6464.0 - Residential Property Price Indexes: Concepts, Sources and Methods, 2014  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 30/09/2014   
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TOTAL VALUE OF THE DWELLING STOCK

INTRODUCTION

10.1 Values of dwellings and land are published annually as part of the national and sectoral balance sheets within the annual Australian System of National Accounts (ASNA) (cat. no. 5204.0) publication. Since the September quarter 2013, a household balance sheet is also published quarterly by the ABS.

10.2 Data for the dwellings and land components of these balance sheets are sourced, in part, from the Total Value of the Dwelling Stock series in Residential Property Price Indexes: Eight Capital Cities (cat. no. 6416.0). This section outlines how these series are compiled.


METHOD FOR VALUING THE DWELLING STOCK

10.3 Valuing the dwelling stock requires information on three things: the price of the dwellings, the number of dwellings in the stock and information on who owns the dwellings.

Scope

10.4 The scope of the value of the dwelling stock is restricted to dwellings where the primary purpose is residential (i.e. excluding commercial properties) regardless of ownership or tenure of the occupants (i.e. including government-owned properties and properties owned by private landlords).

Dwelling price

10.5 Information on the price of dwellings is calculated from the residential property sales dataset provided to the ABS by CoreLogic RP Data, excluding real estate agents data.

10.6 One of the challenges in estimating the value of the dwelling stock is determining a representative price for all dwellings in the stock when price information is only available for dwellings sold in the reference period. Instead, price information from dwellings sold is used to infer the price of all the dwellings not sold during the period.

10.7 This is achieved by stratifying the stock based on the assumption that the major price determining characteristics of a dwelling are location (Statistical Area Level 2 (SA2)) (footnote 19) and dwelling characteristics (represented by dwelling type).

10.8 This method ensures that sales in any region are only used to infer the value of other dwellings in the same region and of the same type. By stratifying in this way, the ABS is able to calculate a quarterly mean dwelling price by geographic area and by dwelling type for all strata, and by consequence, the entire dwelling stock.

The number of dwellings

10.9 The Census of Population and Housing, conducted every five years by the ABS, provides the number (and type) of dwellings in the stock at a detailed geographic level. Between Censuses, however, high quality information on the dwelling stock is only available on additions to the dwelling stock. Information on deductions from the stock is not readily available. To calculate a current period estimate of the number of dwellings, the net additions to the stock are estimated from information on gross additions (i.e. building completions data from Building Activity, Australia (cat. no. 8752.0)) and a modelled value of demolitions. The net additions estimate is then applied to the Census count data.

10.10 Historical gross additions to the stock and changes to the dwelling stock between Censuses are used to calculate a realisation rate. For example, if for every 100 dwellings completed or added to the dwelling stock there are 20 demolitions, then there is a net addition of 80 dwellings to the stock. This represents a realisation rate of 0.80.

10.11 To calculate net additions to the stock in an ongoing way, a realisation rate has been calculated at the State/Territory level for each of the last four Censuses and averaged. The choice to calculate this rate separately for each State/Territory reflects the different supply and demand factors experienced for construction of new dwellings.

10.12 Once the realisation rate has been calculated, the estimated number of dwellings in the stock each quarter is simply:

          Census count of dwellings
          plus (Completions times Realisation Rate) (footnote 20)
10.13 The total figure in each state is then apportioned to each SA2 (based on the number of dwellings of each type at the last Census) so that there is a quarterly estimate of the number of dwellings in the stock (by dwelling type).

Dwelling ownership

10.14 The primary purpose of the suite of TVDS figures is supporting the compilation of the non-financial assets component of the Household Balance Sheet in the Australian System of National Accounts (ASNA).

10.15 To support this, the total value of the dwelling stock figures are compiled for two sectors of ownership: the household sector (which includes Non-Profit Institutions Serving Households) and the non-household sector (all other sectors of ownership). The sectors of ownership are consistent with Standard Economic Sector of Australia (SESCA), 2008 (Version 1.1) (cat. no. 1218.0).

10.16 Information on ownership of dwellings cannot be observed directly in the population, nor is it easily obtainable on every transfer that occurs. To overcome this, information on landlord and tenure type (footnote 21) from the 2011 Census of Population and Housing is used as a proxy for ownership.

10.17 The following tenure types are allocated to the household sector:
      • owned outright;
      • owned with a mortgage; and
      • being purchased under a rent/buy scheme.
    10.18 Where the tenure type is 'rented' or 'being occupied rent free', the following landlord types are allocated to the household sector (with the remainder being allocated to the non-household sector):
        • real estate agent;
        • person not in the same household; and
        • housing co-operative/community/church group.
      10.19 Other tenure type, being occupied under a life tenure scheme, not-stated and not-applicable tenure types are excluded from calculations.

      10.20 The proportion of properties owned by sector by Capital City/Rest of State by dwelling type from the last Census is used to apportion the total value into sectors each quarter. For example, if for attached dwellings in the Rest of NSW 83% of dwellings were owned by households then 83% of the total value of all attached dwellings in the Rest of NSW would be allocated to the household sector.

