Reserve Bank homes in on housing data
29 July 2004
The battle for more accurate data on
residential property values has led the Reserve Bank of
Australia to the doorsteps of the country's biggest agents.
The Reserve Bank, the Australian Treasury
and the Australian Bureau of Statistics have banded together and
recently met with the biggest residential agents in the country,
including Ray White and L J Hooker, in search of ways to improve
the quality of house price data.
The RBA has been on a mission to improve
quality of the data since governor Ian Macfarlane described
house price data in general as "hopeless" and "the weakest link"
last month.
Ray White real estate group deputy chairman
Sam White said he had discussions with the Reserve Bank in June
to discuss ways of addressing the issue.
"We've had one session with them and we've
given them all our sales data in terms of prices and suburbs,"
he said.
"We'd love to make sure the information
that was happening on the ground gets to the guys that are
making the decisions."
Mr White said that late last year he had
been concerned that, because of a lag in reporting times, the
RBA didn't have the complete picture of the effect the two most
recent interest rate rises had had on the market.
"When they were talking about that third
interest rate rise before Christmas, I thought 'Oh my God I hope
they don't do that.
"If only they could see what we were seeing
on the ground."
The RBA, in a report on the subject
released earlier this month, said the biggest problem facing the
reliability of house price data lay in the timeliness of
reporting, due to the decentralised nature of the market. The
report said that over longer periods the different house price
data sets showed a "reasonably similar story" but the
differences became more apparent when the market was at a
turning point.
Some of the housing-price data is based on
the date of the sale contract, and others use settlement dates -
which can lag by up to five months.
The Real Estate Institute of Australia,
Residex and ABS all use sales data based on settlement dates,
while Australian Property Monitors uses data based on contract
exchange dates.
The ABS's director of prices research and
development, Keith Woolford, said ABS was now considering, among
other things, a change to using contract dates for the basis of
its house price index.
"What we would recognise is that the demand
now for an exchange-based series probably outweighs the demand
for a settlement-based approach, and so we'd like to change it
if we can," Mr Woolford said.
"We would also be considering as one of the
avenues in deriving the index that we can use median house
prices or use lower strata - nothing's off the table at this
stage."
Mr Woolford said the ABS was likely to
approach the real-estate bodies of each state and territory,
rather than individual agents, for sales data.
He said it was important for house price
data providers to remain in touch with the needs of users, and
the ABS would continue to liaise with the big agents about the
general state of the market.
"Part of that is informing ourselves about
what the broader community feels about the series of statistics,
and particularly by approaching those who are closest to the
market," Mr Woolford said.
L J Hooker director of international
business development, Michael Davoren, said his agency had
recently been approached by the Reserve Bank.
"They've asked us for data closer to
contract date rather than settlement date and we will be happy
to provide that for them," he said.
"Obviously, if the agents can provide that
to them along with the institutes and the industry as a whole
then I think that's a good thing."
Mr Davoren said L J Hooker was developing a
system that would enable the company to report property-value
information to outside users on a monthly basis.
"It would be ideal if people could read the
real estate market like they can read the stock market," he
said. "You can't do that, but they want to get as close as they
possibly can."
Reproduced from The Australian newspaper, 29 July 2004.
