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6416.0 - Residential Property Price Indexes: Eight Capital Cities, Dec 2013 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 11/02/2014   
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QUALITY DECLARATION

INSTITUTIONAL ENVIRONMENT

The ABS is independent of government, with the Australian Bureau of Statistics Act 1975 giving the Statistician the power to control the operations of the ABS. For further information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.


RELEVANCE

Residential property prices are of significant interest to policy makers, market analysts and researchers for a range of economic and social reasons. This is because the housing market plays an important role in the Australian economy. The Residential Property Price indexes serve the dual purpose of: a macroeconomic indicator of residential property price inflation; and supporting the compilation of the non-financial assets component of the Household Balance Sheet in the Australian System of National Accounts.

The Residential Property Price Index publication includes a suite of three indexes (referred to collectively as 'the indexes'): The Residential Property Price Index (RPPI), the Established House Price Index (HPI) and the Attached Dwellings Price Index (ADPI). These indexes provide quarterly information about the price change of the stock of established detached houses and attached dwellings over time, as well as an aggregated index. Separate indexes are produced for each Capital City, and these are combined to produce a weighted average index of the eight capital cities.

To maintain the relevance of the indexes an index review is undertaken every five years, following the availability of data from the Census of Population and Housing. The quantities of dwellings that underpin the weights of the index are updated at this time. It also provides an opportunity to reassess the compilation methodology of the index. The most recent index review occurred in relation to the 2011 Census.

The ABS uses a stratification approach to compile the indexes. Dwelling transactions are stratified by dwelling type, long term median price and Socio-Economic Index for Areas (SEIFA). Similar dwellings (not exactly the same dwellings) are priced each period and changes in other characteristics of the dwelling stock are not removed from the price index. The change in the median dwelling transaction prices of these strata from quarter to quarter are weighted together to produce a measure of price change at the capital city level.

Estimates are also available for the median price and transfer counts of established houses and attached dwellings for capital cities in Residential Property Price Indexes: Eight Capital Cities (cat. no. 6416.0). Additional outputs for median price and transfer counts for the rest of state for established houses and attached dwellings are available in a time series spreadsheet on the ABS website.

Also published are statistics relating to the total value of the dwelling stock, the mean price and number of residential dwellings by state. These indicators are used to estimate the value of housing as a component of wealth in the national accounts.


TIMELINESS

The Residential Property Price Indexes: Eight Capital Cities (cat. no. 6416.0) is released each quarter, (three months ending March, June, September and December). The data are typically released on the sixth Tuesday after the end of the reference quarter, although this may be adjusted due to public holidays. Price observations are collected throughout the quarter and are classified into the relevant quarter depending on the date of exchange of contracts.

In order to publish the indexes as soon as possible after the end of the reference period, the ABS produces preliminary estimates for the two most recent quarters, which are subsequently revised. The final estimate is available for the third most recent quarter and is not revised. This approach also applies to the total value of dwelling stock estimates.

The median price and number of all established houses and attached dwellings transfers for capital cities and rest of state are only produced for those quarters for which final indexes are available. Revisions are applied for up to the most recent eight quarters for these estimates.

ACCURACY

The accuracy of the indexes relies on the number of price observations available each quarter. Data is provided by State and Territory Land Titles Office or Valuers-General Office (VGs) in each capital city to compile the indexes. Typically, several weeks elapse from the time an agreement is reached between two parties to sell/purchase a residential property and the ABS receiving the data relating to the transaction. To address this delay, the ABS supplements VGs data with mortgage lenders data to produce preliminary index series in the two most recent quarters. For the HPI the two most recent quarters are a combination of mortgage lenders data and VGs data (with the exception of the second most recent quarter for the NT where only VGs data is used). For the ADPI the most recent quarter uses a combination of VGs data for the first two months of the quarter and mortgage lenders data for the most recent month of the quarter (except WA where all VGs data is used). For the second most recent quarter for the ADPI only VGs data is used. However, as this data is not yet complete, the index may still be further revised.

Index series in the third most recent quarter following the reference period are compiled from VGs data only. These index series are considered Final and are not revised.


COHERENCE

The first issue of the RPPI in its current form was the December quarter 2013. This series (Series 3) is based on data from the 2011 Census of Population and Housing and includes updated weights and stratification variables which have been linked to the previous series (Series 2) from the March quarter 2013. The HPI has a time series starting from the March quarter 2002. The ADPI and aggregated RPPI have a time series starting from the September quarter 2003.

Prior to the December quarter 2013, the HPI was the only series published. In the December quarter 2008 issue, updated weights and a refined stratification method based on 2006 Census data were introduced and linked to the existing HPI series (Series 1) at the March quarter 2008. Series 1 was introduced in the September quarter 2005 issue (with improvements applied back to the March quarter 2002). The most significant change was the introduction of a stratification approach to compile the HPI.

An historical series, from 1986 to 2005, continues to be available as an indicator of established house price movements over a longer period. This historical series is not directly comparable to the existing HPI series post 2002 due to the significant changes in methodology introduced in the September quarter 2005 issue.


INTERPRETABILITY

The Residential Property Price Indexes: Eight Capital Cities publication (cat. no. 6416.0) contains Explanatory Notes which provide an overview of the scope, coverage, data sources and methodology of the published series. Appendices are included when appropriate (for example, to explain the outcome of a methodological review).

More detailed information about technical aspects of the HPI can be found in the Information Paper, House Price Indexes: Concept, Sources and Methods, Australia 2009 (cat. no. 6464.0). An updated version of this publication is scheduled for release in the second half of 2014. For additional information and technical details about the RPPI please refer to the Information Paper: Forthcoming Changes to House Price Indexes: Eight Capital Cities (cat.no.6416.0.55.002).


ACCESSIBILITY

All available data is released in the RPPI publication and associated time series spreadsheets on the ABS website each quarter and can be accessed via the ABS website:http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0.

For links to data and publications relating to the Residential Property Price Indexes and other Prices series, please see Topics @ a Glance - Inflation and Price Indexes.


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