Data provider makes suggestion as it launches its redesigned Home Value indices, a key measure for buyers and sellers
Data provider makes suggestion as it launches its redesigned Home Value Index, a key measure for buyers and sellers
Australians need to stop talking about the median price of property and start talking about its median value, according to data provider CoreLogic.
Head of research Tim Lawless made the claim at the launch of CoreLogic's Home Value Index, which is used alongside government statistics to estimate average house prices and assist valuations.
Lawless argues that median value is a better measure of property prices as value applies to all property, whereas median price only measures the property that actually has been sold which, in a given year, only amounts to 5% of all property.
Whilst many measures look only at prices of properties actually sold, CoreLogic claims their approach provides a better long-term indicator of capital gains for real estate agents and mortgage brokers.
CoreLogic previously published a ‘median dwelling price’ for Australia’s capital cities but from the 1st September will publish a median dwelling value figures at a national, state and local levels.
How will this affect property prices?
Asked whether median property values would be different to median property prices, Lawless suggested that they would, although it is not clear whether they would be higher or lower.
In terms of results, CoreLogic's new indices are very similar to old models, with slightly smaller value changes month to month, potentially reducing the number of alarmist media articles on Sydney and Melbourne prices which dominated much of 2016.
For example, the old series found property values across the combined capitals rise 2.2% in the three months to July, whereas the new series found only a 1.3% increase. On an annual basis, the difference narrowed to just 0.4%.
Responding to RBA criticism
CoreLogic needed to redesign their indices after heavy criticism in 2016.
In August, the RBA stopped using CoreLogic data amid concern that it overestimated property price growth. There were other concerns about the influence of off-the-plan property on results, given the gap between sales and settlements.
CoreLogic has attempted to counter these concerns by excluding some types of off-the-plan properties from their sampling and making sure that legitimate sales don’t get accidentally excluded.
CoreLogic has also redesigned a number of their other indices, including those covering rentals.
Australians need to stop talking about the median price of property and start talking about its median value, according to data provider CoreLogic.
Head of research Tim Lawless made the claim at the launch of CoreLogic's Home Value Index, which is used alongside government statistics to estimate average house prices and assist valuations.
Lawless argues that median value is a better measure of property prices as value applies to all property, whereas median price only measures the property that actually has been sold which, in a given year, only amounts to 5% of all property.
Whilst many measures look only at prices of properties actually sold, CoreLogic claims their approach provides a better long-term indicator of capital gains for real estate agents and mortgage brokers.
CoreLogic previously published a ‘median dwelling price’ for Australia’s capital cities but from the 1st September will publish a median dwelling value figures at a national, state and local levels.
How will this affect property prices?
Asked whether median property values would be different to median property prices, Lawless suggested that they would, although it is not clear whether they would be higher or lower.
In terms of results, CoreLogic's new indices are very similar to old models, with slightly smaller value changes month to month, potentially reducing the number of alarmist media articles on Sydney and Melbourne prices which dominated much of 2016.
For example, the old series found property values across the combined capitals rise 2.2% in the three months to July, whereas the new series found only a 1.3% increase. On an annual basis, the difference narrowed to just 0.4%.
Responding to RBA criticism
CoreLogic needed to redesign their indices after heavy criticism in 2016.
In August, the RBA stopped using CoreLogic data amid concern that it overestimated property price growth. There were other concerns about the influence of off-the-plan property on results, given the gap between sales and settlements.
CoreLogic has attempted to counter these concerns by excluding some types of off-the-plan properties from their sampling and making sure that legitimate sales don’t get accidentally excluded.
CoreLogic has also redesigned a number of their other indices, including those covering rentals.
