CoreLogic has just launched its new-generation Hedonic Home Value Index, which uses updated methodologies and processes to provide insights into housing market conditions across the different regions of Australia.
The index, which will continue to be published on the first business day of each month, combines a property’s key attributes (such as land area, number of bedrooms and bathrooms, as well as car spaces) with recent local sales to accurately estimate the value of every dwelling nationally on a daily basis.
At its center, the Hedonic Home Value Index is designed to measure pure returns and omit value add from capital works (such as renovations and new construction). Meanwhile, estimated capital gains are based on the change in the overall value of a consistent housing portfolio over each time period.
“CoreLogic spends more than $20 million each year in acquiring, cleaning and matching disparate data sources in order to compile the most comprehensive database on property sales and attributes in Australia,” said Tim Lawless, CoreLogic’s head of research.
“Hedonic regression is a statistical technique which allows us to determine a property’s value based on its component parts, and not just on local market movements. This allows for a far more accurate measurement of capital gain or capital loss that can benefit buyers, sellers, lenders and real estate professionals alike.”
The updated features for the index include:
- An improved sampling technique that ensures legitimate transactions are included, while erroneous sales are omitted. A higher weighting is also placed on recent sales to ensure greater accuracy in valuing individual properties.
- Better handling of bulk settlements and off-the-plan sales, such as the exclusion of sales with a settlement period of more than 12 months, which can imbalance market readings.
- Rebalanced stock weighting to ensure that the combined dwellings index appropriately reflects the mix of houses and medium to high-density dwellings.
- Updated geographic boundaries in line with the ABS’ determination of official regions (ASGS 2016). This ensures that housing statistics line up with other economic and demographic measures.
- Longer back series, with the new index commencing at 1980 for most areas. This is a substantial improvement from the previous series, which commenced from 1996.
The new-generation CoreLogic Hedonic Home Value Index data will be available from 1 September 2017.
Related Stories:
A Budget Of $400,000 Won’t Take You Very Far
Quarterly Trend In Capital Gains Is Moderating
