The Reserve Bank released today a discussion paper on the development of stratified housing price measures using the Real Estate Institute of New Zealand's (REINZ) housing market data.
Reserve Bank Assistant Governor Dr John McDermott said: "By using detailed sale price information collected by REINZ, the Bank has developed a housing price measure that provides a timely and regular reading of housing price movements."
Dr McDermott said the current monthly REINZ median housing price is timely, but changes in the mix of properties sold each month can make it difficult to identify residential property price trends. A changing proportion of more (or less) expensive housing being actually sold in one month can move the median sale price even if the market prices for all properties have not changed.
The REINZ housing price index is put together using a technique known as stratification; basically it is an average of sale prices for common groups.
"Obtaining timely signals on housing prices are important for analysis of the New Zealand economy. Given their close historical linkage with household consumption, changes in housing prices can provide a useful gauge of household demand conditions. This more timely measure of housing price movements will allow the Bank to identify housing market trends more quickly," Dr McDermott concluded.
The REINZ Monthly Housing Price Index is a new development and is based on detailed suburb-level data. Future improvements, including updating comparison periods, investigating complementary data sources, and the introduction of new regional areas will be introduced periodically.
More information on the new index and how stratification works can be found in the discussion paper Developing stratified housing price measures for New Zealand (PDF 455KB).
REINZ will start publishing the new monthly housing price index on 14 August.
Media contact:
Anthea Black
External Communications Adviser
04 471
3767, 021 2225225
How stratification works
The REINZ Monthly Housing Price Index is based on a value of 1000 in January 1992, the first month for which electronic information is available. Changes in the index represent movements in housing prices, where the mix of sales between the groups is held constant and are more likely to reflect genuine property price movements. Indexes for each of the ten strata used to calculate the REINZ Monthly Housing Price Index will also be published.
Using the same methodology, regional REINZ Monthly Housing Price Indexes have been developed for Auckland, Wellington, the rest of North Island, Christchurch and the rest of the South Island. A REINZ Monthly Residential Section Price Index will also be published.