Introduction to the RP Data-Rismark Indices

RP Data and Rismark International ("Rismark")* have combined to

launch a highly accurate and timely suite of world-class property price indices that will transform the way Australians measure and understand changes in the value of residential real estate over time.

These indices will be known as the "RP Data-Rismark Indices". A number of the indices are the first of their kind to be released for commercial use in the Australian and global markets.

The RP Data-Rismark Indices will be available on a monthly and quarterly basis for every geographic demarcation including suburb, postcode, capital city and state in Australia. They draw on the most comprehensive property database in Australia and are computed using some of the most advanced global index construction techniques.

Special customised versions of the RP Data-Rismark Indices are also available. These are made up of property sales data relating to the latest possible month, thereby avoiding the 6 to 8 week reporting lags that have previously plagued other published indices.

The RP Data-Rismark Indices have been independently audited by the Securities Industry Research Centre of Asia-Pacific ("SIRCA"), which is a not-for-profit financial services research organisation involving twenty-six collaborating universities across Australia and New Zealand. In its review of the RP Data-Rismark indices, SIRCA concluded:

"...the results of our analysis indicate that the stratified median price, hedonic and repeat-sales property price indices developed by RP Data-Rismark represent a material improvement over the simple median price series that have historically predominated in the Australian market. In this regard, it is pleasing to see private sector organisations that are committed to undertaking sophisticated residential real estate research and advancing our otherwise crude understanding of this complex market."

In addition to the SIRCA audit, Moody’s Economy.com, which is a leading global economics research organisation, has also undertaken an extensive review of the methodology, data and procedures used by RP Data-Rismark to construct house price indices.

The Moody’s report’s summary findings, which were authored by two economics PhDs, are as follows:

“The suite of indexes calculated by RP Data-Rismark represents a significant improvement in the quality of housing price statistics available in Australia.”

“We look forward to seeing these indexes as they are released and believe that they will quickly take a central place in the macroeconomic data framework of Australia.”

“These data are more sophisticated, detailed and have better coverage than that used in the construction of existing housing price indexes in Australia. The high quality of the data makes it possible to implement not only median price and repeat sales indexes but also hedonic indexes, which up to this point had proved difficult to construct in Australia due to data constraints”

Other comments from the Moody’s report include:

“Perhaps the most exciting methodological development is the introduction of hedonic price indexes to the Australian market. This approach to price index construction controls for compositional change by obtaining information on housing characteristics (e.g. bedrooms, bathrooms, land size, suburb, etc.)...”

“Through their Strategic Alliance with RP Data, Rismark has access to arguably one of the best databases available anywhere for the construction of hedonic indexes.”

“At present no hedonic price indexes are regularly produced for Australia, a void which RP Data-Rismark aims to fill. The adoption of the hedonic approach means that a better balance can be achieved between sample coverage and adequate control for compositional change. Hedonic methods potentially offer an improvement over the house price measures currently available in Australia.”

“..the way in which the real-time data is collected, via real estate agents (over and above the traditional valuer-general and land titles sources), has the potential to solve many of the timeliness problems that has plagued measurement in this area.”

You can purchase the RP Data-Rismark Indices here, or contact one of our consultants to find out more here.