Sponsored: CoreLogic launches next gen hedonic home value index

Comprising updated methodologies, the indices delivers more multi-level insights by combining a property’s key attributes, such as land area, number of bedrooms, bathrooms and car spaces, with recent local sales to accurately estimate the value of every dwelling nationally on a daily basis. It measures pure returns and excludes value-add data from capital works such as renovations and new construction.

The index series is produced across a variety of geographical regions within Australia. These regions have been defined using the Australian Statistical Geography Standard (ASGS) 2016. Each index can be subcategorised according to any region and property attribute combination and additional sub-indices can be added. A broad suite of indices are produced for listings, sales and rents using different methodologies such as simple median/mean, repeat observation and hedonic imputation.

Annually, CoreLogic invests approximately $20 million in acquiring, cleaning and matching disparate data sources in order to compile the most comprehensive database on property sales and attributes in Australia. The regression method; a statistical technique which, according to CoreLogic head of research Tim Lawless, “allows us to determine a property’s value based on its component parts, and not just on local market movements”, leverages these timely and comprehensive property data sets to provide the most timely and accurate measure of value shifts across Australia’s most valuable asset class.

“The updated methodology is the latest in a series of changes that has seen the hedonic home value index evolve over the past 11 years, since its original publication in 2006.”

He said, “This approach 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 methodology is the latest in a series of changes that has seen the hedonic home value index evolve over the past 11 years, since its original publication in 2006.”

“It aligns our methodologies with current global best practices, including the technical standard legislated for use by the European Commission and endorsed as best practice by the International Monetary Fund.”

The new CoreLogic hedonic index model has been comprehensively audited both internally and externally.

Updated features include:

• An improved sampling technique to ensure legitimate transactions are included while erroneous sales are removed, and placing a higher weighting on recent sales to provide greater accuracy in estimating the value of individual properties.

• Better handling of bulk settlements as well as off-the-plan sales, such as the exclusion of sales with a settlement period of more than 12 months that can imbalance market readings.

• Rebalanced stock weighting to ensure the combined dwellings index appropriately reflects the mix of houses and medium to high-density dwellings.

• Updated geographic boundaries in line with Australian Bureau of Statistics determination of official regions (ASGS 2016), ensuring housing statistics line up with other economic and demographic measures.

• Faster processing, using scalable cloud based technology, to enable the rapid generation of new back series and bespoke index production on a daily basis.

• Longer back series, the new index commences at 1980 for most areas; a substantial improvement from the previous series which commenced from 1996.

• Improved volatility, the new hedonic home value index shows a reduction in volatility relative to the previous model, without any compromise on measurements of return.

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