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CHAPTER 3 FUTURE SUITE OF RESIDENTIAL PROPERTY PRICE INDEXES
3.4 The new indexes will be published quarterly, with a time series starting in the September quarter 2003.
Residential Property Price Index (RPPI)
3.5 The headline price measure in Residential Property Price Indexes: Eight Capital Cities (cat. no. 6416.0) will be the RPPI. This index is an aggregation of the HPI and the ADPI and measures the price change in all residential dwellings within the eight Greater Capital City Statistical Areas (GCCSAs)(footnote 2) . This measure will be published on an index reference period of 2011-12=100. The index will be published quarterly, with a time series starting in the September quarter 2003.
Established House Price Index (HPI)
3.6 The HPI will continue to measure the price change in all established detached houses. This naming convention has been used from 1986, and will remain in the new publication. The HPI will be compiled for the eight GCCSAs. This measure will be published on an index reference period of 2011-12=100. The scope of the HPI will continue to be established detached houses on their own block of land.
Attached Dwellings Price Index (ADPI)
3.7 The ADPI measures the price change of attached dwellings within the eight GCCSAs. This measure will be published on an index reference period of 2011-12=100. Dwellings in scope of the index are:
DATA RESULTS: JUNE QUARTER 2013
3.8 The preliminary RPPI for the weighted average of the eight capital cities rose 5.1% through the year to the June quarter 2013. Annually, the RPPI rose in all cities. The largest rise was in Perth (+10.2%). Rises in the other cities were Darwin (+6.7%), Sydney (+6.1%), Brisbane (+3.6%), Melbourne (+3.5%), Canberra (+2.1%), Adelaide (+1.2%) and Hobart (+1.0%).
3.9 The preliminary ADPI for the weighted average of the eight capital cities rose 5.1% through the year to the June quarter 2013. Annually, the ADPI rose in all cities except Hobart. The rises were largest in Perth (+6.8%) and Sydney (+6.2%). Rises in the other cities were Melbourne (+4.2%), Darwin (+3.7%), Adelaide (+3.4%), Brisbane, (+3.1%) and Canberra (+0.1%). Hobart fell 0.6%.
3.10 Over the same period, the preliminary HPI for the weighted average of eight capital cities also rose 5.1%. The HPI rose in all cities. The rises in Perth (+11.0%), Darwin (+7.7%), Brisbane (+3.7%), Canberra (+2.6%) and Hobart (+1.2%) were larger than those in the ADPI. The rises in Sydney (+6.1%), Melbourne (+3.3%) and Adelaide (+0.6%) were smaller than those in the ADPI.
3.11 See Appendix 1 for index numbers and movements of the RPPI and the ADPI.
DATA SOURCES AND METHODS EMPLOYED TO PRODUCE THE RPPIs
3.12 For many years the ABS has employed a stratification approach to compile the HPI. The same method will be used to compile the ADPI. The RPPI is an aggregation of the HPI and the ADPI.
3.13 The stratification approach separates the total sample of residential properties into a number of sub-samples or strata(footnote 3) . Each quarter, the strata for the HPI and ADPI are re-valued by applying a price relative (i.e. the current period median price of the stratum compared to the previous period median price of the same stratum) to the value of the dwelling stock for that stratum to produce a current period stratum value. The current period values of each stratum are then summed to derive the current value of the total dwelling stock in the capital city. Index numbers are subsequently derived from the total values.
3.14 The RPPIs will be a key input into estimating the total value of the dwelling stock in the national accounts. The TVDS estimate requires quality and price change of the housing stock to be included in the total value estimates. The ABS' stratification approach to compiling RPPIs supports this objective.
3.15 The exchange date is used in all indexes to determine the quarter in which the sale occurred. In Adelaide and Darwin the exchange date is not known. In these cases, the exchange date is modelled from the known settlement date.
3.16 For further information on the methodology employed, particularly stratification, please consult House Price Indexes: Concepts, Sources and Methods (cat. no. 6464.0).
3.17 All Australian residential property sales data are collected from State and Territory VGs. The ABS supplements VGs data with mortgage lenders data to produce index series in the two most recent quarters.
The rationale for Preliminary and Final index series
3.18 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. This is because:
3.19 To address this delay, the ABS supplements VGs data with data from mortgage lenders to produce index series for the RPPI, HPI and ADPI in the two most recent quarters. These series are considered Preliminary and are subject to revision.
3.20 Index series in the third most recent quarter following the reference period are compiled from VGs data only. These index series are considered Final(footnote 4) and are not revised.
3.21 The composition of data used to compile the HPI and ADPI for the Preliminary and Final series is listed in table 1 below.
MAINTAINING THE RELEVANCE OF THE RPPIs
3.22 Every five years, following the availability of data from the Census of Population and Housing, an index review is undertaken to update the quantities of dwellings that underpin the weights of the index. It also provides an opportunity to reassess the compilation methodology of the index. The most recent index review has occurred in relation to the 2011 Census and has been undertaken for the RPPI, HPI and ADPI.
