The LJ Hooker / BIS Shrapnel Residential Property Index is the timeliest indicator of housing price movements available in Australia today.

In the past market analysts and the public have waited, at best a month, at worst six months, for any indication of market direction.

Often the reported statistics on median prices come from property settlements during the reporting period. These prices would have been negotiated, on average, six weeks prior to settlement and for off the plan sales it may be years since the price was agreed. This has lead to much debate about the timeliness and usefulness of these statistics. 

The LJ Hooker / BIS Shrapnel Residential Property Index is based on the contract price of sales negotiated during the reporting period, making the base data the most up to date measure of market activity during the period. Further, the Index will be available within two weeks of the end of the reporting period, making it the most timely market report available.

LJ Hooker has an extensive network of offices covering most geographic areas of Australia selling over $ 25 billion of real estate every year, indeed statistics show that LJ Hooker sells a home somewhere in Australia every 8 minutes. With a national spread and high market activity levels, LJ Hooker is the perfect microcosm of the Australian residential real estate market.

LJ Hooker has been storing information on property sales since July 1991. They have also been building a database of the entire market sales since January 1996 and have listing data going back to September 1997.

In 2003 the company launched the LJ Hooker Data and Information Centre to manage this data and formulate it into something usable for LJ Hooker offices.

In partnership with independent economic forecasters, BIS Shrapnel, LJ Hooker data is now being used to create an Index showing movement in the median price of residential property in all Australian capital cities.

Each month the Index will provide an indication of the movement in median prices in each capital city based on a rolling three months of sales in Sydney, Melbourne, Brisbane, Adelaide and Canberra and a rolling six months in Perth, Hobart and Darwin.
 
To create the Index LJ Hooker sales in each capital city have been divided into a number of regions. A total weighted median for the city is then calculated, based on aggregating the medians for each region, and weighing them in accordance with the number of houses in each region. This ensures that the index reflects a representative sample of the distribution of the residential housing stock.

To test this model BIS Shrapnel have taken past data from LJ Hooker and used it in the same manner and measured it against other established measures of price movements. The results have proven to be accurate, giving further credence to the model used.

BIS Shrapnel is comfortable that the LJ Hooker data provides a large enough sample to give a relevant index when weighted.

For additional property forecasting reports for BIS Shrapnel please click here for Commercial Property or click here for Residential Property. 

House sales mediated by LJ Hooker agents form the basis of the price index. The data is compiled on the basis of contract date. Prices paid for individual properties are aggregated to generate a price index value for each city.

For Sydney, Melbourne, Brisbane, Adelaide and Canberra, the index is calculated on a three-month rolling basis. For example, the March 2005 index relates to sales recorded in January, February and March 2005.

For Perth, Hobart and Darwin, the index is calculated on a six-month rolling basis. The longer period for Perth, Hobart and Darwin is necessary, as the smaller number of sales for these cities would make a three-month index value too volatile.

Data for the latest month is based on internet returns by LJ Hooker agents. Historical data is revised periodically, as any sales not identified in the internet returns are reported by agents.

The index is calculated through three steps:

• Sales for each city are divided into regions, and median house prices are identified for each region. The regions are structured to help ensure that variations in the location of sales do not distort the trend at the city level.
• The median price for each region is given a weight, where the weight is based on the proportion of the house stock located in that region relative to the total house stock in the city.
• The weighted median prices for each region are aggregated to form the price index for the city.
  

This approach ensures that a representative number of sales are available for each region, and that each region’s contribution to the index accords with its share of the total house market. It controls the influence of variation in LJ Hooker market shares of house sales in different cities, as well as the variation of sales across regions within each city.