PRICES AND PRICE COLLECTION
7.1 This section describes data collection processes for the indexes and TVDS. It also describes how prices are sampled from the stock of dwellings and provides information on how these prices are used in index compilation. It also contains information on the source of the data and related measurement issues.
7.2 Conceptually, the RPPI measures the price change of the stock of dwellings over time in the eight capital cities in Australia. As such, the population of interest is all dwellings in the eight capital cities. It is not practical or cost-effective to attempt to collect data on the entire population of interest every quarter (or year). Instead dwellings from the population are sampled. Many different statistical methods exist to sample data. Whichever method is used, the aim of sampling is to collect data on units that are representative of the entire population (or sub-set of the population).
7.3 It would be possible to construct the HPI and ADPI by sampling dwellings in the population and obtaining a market price for each dwelling every quarter, however the cost associated with such an exercise would be prohibitive. Instead, the ABS utilises administrative data on sales of residential property as the sample of market prices for residential property from the population. In this case, the change in the price of residential property sold in a period is considered representative of the change in price of all residential property in the same period.
7.4 Whilst complete coverage of all transactions is expected, there is a known lag between the sale date and the data being received (this is discussed later in this section) by the ABS. The dataset used by the ABS to compile the RPPI and related statistics includes VGs and real estate agents data to ensure as complete coverage as possible.
USE OF MEDIAN PRICES
7.5 Price movements at the stratum level are determined by comparing the median price of the stratum in one period to the median price of the stratum in another period. The median price of all residential property sold in a stratum is used to represent the stratum price. Calculation in Practice contains further detail on how the strata are determined.
7.6 Median prices are the preferred measure of a representative price as they are not affected by extreme or outlier values as is the mean. The price relative calculated from two medians is considered to be the most reliable measure of price change for residential property.
7.7 The weighted movements of the median prices of each stratum contribute to the capital city index movement, as described in Weights and their Sources.
7.8 The Handbook on Residential Property Price Indices (RPPIs) outlines several different prices (and their sources) that can be used to construct property price indexes. For example, asking prices, valuations and transaction prices.
7.9 Consistent with the System of National Accounts 2008 requirement for market prices, the ABS has chosen to use transaction prices to calculate the indexes. The transaction price is the price agreed upon by the vendor and purchaser. As such, it does not take account of or include any taxes or subsidies.
7.10 A typical dataset will contain records of transactions which are not representative of the market. These could be categorised as transactions between related parties, such as family members or in divorce settlements.
7.11 Where these transactions can be identified, they are removed from the datasets and therefore do not contribute to stratum median calculations.
7.12 In the Australian context, there are four significant dates related to the purchase of a residential property. A general timeline of the stages of the sale of residential property is as follows:
- verbal agreement to purchase at a negotiated price;
- approval of mortgage financing;
- exchange of contract; and
- settlement of the property sale.
For the purposes of measuring price changes for residential property, it is desirable to select the earliest date at which the final purchase price is set. The point in time at which the price is first determined is when verbal agreement is reached. However, there is no effective way to capture this information and it is possible for the originally agreed sale price to be renegotiated before the exchange of contracts. A property price index constructed on a settlement date basis incorporates a lag in identifying the turning points in housing prices as the settlement date can occur several weeks or months after the exchange of contract. It is for these reasons that, in compiling the indexes, the date of exchange of contract is the preferred date
For most states, the residential property sales dataset includes information on the date of exchange of contracts. However, the contract exchange date is not captured in either South Australia or the Northern Territory. For Adelaide and Darwin, the ABS estimates the contract exchange date from the settlement date. The estimates are modelled on the relationship between the settlement and exchange dates of price segments in Brisbane, where similar administrative arrangements exist. The assumptions underpinning these models are reviewed from time to time to ensure their continuing effectiveness and relevance.
All Australian residential property sales data are supplied to the ABS by CoreLogic. This dataset (footnote 12
is a combination of residential property sales data obtained from State and Territory Land Titles Office or Valuers General Offices in each capital city (collectively referred to as VGs) and real estate agents data provided to CoreLogic. The ABS applies classifications to this dataset to create the residential property sales dataset from which the price indexes and related statistics are produced.
DATA AVAILABILITY AND TIMING
|7.16 The residential property sales dataset is obtained from CoreLogic 1 month and 9 days after the end of the quarter. This timing allows for the greatest number of VGs records to be supplied and to provide enough time to compile the indexes and related statistics.|
13 See Appendix CoreLogic Disclaimer and copyright notices from the Residential Property Price Indexes: Eight Capital Cities, Dec 2018 (cat. no. 6416.0). <back