RP Data launches weekly mortgage index

By Leith van Onselen

RP Data has launched two new leading indices, which look like a great addition to the toolkit of any housing analyst.

The first index, called the “RP Data Mortgage Index (RMI) provides a real time indicator for mortgage market conditions, leading the ABS Housing Finance data by at least six weeks.

RP Data states that it manages in excess of 90% of all residential valuation instructions originating from the Australian financial services sector. Accordingly, its RMI has an 82% correlation with the ABS housing finance data and an 88% correlation when the seasonally-adjusted series is used (see next chart).

In the week ended 24 February, the RMI reported a -1.9% monthly fall in mortgage activity at the national level, with all major markets experiencing declines. The seasonally-adjusted index has also fallen away since the beginning of this year  (see below).

If the index proves correct, it appears we have several more months of declining mortgage issuance rates ahead in the ABS Housing Finance series.

RP Data has also launched a new Property Index (PI), which provides a leading indicator for new residential property listings across Australia.

The PI is based on real estate agent activity events taking place across RP Data’s online platforms. And with RP Data’s online services capturing some 70-80% of real estate agents across the country, the index is said to have a 75% correlation with new listings about to enter the market (see next chart).

In the week ended 24 February, the PI showed that the number of new listings were expected to rise by a seasonally-adjusted 2.4% at the national level, with increases expected across all capitals (see below).

However, while listings look to be on the rise, the total number of homes listed for sale (109,330) is 16.6% lower than the same time last year, according to RP Data (see next chart).

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7 Responses to “ “RP Data launches weekly mortgage index”

  1. Lef-tee says:

    I’m growing a bit more skeptical about what I thought might have been a modest recovery based on a new low interest rate enviroment – the main effect seems to have been to renewed confidence by speculators to start buying houses from one another again, rather than solid demand for housing as a place to live.

    • raveswei says:

      speculators will push prices up until gov does something to prevent speculations (tax and credit regulation) or until the whole scheme collapses. Problem with the second way is more than obvious – banks and economy will collapse as a consequence

  2. Roberto says:

    Leith, thanks for that – very useful as usual.
    Is the New Listings data an RP Data product?

  3. Labrynth says:

    “RP Data states that it manages in excess of 90% of all residential valuation instructions originating from the Australian financial services sector.”

    What does this mean?

    • +1. As usual the RP methodology is clear as mud. It sounds like the index might be based on the number of mortgages logged (not value). Presumably the finance sector sends through valuations requests to RP Data (e.g. check this house is worth $400k so we can lend $350k against it), so this index is an aggregation of these requests? That’s my best guess.

    • cmarshall says:

      Yes. Frankly, it doesn’t mean much.
      If we are to believe their own numbers, 90%+ of bank instructions use RP data as the communicative tool.
      If you were to use these figures to help make a financial decision, you might be making an error. When it comes to property, I’m not sure how an inaccurate figure, six weeks in advance of a more accurate figure, is any advantage.