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The House Price Index (HPI) provides quarterly information about the price change of the stock of established, detached houses over time. Separate indexes are produced for each capital city, and these indexes are combined to produce a weighted average index of the eight capital cities.
The HPI differs from other price indexes such as the Consumer Price Index, which re-prices the transaction price of identical items each quarter. This approach is not viable in the case of established houses as the prices observed each quarter relate to a different set of houses. The House Price Index groups houses into similar geographic clusters according to important price-determining characteristics. The change in the median house transaction prices of these clusters from quarter to quarter are weighted together to produce a measure of price change for the capital city overall.
Medians for each city are published in Table 7 of the HPI publication (cat. no. 6416.0). Quarterly movements in the medians and the indexes are not comparable, due to the methodology employed to compile the index. The number of transactions which contribute to the calculation of the medians is published in Table 8.
The HPI is released each quarter, for the three months ending March, June, September and December. The data are usually released on the fifth Monday following the end of the reference quarter, although this may be delayed slightly 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 HPI as soon as possible after the end of the reference period, the ABS' current approach is to produce 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 subsequently revised. The HPI is based on state and territory valuers-general data only for the final estimate in the third most recent quarter. Financial institution data is included in the preliminary estimates to ensure a sufficient number of price observations are available to enable the production of the index in a timely manner.
Medians for each city in Table 7 of the HPI publication (cat. no. 6416.0) are only available when sufficient valuers-general data has been received and when the index is considered final (i.e. for the third most recent quarter). The medians may be revised each quarter as historical valuers-general data are received; however, final index numbers are not revised. The number of transactions which contribute to the calculation of the medians, published in Table 8, may also be revised each quarter.
The HPI is based on a census of all established house property transactions for each capital city obtained from state and territory valuer-general departments. For the preliminary estimates, this data is supplemented with financial institution mortgage data for the two most recent quarters.
Over time, the valuer-general dataset increases and becomes a greater proportion of the combined dataset, with financial institution data removed completely from the final estimate (third most recent quarter). Revisions are published in House Price Indexes: Eight Capital Cities (cat. no. 6416.0), Table 9.
The stock of established houses changes over time, with additions to the housing stock resulting from new house construction, and decreases in the stock resulting from demolitions (e.g. when a house is replaced by a block of units). However, the HPI is based on the quantity of detached houses in each city as recorded in the most recent Census of Population and Housing. These quantities are held constant from period to period in the compilation of the index.
The HPI in its current form was first published for September quarter 2005, with the series backdated to March quarter 2002. In the December quarter 2008 issue, updated weights and a refined stratification method were introduced and linked to the existing series at March quarter 2008. Following the 2011 Census of Population and Housing, the stock weights underpinning the index will be updated, and the compilation methodology will be reviewed and refined as necessary.
Prior to September quarter 2005, the HPI was produced to meet the specific data requirements for the construction of a price measure for mortgage interest charges, which were included in the Consumer Price Index (CPI) from 1986 to 1998. The ABS continued to publish this index up to June quarter 2005, when the new methodology was implemented causing a break in the series. This historical series, from June quarter 1986 to June quarter 2005, is available in Table 10 of 6416.0 on the ABS website.
A range of other house price measures are available from other agencies, industry groups, and economic research firms. The methodologies and conceptual approaches used to construct these measures differ according to factors such as the scope and coverage, the sources of house price data, the resources available to collect and process the data, and the purpose of the measures. Therefore, the results produced across the range of measures, particularly the preliminary results, are not directly comparable.
The House Price Index publication (cat. no. 6416.0) contains Explanatory Notes which provide an overview of the scope, coverage, and methodology of the published series. Appendices are included when appropriate (for example, to explain the outcome of a methodological review).
Analysis of the quarterly results has also been included in the publication since the June quarter 2010 issue. The aim of the Analysis section is to summarise significant results, describe the main drivers of the indexes, and provide historical context.
More detailed information about technical aspects of the HPI can be found in the Information Paper, House Price Indexes: Concepts, Sources and Methods, Australia 2009 (cat. no. 6464.0).
All available house price index data is released in the HPI publication 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 house price index and other Prices series, please see Topics @ a Glance - Inflation and Price Indexes.