      10.21 Table 1 shows the percentage of dwellings, by type, owned by the household sector.


      TABLE 8, Ownership by Dwelling type, Australia, 2011

      % of dwellings owned by the household sector

      Detached Houses 96.1
      Attached Dwellings(a) 89.1
      All Dwellings 94.4

      (a) Includes flats/units/apartments and semi-detached/row/terrace houses.

      Producing the total value of dwelling stock

      10.22 A value of the dwelling stock can now be calculated as a price, dwelling count and ownership has been determined.

      10.23 Each quarter the mean prices for each geographic area (SA2) are multiplied by an estimated number of dwellings (by dwelling type, for the same geographic area) to compile a total value of the dwelling stock. As the geographic areas (i.e. SA2s) easily aggregate up into larger geographies, this allows for the compilation of dwelling stock values at the state and national level.

      10.24 However, the calculation of mean prices in the most recent quarter using only VGs data is likely to lead to volatile results. This is because of the time lag between the property price being determined and information received and processed by the ABS.

      10.25 To enable the timely publication of data on the value of the dwelling stock, the movements of the RPPI (at the capital city level) are used as a proxy for movements in the mean prices (at the state level) for the most recent quarter. This results in the TVDS estimates being Preliminary in this period.

      10.26 Revisions to the TVDS are applied to both the second and third most recent quarters due to updated completions and unit record residential property sales data becoming available to use in the direct calculation of quantity and price. The TVDS for the third most recent quarter is considered Final.

      TABLE 9, Example of Calculations (a)

      State/Strata
      Census Count ('000)
      Dwelling Share (%)
      Net Additions ('000)
      Estimated Dwellings ('000)
      Mean Price ($)
      Combined Value ($ m)
      quantity
      quantity / quantity (State)
      share * additions (State)
      quantity + net additions
      price
      quantity * price

      NSW
      2 839.0
      100.00
      17.3
      2 856.3
      (b)
      (c) 1 577 280.7
      Strata 1
      3.2
      0.11
      1.9
      5.1
      504 000
      2 570.4
      Strata 2
      3.4
      0.12
      2.1
      5.5
      807 000
      4 438.5
      Strata 3
      2.9
      0.10
      1.7
      4.6
      350 000
      1 610.0
      ...
      VIC
      2 265.6
      100.00
      33.60
      2 299.2
      (b)
      (c) 1 150 030.9
      ...
      AUSTRALIA
      9 002.7
      100.00
      94.90
      9 097.6
      (b)
      (d) 4 456 988.8


      (a) Each strata is a combination of SA2 x dwelling type. Data is illustrative only.
      (b) Can be calculated by taking the total value and dividing it by dwellings but not directly derived from VG's data.
      (c) Sum of all strata combined values.
      (d) Sum of all state values.


      OTHER MEASUREMENT ISSUES

      Adjusting for the other territories

      10.27 The Other Territories (comprising of Jervis Bay Territory, Christmas Island and the Cocos (Keeling) Islands) are considered part of economic and Geographic Australia, however the ABS does not receive VG's data for these territories.

      10.28 In order to include the value of the dwelling stock in figures, an adjustment is made to the NSW (for Jervis Bay) and WA (for Christmas Island and the Cocos (Keeling) Islands) total values. This adjustment is based on the number of dwellings in each of the Other Territories relative to the number of dwellings in the state from the latest Census. The adjustment is made to the total values rather than the dwelling counts.

      10.29 Data for the other territories is not included in the estimated number of dwellings in the stock as it cannot be separately calculated.

      Vacant land

      10.30 The value of vacant residential land is not included in the total value of the dwelling stock figures as the ABS cannot currently estimate the price or quantity component of vacant residential land.

      10.31 The ABS will continue to investigate potential data sources that could be used to calculate the total value of vacant residential land in the future.


      OUTPUTS

      10.32 The following information is published in Table 6 of Residential Property Price Indexes: Eight Capital Cities (cat. no. 6416.0):
          • Value of the dwelling stock owned by households, States and Territories ($ m);
          • Value of the dwelling stock owned by non-households, States and Territories ($ m);
          • Value of the dwelling stock owned by All Sectors, States and Territories ($ m);
          • Number of residential dwellings, States and Territories ('000); and
          • Mean price of residential dwellings, States and Territories ($'000).
        10.33 Further breakdowns of the data are not available.

        19 The location variable is defined by the Statistical Area Level 2 (SA2) in the Australian Statistical Geography Standard (ASGS): Volume 1 - Main Structure and Greater Capital City Statistical Areas, July 2011 (cat. no. 1270. 0. 55. 001). The SA2 level of geography has been chosen due to its closeness to gazetted localities, size, comparability with other data and stability between Censuses. <back
        20 i.e. net additions to the stock. <back
        21 See Census Dictionary, 2011 (cat. no. 2901.0). <back