Australian Bureau of Statistics
6464.0 - House Price Indexes: Concepts, Sources and Methods, Australia, 2009
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 14/12/2009
|Page tools: Print Page Print All RSS Search this Product|
CHAPTER 12 OUTPUTS AND DISSEMINATION
INTERPRETING INDEX NUMBERS
12.4 Movements in indexes from one period to any other period can be expressed either as changes in index points or as percentage changes. The following example illustrates these calculations for the HPI for Sydney between December quarter 2005 and December quarter 2008. This procedure is applicable for any two periods.
less December quarter 2005 index number 93.5
equals change in index points 3.7
percentage change 3.7/93.5 x 100 = 4.0%
12.5 For most applications, movements in price indexes are best calculated and presented in terms of percentage change. Percentage change allows comparisons in movements that are independent of the level of the index. For example, a change of 2 index points when the index number is 120 is equivalent to a change of 1.7%, but if the index number were 80 a change of 2 index points would be equivalent to a change of 2.5% - a significantly different rate of price change. Only when measuring change from the index reference period will the points change be numerically identical to the percentage change.
12.6 The percentage change between any two periods must be calculated, as in the example above, by direct reference to the index numbers for the two periods. Adding the individual quarterly percentage changes will not result in the correct measure of longer-term percentage change. In other words, the percentage change between, say, the June quarter one year and the June quarter of the following year will not necessarily equal the sum of the four quarterly percentage changes. The error becomes more noticeable the longer the period covered and the greater the rate of change in the index. This can readily be verified by starting with an index of 100 and increasing it by 10% (multiplying by 1.1) each period. After four periods, the index will equal 146.4 delivering a through-the-year percentage change of 46.4%, not the 40.0% obtained by adding the four quarterly changes of 10.0 per cent.
ANNUAL INDEX NUMBERS
12.7 Price indexes produced by the ABS are published on both a quarterly and a financial year basis. The index number for a financial year is the simple arithmetic average (mean) of the index numbers for the 4 quarters of that year. Index numbers for calendar years are not calculated for the HPI but can be derived by calculating the simple arithmetic average of the quarterly index numbers for the year concerned.
12.8 For example, an index number for the year 2008 would be calculated as the arithmetic average of the index numbers for the March, June, September and December quarters of 2008. This characteristic of index numbers is particularly useful. It allows annual price movements to be calculated and compared with those of any other year. It also enables the index number in, say, the current quarter, to be compared with the average prevailing in some prior year.
HISTORICAL SERIES AVAILABLE
12.9 As noted above, the HPI series compiled under the previous methodology (prior to the 2004 review) is published on the ABS website for users to access. This series commences in June quarter 1986 and concludes in June quarter 2005.
12.10 Caution should be exercised when attempting to 'link' the original and current series. While the ABS can provide advice on re-basing (see Chapter 11) and splicing, due to the variety of outcomes determined by users' decisions, the ABS does not recommend a method for linking the two series.
12.11 The final decision for deciding the appropriateness or otherwise of the HPI for any particular application lies with the end user. While the ABS can provide technical and statistical guidance, it does not provide advice on indexation practices, nor can it tell users which index would best suit any particular use. See Appendix 2, Price Indexes and Contract Indexation, for further information.
INFORMATION PAPERS AND RELATED PUBLICATIONS
12.12 Users may also wish to refer to the following publications which are available from the ABS website:
12.13 Current publications and other products by the ABS are listed on the ABS web site <www.abs.gov.au>. The ABS also issues a daily Release Advice on the web site which details products to be released in the week ahead.
These documents will be presented in a new window.
This page last updated 11 December 2009