Use of complementary administrative data sets for Australian house price indexes
Household borrowing
Household wealth
Housing
Other
Household Wealth and Wealth Distribution, Australia 2005-2006, ABS cat. no. 6554.0
House purchase and home ownership
65%
85%Policy makers, housing industry, households interested in a timely measure of house price change
House Price Indexes, Eight Capital Cities (ABS cat. no. 6416.0)
•Since 1986•Quarterly•Free-standing houses•Eight capitals•National index – weighted average•Using median prices
Australian house price indexes (HPIs)
x
xxx •Ideally based on
current and historical prices of all dwellings•Only a fraction is sold
Assumption: Median price of dwellings sold is representative of housing stock
HPI construction
Time
HPI construction
Re-price representative house over timeNo two houses are identicalQuality may change
Need to control for compositional effects
House characteristics
Price
Hedonics•Regression •Data not available
Repeat sales•Requires long time series•Quality may change•Peculiar characteristics ?
Stratification•Group dwellings
Controlling for compositional change
Stratification
•Compare houses with similar attributes – next best alternative•Suburbs base unit•Cluster suburbs according to price determining characteristics•Maximise homogeneity but require sufficient sales
Cluster- Suburb base unit
Structuralcharacteristics
Neighbourhoodcharacteristics
Locational characteristics
Current stratification
Socioeconomic index for areas (SEIFA)•High incomes•Tertiary education•Skilled occupations
•Number of bedrooms•Owner occupied•Houses
Distance to •CBD•shops•hospital
Neighbourhoodcharacteristics
Long-termmedian price
New stratification
•Simpler approach•Better at controlling forcompositional change
Cluster- Suburb base unit
•Current stratification – suburbs in same cluster in same statistical sub-division
Cluster location
•Current stratification – suburbs in same cluster in same statistical sub-division•New stratification – this constraint relaxed
Cluster location
Entire housing stock (not just houses sold)Median cluster price used to update cluster stock values
Weights
x
x
x
Dates
Verbal agreement Contract signing
Contract
Exchange of contracts Settlement
Dates
Contract
Exchange of contracts
most closely approximates the time at which the market price is determined
Valuer General Mortgage Lender
Data sources
•Exhaustive coverage•Suburb, date, price
•Slow •Timely•Do not capture exchange date
•Loan approval data•Imperfect coverage
Mortgage Lender
Benchmark series Updates
Valuer General
Time
Current quarter
Used for HPI up to 6 months prior to present quarter
Used to update HPI up to present quarter
Data sources
• Extend scope from detached houses
• Possibly extend to regional cities and rural areas
Future developments