FAQs
Why look at a House Price Index instead of a median or an average?
Data on median and average house prices is 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 greater accuracy.
It does this by analysing how prices in a market are influenced by a range of attributes such as land area, floor area, number of bedrooms etc. to create a single, more accurate measure of housing market activity and trends over time.
Using the Reserve Bank’s preferred Sale Price to Appraisal Ratio (SPAR) methodology, the REINZ HPI uses unconditional sales data (when all the conditions of a sale and purchase agreement are met) rather than at settlement, which can often be weeks later. It is therefore more accurate and timelier.
Where does REINZ data come from?
REINZ data is based on unconditional sales data which is provided by our 17,000 + members nationwide. Other housing market data sources report on sales once they have become settled.
What is the Sales Price to Appraisal Ratio, or SPAR method?
The Sales Price to Appraisal Ratio, or SPAR method, is the favoured method for developing house price indexes by many international government agencies.
RBNZ found that the SPAR method performed well due to lower month-to-month noise (especially for more disaggregated regional indices), greater stability as more data is added, robustness to sample changes, and higher accuracy in predicting sales prices.
View their detailed report here.
How was the Reserve Bank of New Zealand involved?
In 2017, REINZ partnered with RBNZ to conduct an analysis on HPI methodologies, to ensure the REINZ HPI would be the best performing option for the New Zealand market.
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. It was found that the SPAR performed best.
View their detailed report here.