The house price data the RBA uses: Christopher Joye
After each monthly board meeting, the RBA publishes its official "chart pack", which is a detailed 30-page presentation on the Australian economy that it uses to brief members.
The RBA's chart pack includes one chart on Australian house prices, covering the individual capital cities, a national weighted average of the capital cities, and a rest of state index.
For many years the RBA used to only use the ABS house price data in this chart. Some time ago the RBA switched to RP Data-Rismark. RP Data-Rismark's new daily house price index is the only house price data used by the RBA in the chart pack. Specifically, the RBA takes the daily index number for the end of each month, and then seasonally adjusts the data over time. (The RBA was also consulted as part of the daily index development process.)
The chart below was published by the RBA yesterday. It illustrates RP Data-Rismark's daily index data through to the end of May (i.e., it does not include the latest June data). Further to my post here on different house price measures, I would note that the RBA's team of 100-plus economists can use whatever house price data that they deem provides the best possible insights into the market.
In every quarterly Statement on Monetary Policy the RBA chooses to report three different indices – from RP Data-Rismark, APM and the ABS – although the charts in the SMP, and the RBA's official conclusions in the text, all normally reference the RP Data-Rismark findings.
For the avoidance of doubt, the RBA does not rely exclusively on any one index provider. The RBA inspects and analyses at least three (i.e., RP Data-Rismark, APM and the ABS). But given the significant differences in the technical methods, it has developed preferences over time.
Christopher Joye is a leading financial economist and a director of Yellow Brick Road Funds Management and Rismark. The author may have an economic interest in any of the items discussed in this article. These are the author’s personal views and do not represent the opinions of any other individual or institution. This material is not intended to provide, and should not be relied upon for, investment advice or recommendations.
