K REINZ House Price Index


In April 2017 REINZ is proud to release the new enhanced house price index (HPI) developed in conjunction with the Reserve Bank of New Zealand. A house price index is an analytic tool used to measure house price trends, it is expressed as a scale and can be broken down by geography or key attributes, i.e. apartments in Auckland, three bedroom houses in Invercargill.

Why is an HPI necessary?

Currently, data on median and average house prices are open to being skewed by market composition changes. This means observed changes in these values could be almost entirely due to the changed nature in the underlying sample (e.g. an unusually large representation of high-end housing sales) rather than changes in the true market value. The REINZ HPI takes many aspects of market composition into account resulting in a more accurate observation of market value.

A complete picture

The REINZ HPI measures total housing market activity, it wraps up a series of metrics by looking at the sale price as it relates to a value influenced by housing attributes such as land area, floor area, number of bedrooms etc. to create a single, more accurate measure of housing activity and trends over time.

What does it look like?

One of the advantages of the new REINZ HPI is the ability to look at market trends at a more granular level than ever before. This graph shows the type of graph a salesperson could pull up to show housing activity in council wards. Whilst we know that the median house price in the Orakei Ward will be greater than that in the Manukau Ward, we can see that the percentage change in house value in the Manukau Ward has exceeded that of Orakei, particularly in the past few years.

Frequently Asked Questions

How does the REINZ HPI compare to other HPI's that are available?

The key difference between REINZ data and other housing data on the market is that REINZ has access to sales data from the time the price is locked in (unconditional date) rather than when the house changes hands (settlement date) which often is weeks or months later. Therefore, the REINZ HPI is the best measure of recent housing market activity.

What is the difference between an index and a median approach?

The median price approach is based on all raw data submitted, which makes it susceptible to market composition changes. The REINZ HPI approach takes many aspects of market composition into account resulting in less variable observed values over time.

Where does the REINZ data come from and why is it different from other data providers?

REINZ data is based on sales as they occur which is provided by our 14,000 + members nationwide. Other housing market data sources report on sales once they have become settled.

How is the new index calculated?

The REINZ HPI measures total housing market activity, it wraps up a series of metrics by looking at the sale price as it relates to a value influenced by housing attributes such as land area, floor area, number of bedrooms etc. to create a single, more accurate measure of housing activity and trends over time.

Why did REINZ update their HPI methodology?

Our original House Price Index, developed nearly eight years ago, focussed on the Stratified Median Approach. This was based on data available at the time, and proved to be a good tool, but over the years we recognised this model needed to be reviewed. We’re always looking for ways to advance our members’ and the publics’ overview of the market and the Sale Price to Appraisal Ratio (SPAR) based HPI, after a comprehensive investigation by RBNZ was found to be the best way to do that.

What is the Sales Price to Appraisal Ratio?

The Sales Price to Appraisal Ratio, or SPAR method, is the favoured method for developing house price indexes by many international government agencies.

How does the enhanced REINZ HPI give us greater insight into the New Zealand housing market?

The new REINZ HPI provides a deeper dive into market activity and allows for a greater level of disaggregation. Indices can be disaggregated to a lower level than before. Disaggregation means you can focus on a smaller data set, allowing us to compare building typology (i.e. apartment, house, number of bedrooms) and suburbs, wards, regions, cities.

How is the Reserve Bank involved?

Last year, REINZ partnered with RBNZ to conduct experimental analysis on HPIs to ensure the REINZ HPI would be the best performing housing price index in New Zealand. Former Reserve Bank Chairman Dr. Arthur Grimes was heavily involved with support from Bernard Hodgetts and members of the macro financial team at the Reserve Bank. RBNZ conducted an analysis of the four most recognised international HPI methodologies: Sale Price to Appraisal Ratio (SPAR, Standard Hedonic, Repeat Sales and our previous method – the Stratified Median).

Who can use the index?

Everyone will have access to the monthly REINZ HPI reports via the press release material on the REINZ website. REINZ members will have enhanced access to the tools and reports generated by the HPI. Banks and other high level institutions will also be given the opportunity to access the site.

REINZ HPI: An Introduction

Wednesday April 12, 2017

RBNZ Analytical Notes

Tuesday March 14, 2017

HPI Member Briefing

Wednesday April 12, 2017