A new price measure for the Australian residential property sector suggests that there is not as much divergence in the different capital city markets as other surveys indicate.
RP Data and Rismark International yesterday launched a new residential property index using a methodology which involves taking into account such attributes as number of bedrooms and bathrooms, amenities such as swimming pools, proximity to shops and the existence of views when measuring price movements. (The statistical term for this, which the promoters repeatedly use in their literature, is hedonics).
But a war of words has broken out between the companies that compile house price data over claims by RP Data and Rismark that their new indexes would set the standard for home buyers and investors in the Australian market.
The three common approaches to measuring house price movements are median price change, repeat sales and hedonics. Australian Property Monitors uses an adjusted median measure and Residex uses repeat sales. RP Data-Rismark plans to use all three approaches but prefers hedonics.
Earlier this month the Reserve Bank of Australia published a summary of house prices indexes that included surveys by APM, the Real Estate Institute of Australia and Residex. And Sydney home owners will be comforted to learn that at least one authority thinks there has been price growth in their market.
According to the RP Data-Rismark index, prices in the Sydney market increased by 2.5% in calendar year 2006, compared to one per cent according to both the APM and Residex surveys (no REIA figure was supplied).
RP Data-Rismark put the growth of the Perth market at 27.9%, compared to APM’s figure of 31%, Residex at 27% and the REIA at 37%.
The RP Data-Rismark index shows the Melbourne market growing at 4.9%in 2006. This is close to the other surveys. APM says Melbourne was up 3%, Residex says it was up 4% and REIA says it was up 5%.
RP Data-Rismark put the growth of the Brisbane market at 2%, compared to APM’s figure of 5% and Residex at 7% (no REIA figure was given).
The RP Data-Rismark index shows growth in the Adelaide market of 4.6%. APM has Adelaide up 8%, Residex reports Adelaide growing at 7% and REIA 4%.
In the only example where RP Data-Rismark was the outlier on the high side it put growth in the Darwin market in 2006 at 26%. APM says Darwin grew 17%, Residex reports the city growing at 21%and REIA says 13%.