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6464.0 - House Price Indexes: Concepts, Sources and Methods, Australia, 2009  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 14/12/2009   
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CHAPTER 13 SYSTEM OF PRICE STATISTICS


INTRODUCTION

13.1 Having determined that a price index is required for a particular application, it is important for price index users to carefully consider the range of available indexes and select the one that best meets the specific requirement. The ABS can provide statistical and technical guidance but it does not provide advice on indexation practices and it cannot advise users of which index they should use for particular indexation purposes.


PRINCIPAL PRICE INDEXES

13.2 The HPI is one of a range of price indexes published by the ABS. Other price indexes available include:

  • the consumer price index (CPI);
  • producer price indexes (PPI);
  • international trade price indexes (ITPI); and
  • labour price indexes (LPI).


OTHER HOUSE PRICE INDEXES

13.3 There are a number of other price indexes and other data related to housing that are produced by the ABS. A selection of these data are included in House Price Indexes: Eight Capital Cities (cat. no. 6416.0), published in Table 5. Each of these are described below.


Project homes index

13.4 The index for project homes is compiled for use in calculating the house purchase expenditure class of the CPI where price information is obtained each month from a sample of project home builders in each capital city. For the purpose of the CPI, a project home is defined as a dwelling for construction on a client's block of land, and price changes therefore relate only to the price of the dwelling (i.e. excluding land).

13.5 A price index series is produced for each capital city and for the weighted average of the eight capitals. The city weights are derived as the value of additions to the stock of houses in the city, calculated using average price data derived from the Building Activity survey and quantity data from house counts recorded in consecutive Censuses.

13.6 As extensions and renovations are conceptually part of the CPI expenditure class, their value is included in the calculation of the weights. No prices specifically relating to these activities are collected as their prices are assumed to move similarly to those of new houses.

13.7 Although the capital city price indexes for project homes are compiled for use in calculating the House purchase expenditure class of the CPI, price movements exhibited in the published CPI series are not comparable to those published with the established house price index because the CPI for house purchase is a broader aggregate which also covers fixed appliances and an adjustment for government subsidies directly related to house purchase.

13.8 Appendix 1 (eight capital city weighting pattern) shows each capital city's percentage contribution to the eight capital cities aggregate for the project homes index and the established house price index.


Materials used in house building

13.9 The index for materials used in house building is published for the weighted average of the six state capital cities in Producer Price Indexes, Australia (cat. no. 6427.0), re-referenced to 2003- 04 = 100.0. For more information on this index refer to Producer and International Trade Price Indexes: Concepts, Sources and Methods, 2006 (cat. no. 6429.0).


Construction industry total hourly rates of pay

13.10 The index for the construction industry total hourly rates of pay excluding bonuses, private and public, is published in Labour Price Indexes, Australia (cat. no. 6345.0), referenced to 2003-04 = 100.0. For more information on this index refer to Labour Price Index: Concepts, Sources and Methods, 2004 (cat. no. 6351.0.55.001).


Private housing investment

13.11 The private housing investment series is the annually-reweighted chain Laspeyres price index for private capital expenditure on new dwellings, as used (but not separately published) in Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0), re-referenced to 2003-04 = 100.0. For more information on this index refer to Australian National Accounts: Concepts, Sources and Methods, 2000 (cat. no. 5216.0).


OTHER HOUSE PRICE DATA

13.12 As well as the price indexes based on stratified weights for each city, the ABS publishes the median price of all established house transfers, and the number of established house transfers for each quarter since March quarter 2002. Both of these series are based on VGs house sales data and, are only available for those quarters for which the benchmark HPI is available. As the ABS receives more data, these figures are revised as necessary.

13.13 The median prices are calculated using all available VGs house sales data for each city each quarter, with no clustering (stratification) or weighting applied. These 'raw' medians will not correspond to the published HPI and will not show price movements that are consistent with the HPI.

13.14 The number of transfers of established houses recorded each quarter by the VG in each capital city are presented in the HPI publication to provide an indication of sales activity for the city each quarter.


DIRECT MEASURES OF PRICE CHANGE

13.15 The principal price indexes listed above in 13.2, and the other house price indexes (except the private housing investment series) are direct measures of price change, in that they are compiled through collecting and directly using price data. The CPI, ITPIs, PPIs, and LPIs are detailed in respective Concepts, Sources and Methods publications (see Chapter 12).


DERIVED MEASURES OF PRICE CHANGE

National accounts chain price indexes

13.16 Chain price indexes published in the national accounts are annually reweighted chain Laspeyres price indexes. An annually chained price index weights price changes together using the previous year's weights for each quarter of the current year. The chain price indexes are calculated from the deflators used to derive the volume estimates, weighted together in the same way and at the same level of detail as the chain volume estimates. In those cases where quantity revaluation is used to derive volume estimates, the implicit price deflator at a detailed level of disaggregation is used in constructing the chain price indexes to minimise the impact of any compositional change.

13.17 Chain price indexes are published in Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0).


Implicit price deflators

13.18 In addition to the chain price indexes published for the major national accounts aggregates, the ABS publishes a range of implicit price deflators (IPDs). IPDs are obtained by dividing a current-price value by the chain volume measure expressed in dollar terms. Thus IPDs are derived measures (hence the term implicit) and are not normally the direct measures of price change by which current price estimates are converted to volume measures. They reflect both changes in the prices between the two periods and changes in the composition of the aggregate between those periods.

13.19 IPDs are available for GDP, exports of goods and services, imports of goods and services, and of domestic final demand and its four major components. They are published quarterly as part of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0), and Balance of Payments and International Investment Position, Australia (cat. no. 5302.0).


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