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Introduction

5.1. The Price Index of Materials Used in House Building, Six State Capital Cities, (Cat. No. 6408.0) was first published in September 1970 on a reference base of 1966-67 =100.0. The weighting pattern was derived from estimated materials usage in 1968-69. Monthly index numbers were compiled for this first series for the period July 1966 to September 1986. A description of the first series, including its composition and weighting pattern, is given in the September 1970 issue of the publication and in Labour Report No 55, 1970.

5.2. The index was reviewed in 1986 and a new series introduced from October 1986. This second series was on a reference base of 1985-86 = 100.0 and had a weighting pattern based on estimated materials usage in 1985-86. This series was linked to the previous series. A description of this series is given in the October 1986 issue of the publication.

5.3. The current indexes were introduced in December 1995 on a reference base of 1989-90 =100.0 and were linked to the previous series. From the September quarter 1997 the index has been compiled and released quarterly.


Nature and purpose

5.4. The index measures changes in prices of selected materials used in the construction of houses in each capital city Statistical Division. It is used by both the government and private sectors primarily for adjusting business contracts. It is used also for economic analysis.

5.5. A house is defined as a detached building, predominantly used for long term residential purposes and consisting of only one dwelling unit. The index does not purport to represent buildings of any kind other than detached houses.

5.6. Although many of the selected materials are also used in buildings other than houses, and in house repair, maintenance and alteration work, the index is not strictly applicable to those other activities of the building industry.

5.7. Since the weights are based on average materials usage for a range of different house types, the index is not necessarily representative of the price movements for materials used in any one particular type of house.


Composition and Weighting

5.8. The materials included in the index and the relative weights assigned to them are based on the estimated average usage of building materials used in the construction of houses in the 3 years ending June 1993. The estimates are based on material usage in houses selected to be representative of the main types (ie. according to type of materials used and size) of houses constructed in the six State capital cities. In deriving these estimates the ABS employed the services of a firm of quantity surveyors.

5.9 The index includes 42 items for the six State capital cities although not all of them apply in each city. For example, steel house frames are not included for Perth and Hobart.

5.10. Table 5.1 sets out the composition and weighting pattern of the index.

5.11. The index for the six State capital cities combined is a weighted average of the individual city indexes. The relative weighting of each capital city is in proportion to the average value of work done on house building in each capital city in the three years ending June 1993.


Data sources

Prices

5.13. The same data sources for prices are used in this index as for the Materials Used in Building Other than House Building index. See paragraphs 4.19 to 4.23.

Weights

5.14. The same data sources for weights are used in this index as for the Materials Used in Building Other than House Building index, except that houses are selected rather than other buildings. See paragraphs 4.24 to 4.26.

Special pricing considerations

5.15. The main problem encountered in compiling the index is to ensure actual transactions prices are obtained. See the discussion in paragraph 4.28 as it relates to the Materials Used in House Building index as well as the Materials Used in Building Other than House Building index.