origination Period 1: First property value collected using real‑estate valuation indices Period 2: Second property value collected using real‑estate valuation indices Period 3: Third property value collected using real‑estate valuation indices Period 4: Fourth property value collected using real‑estate valuation indices Period 5: Fifth property value collected using real‑estate valuation indices Period 6: First formal property revaluation RRE: Case 3 - Use of real‑estate price valuation and indices to construct the historical period Period 0: Property value at origination Period 1: First formal property revaluation Period 2: First property value collected using real‑estate valuation indices Period 3: Second property value collected using real‑estate valuation indices Period 4: Third property value collected using real‑estate valuation indices Period 5: Fourth property value collected using real‑estate valuation indices Period 6: Second formal property revaluation

For determining the reviewed property value of immovable collateral used for credit risk mitigation, a key element is the requirement to calculate an average property value based on a set of equally distant intervals valuation points over a defined historical period. For residential real estate (RRE), this period must cover at least six years, and for commercial real estate (CRE), at least eight years.  In practice, institutions may not always have formal property revaluations available at the required intervals. Many exposures - particularly those originated several years ago or those for which revaluation practices were less frequent - may only have one or two formal valuations within the relevant historical window. This raises the question of how institutions should construct the required equidistant valuation series when formal revaluations do not exist for all points in the timeline. To address these gaps, institutions are considering whether they may rely on real estate price valuation indices to estimate property values for the missing periods. Such indices, when appropriately selected and calibrated, could provide a market‑consistent proxy for the evolution of property values and allow institutions to construct a complete historical series that meets the requirements of Article 229. This leads to two key points requiring clarification: Whether the use of real estate valuation indices is acceptable for filling in missing valuation points when formal revaluations are not available. Whether institutions must reconstruct the full historical series (e.g., all six or eight years), or whether it is sufficient to rely on the minimum three equidistant points required by Article 229, even if these points are derived from a combination of formal valuations and index‑based estimates. In this regard, it is important to clarify whether all formal valuations carried out in the last six or eight years must be considered and that the equidistant requirement also applies in all cases, forcing to different combinations of formal and index-based valuations. Clarification on these issues is essential to ensure consistent application of Article 229 across institutions and to avoid divergent interpretations regarding the acceptable use of index‑based valuations and the required length of the reconstructed historical series.