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6416.0.55.002 - Information Paper: Forthcoming changes to House Price Indexes: Eight Capital Cities, 2013  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 24/09/2013  First Issue
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CHAPTER 4 TOTAL VALUE OF THE DWELLING STOCK


INTRODUCTION

4.1 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. These estimates are currently based on figures compiled by the Reserve Bank of Australia (RBA).

4.2 The ABS will, utilising the additional data series outlined in this information paper, produce the value of the dwelling stock for the 2012-13 Annual National Accounts and quarterly accounts from the September quarter 2013. The total value of the dwelling stock series will be published as part of Residential Property Price Indexes: Eight Capital Cities (cat. no. 6416.0) from the December quarter 2013.


METHOD FOR VALUING THE DWELLING STOCK

4.3 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

4.4 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

4.5 Information on the price of dwellings is collected by the ABS from VGs.

4.6 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.

4.7 Price information from dwellings sold is used to infer the price of all the dwellings not sold during the period.

4.8 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 1) ) and dwelling characteristics (represented by dwelling type). 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 for all strata, and by consequence, the entire dwelling stock.


The number of dwellings

4.9 The Census of Population and Housing, conducted every five years, 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) and a modelled value of demolitions. The net additions estimate is then applied to the Census count data.

4.10 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 residential 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.

4.11 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.

4.12 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).

4.13 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

4.14 Not all residential dwellings in Australia are owned by households. Some (for example public housing) are owned by government, or by corporations (for example housing owned by mining companies). Table 2 shows the percentage of dwellings, by type, owned by the household sector.

Table 2, 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.


4.15 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 from the 2011 Census of Population and Housing is used as a proxy for ownership. This remains unchanged between Census periods.


Producing the total value of dwelling stock

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

4.17 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.

4.18 However, the calculation of mean prices in the most recent two quarters using 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 VGs office and provided to the ABS.

4.19 Based on historical trends, the ABS estimates that it is not until the second quarter after the reference quarter that the majority of records from the VGs are received. It is known that the time lag between exchange and settlement is not evenly distributed across property prices, longer lags tend to be associated with more expensive properties. Because of this, using a mean value during the latest two quarters would bias the results.

4.20 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 two quarters. This results in the TVDS estimates being Preliminary in these periods and being Final in the third most recent quarter.


OUTPUTS FOR PUBLICATION

4.21 The ABS will be publishing the following data items quarterly (with a time series beginning in the September quarter 2011) from the December quarter 2013:
  • 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).

4.22 Further breakdowns of the data will not be available.


ANALYSIS: JUNE QUARTER 2013

4.23 The estimated total value of residential dwellings in Australia in the June quarter 2013 was $4,722 billion (up from $4,598 billion in the March quarter 2013). Of this, $4,472 billion was owned by households.

4.24 Over the same period, the number of residential dwellings in Australia rose from 9,193,300 to 9,230,400 (an increase of 0.4%, compared to a rise of 2.7% in the value).

Value and number of residential dwellings, Change from previous quarter
Graph: Value and number of residential dwellings, Change from previous quarter


4.25 The mean price of dwellings remains the highest in NSW at $583,400 followed by WA ($582,700) and the ACT ($563,800).

MEAN DWELLING PRICE, States and Territories: June 2013
Graph: MEAN DWELLING PRICE, States and Territories: June 2013


4.26 Further data can be found in Appendix 2: Total value of the dwelling stock data.



1 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

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