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.