6416.0 - Residential Property Price Indexes: Eight Capital Cities, Dec 2013 Quality Declaration 
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 11/02/2014   
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APPENDIX 1 RE-REFERENCING THE RESIDENTIAL PROPERTY PRICE INDEXES


INTRODUCTION

1 From the December quarter 2013, the ABS Residential Property Price indexes have been re-referenced and are now presented with an index reference period of 2011-12 = 100.0.

2 The Index reference period is the period for which a price index is set to 100.0.

3 Re-referencing is the process which sets a new index reference period for a price index. The ABS changes the index reference period of its suite of price indexes from time to time. This is for presentation, interpretability and accuracy reasons. Index numbers lose relevance over time as an index moves significantly from the index reference period (i.e. extremely low values). When new indexes are developed the index reference period is changed so that all indexes are presented on a consistent basis.

4 The ABS has published conversion factors in Table A1.2 'RPPI conversion factors, from index reference period 2003-04 to 2011-12'. This enables users to convert previously published time series to the new index reference period or to convert index numbers on the new index reference period to an old time series index reference period.

5 The following examples demonstrate the method used by the ABS to calculate the conversion factors to convert from the old (2003-04 = 100.0) to the new (2011-12 = 100.0) index reference period (and vice versa).


CONVERTING A PRICE INDEX SERIES TO THE CURRENT INDEX REFERENCE PERIOD

6 The conversion of index numbers from a previous index reference period to a new index reference period involves rescaling the index numbers. This is achieved by applying conversion factors to the previous period index reference period series. Conversion factors are calculated by the ratio of the index numbers on the previous index reference period (2003-04 = 100.0) to the index numbers on the new index reference period (2011-12 = 100.0). Index numbers for financial years are calculated as the simple (arithmetic) averages of the four quarterly index numbers for that financial year.

Table A1.1 RPPI, weighted average of eight capital cities, index numbers

Period
Index reference period 2003-04=100 (old)
Index reference period 2011-12=100.0 (new)

2010-11
March quarter 2011
145.5
102.7
June quarter 2011
144.4
102.0
2011-12
September quarter 2011
141.9
100.2
December quarter 2011
140.8
99.4
March quarter 2012
141.5
100.0
June quarter 2012
142.1
100.4
Financial year 2011-12
(a)141.6
(b)100.0

(a) Index number for financial year 2011-12 (index reference period 2003-04 =100.0) = (141.9+140.8+141.5+142.1)/4 =141.6
(b) Index number for financial year 2011-12 (index reference period 2011-12 =100.0) = (100.2+99.4+100.0+100.4)/4 = 100.0


7 A conversion factor is calculated as follows:
      Rounded conversion factor = 100.0/141.6 = 0.7062
      Index number for the September quarter 2011 (index reference period 2003-04 = 100.0) = 141.9
      Index number for the September quarter 2011 (index reference period 2011-12 = 100.0) = 141.9 x 0.7062 = 100.2

8 The conversion factor may be used to convert any historical Residential Property Price Indexes, weighted average of eight capital cities index numbers to the new index reference period. Different conversion factors will be required for each index series.

9 NOTE: The above example is calculated using the published index numbers that have been rounded to one decimal place. The ABS has calculated the conversion factors from unrounded index numbers, to obtain a greater degree of precision. The conversion factors used to calculate the published index series on the new reference period are available electronically in Table A1.2 'RPPI conversion factors, from index reference period 2003-04 to 2011-12'.


CONVERTING RE-REFERENCED SERIES BACK TO THE PREVIOUS INDEX REFERENCE PERIOD

10 Similarly, to convert index numbers on the new index reference period back to the old index reference period will also require rescaling of index numbers. The conversion factors to achieve this are obtained by taking the inverse of the previously described conversion factor.

11 Using the example above, a conversion factor is calculated as follows:
      Rounded conversion factor = 141.6/100.0 = 1.416
      Index number for the September quarter 2011 (index reference period 2011-12 = 100.0) = 100.2
      Index number for the September quarter 2011 (index reference period 2003-04 = 100.0) = 100.2 x 1.416 = 141.9

12 The conversion factor may be used to convert any historical Residential Property Price Indexes, weighted average of eight capital cities index number to the old index reference period. Once again, different conversion factors will be required for each index series.


ROUNDING

13 Index numbers and percentage changes are always published to one decimal place, with the percentage changes being calculated from the rounded index numbers. A consequence of re-referencing price indexes is that period-to-period percentage changes may differ to those previously published. These differences do not constitute a revision of the index series and are the effect of the rounding and the re-referencing process. There may also be differences between user calculations and published values due to the greater level of precision of the values used in calculations performed by the ABS.

14 Different conversion factors apply for each index series and capital city and for each analytical series. For example, the conversion factor for the Attached Dwellings Price Index, Perth will differ from the factor for the House Price Index, Perth and for the Attached Dwellings Price Index, Sydney.

15 The ABS provides further information on re-referencing in Chapter 10 of House Price Indexes: Concepts, Sources and Methods (cat.no.6464.0).

Table A1.2 RPPI conversion factors, from index reference period 2003-04 to 2011-12

Old to New
New to Old

RPPI
Sydney
0.8625
1.1595
Melbourne
0.6110
1.6366
Brisbane
0.6900
1.4493
Adelaide
0.6421
1.5575
Perth
0.5127
1.9503
Hobart
0.6705
1.4914
Darwin
0.4363
2.2928
Canberra
0.6979
1.4328
Eight Capital Cities
0.7063
1.4159
HPI
Sydney
0.8754
1.1424
Melbourne
0.6009
1.6640
Brisbane
0.6969
1.4348
Adelaide
0.6431
1.5551
Perth
0.5123
1.9519
Hobart
0.6644
1.5049
Darwin
0.4474
2.2359
Canberra
0.6927
1.4437
Eight Capital Cities
0.7008
1.4266
ADPI
Sydney
0.8341
1.1988
Melbourne
0.6511
1.5359
Brisbane
0.6577
1.5205
Adelaide
0.6390
1.5650
Perth
0.5160
1.9377
Hobart
0.7006
1.4273
Darwin
0.4008
2.4951
Canberra
0.7203
1.3883
Eight Capital Cities
0.7259
1.3775