3.23 Given there have been no significant changes to the availability of data on dwelling sales, the indexes will continue to be compiled using the stratification approach.
3.24 Maintaining the method of stratification for the introduction of the new series of indexes means that suburbs will be grouped into strata based on their long term median price (the median price of the suburb between the 2006 and 2011 Census) and their 2011 Socio-Economic Index for Areas (SEIFA) score on the Index of Relative Advantage and Disadvantage ( see Census of Population and Housing: Socio-Economic Indexes for Areas (SEIFA), Australia, 2011 (cat. no. 2033.0.55.001) for more information on SEIFA). This approach balances homogeneity of suburbs within the same stratum with sufficient sales observations to construct reliable measures of price movements.
3.25 As a result of the updated variables for stratification, the number of strata in each city will change for both the HPI and the ADPI. Further information on the number of strata in each city will be available in the December quarter 2013 publication.
3.26 The weights underpinning the indexes are based on the value of dwellings (including land) in scope of the indexes. Dwelling counts from the 2011 Census of Population and Housing will be combined with the March quarter 2013 mean prices to produce new weights for the indexes.
3.27 The updated weights will be published in the December quarter 2013 issue of Residential Property Price Indexes: Eight Capital Cities (cat. no. 6416.0).
3.28 The ABS has undertaken a review of geography standards(footnote 5) and is progressively producing data under the new standard.
3.29 The new geography standard introduces changes to the capital city boundaries. From the December quarter 2013, all references to capital cities will be defined by the ASGS Greater Capital City Statistical Areas (GCCSA).
3.30 While the current geography will be updated to align with the ASGS, historical naming conventions (i.e. Sydney rather than Greater Sydney) will continue to be used.
3.31 A time series will be maintained but users should exercise caution in interpreting medians and numbers of house transfers over time as historical data will reflect capital city boundaries as previously defined. This is particularly significant for Canberra where the capital city is now defined to be the whole of the ACT.
Implementing the new weights and strata
3.32 The new series for the RPPI, HPI and ADPI with updated weights and stratification commence in the June quarter 2013.
3.33 The new price index series is joined to the existing index to form a continuous series via a process known as chain linking. At the link period (March quarter 2013 in this instance), new dwelling stock weights and stratification are introduced in parallel to the old basis and median prices are calculated using both the new and old strata. The published index number for the link quarter is produced on the old basis.
3.34 See House Price Indexes: Concepts, Sources and Methods, Australia, 2009 (cat. no. 6464.0) for further information on chain linking.
Re-referencing the indexes
3.35 The ABS changes the index reference period (a process known as re-referencing) of its suite of price indexes from time to time. This is because the index numbers lose relevance over time as an index moves significantly from the index reference period (i.e. has extremely low or high values).
3.36 Re-referencing does not change the relative movements between periods(footnote 6) . The HPI is currently published with an index reference period of 2003-2004=100.0. From the December quarter 2013, all index numbers will be published on a new index reference period of 2011-12=100.0(footnote 7) .
3.37 An updated edition of House Price Indexes: Concepts, Sources and Methods, Australia, 2009 (cat. no. 6464.0) is planned for release in the second half of 2014.
1 Experimental results of this work were first published in the Feature Article: Experimental Other Dwellings Price Index in the June quarter 2012 issue of House Price Indexes: Eight Capital Cities (cat. no. 6416.0). Presentation changes will be made to the indexes included in the June quarter 2012 article. The Experimental All Dwellings Price Index will be renamed to the Residential Property Price Index (RPPI) to reflect internationally accepted terminology. The Experimental Other Dwellings Price Index will be renamed to the Attached Dwellings Price Index (ADPI). For the purposes of the RPPIs, the Attached Dwellings index scope includes flats, units and apartments plus semi-detached, row and terrace houses. In addition, the ABS has now finalised the methodology for the indexes and has removed the qualifier "Experimental" from the index names. <back
2 For further information about GCCSAs see paragraphs 3.28-3.31. <back
3 The sub-samples or strata described in the stratification methodology have previously been referred to as 'clusters'. See paragraph 5.13. <back
4 The use of the term 'Final' is a change in terminology, previously the third most recent quarter was termed 'benchmark'. See paragraph 5.12. <back
5 For more detail please see Australian Statistical Geography Standard (ASGS) (Vol 1, cat. no. 1270.0.55.001). <back
6 Index numbers and percentage changes are always published to one decimal place, with percentage changes calculated from the rounded index numbers. A consequence of re-referencing price indexes is period-to-period percentage changes may differ slightly to those previously published. These differences do not constitute a revision of the index series and are simply the effect of rounding and the re-referencing. <back
7 The ABS will be publishing conversion factors to assist users in converting future index numbers on the new index reference period to the old index reference period. Duplication of historical data or conversion of future data can be performed using these conversion factors and following the examples provided in Chapter 12 of Consumer Price Index: Concepts, Sources and Methods, 2011 (cat. no. 6461.0). <back
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