CoreLogic Launches New Generation Hedonic Home Value Index
Australia’s leading property data and analytics provider, CoreLogic, has launched its new-generation Hedonic Home Value Index, using updated methodologies and processes to provide insights into housing market conditions across the regions of Australia.
The upgraded 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, bathrooms and car spaces, with recent local sales to accurately estimate the value of every dwelling nationally on a daily basis. The home value index is designed to measure pure returns and exclude value add from capital works (such as renovations and new construction). 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,” says CoreLogic head of research Tim Lawless.
“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,” he said.
The updated methodology is the latest in a series of changes that has seen the CoreLogic Hedonic Home Value Index evolve over the past 11 years, since its original publication in 2006. It brings CoreLogic’s methodology in-line 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.
CoreLogic’s new hedonic index model has been comprehensively audited both internally and externally, the results of which will be available from the CoreLogic web site along with a methodological white paper and FAQ's.
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 valuing 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.
Download the new-generation CoreLogic Hedonic Home Value Index from 1 September.
Sign up to our live webinar hosted by Director of Research, Tim Lawless on Monday 4 September and hear about our new Hedonic Home Value Index. Register your seat here.