From Chris Joye today:
In the mid 2000s the RBA was worried about the timeliness and accuracy of the quarterly “median price” indices. To address these problems I helped establish a business that designed the daily hedonic house price index CoreLogic publishes, which we built in close consultation with the RBA.
Unlike US indices that access only a sample of sales, our indices ultimately include the entire population of transactions, which are required by law to be reported to land titles offices.
In contrast to the quarterly data released by the ABS, CoreLogic’s numbers are produced daily and carefully adjusted for the types of homes that are sold in any period by statistically controlling for their land size, location and specific attributes, including the number of bedrooms, bathrooms, car spaces and so on.
This method harnesses the incoming 300,000 metro sales each year to “reprice” Australia’s entire stock of 9.7 million homes, rather than relying purely on properties that transact, which represent only 5 per cent of the stock.
This makes CoreLogic’s index, which is the most sophisticated hedonic benchmark in the world, comparable to a sharemarket index insofar as all assets get revalued, not just those that trade.
…The kerfuffle on the quality of the data arose when CoreLogic updated the price cut-offs it uses to remove extreme outliers. It had not done this for a few years, and the April index level rose by 0.8 per cent as a result of the revised cut-offs.
The hedonic index method remains exactly the same one that the RBA has championed for years by prioritising these numbers and placing less weight on stratified median price estimates which suffer from compositional biases.
This is all just hot air. Splicing one data methodology onto another methodology mid-stream is an obvious statistical blunder.
There is one very simple answer. Publish the fully revised history of the index using the new methodology.
Surely CoreLogic software could deliver such in about five seconds.
Where is it?
