New property index helps track market trends

PROFESSIONALS REAL Estate Group has launched a new market index in partnership with RP Data Information Services to accurately track movements in the Western Australian residential property market.
The Professionals Property Index (PPI) is designed to aid those buying and selling residential property, as well as providing a tool to reflect movements in the local econonomy. Professionals Real Estate Group CEO David Hobbs said the monthly index is the most comprehensive property model available to the public, providing an accurate monthly reflection of sales across the Perth metropolitan market.
“Professionals Group recognise that good decisions require good information, so the PPI is based on sales price information from 200 Perth suburbs to provide ‘average’ monthly dwelling prices and monthly price changes,” Mr Hobbs said.
“While most property indexes quote median prices for houses and units separately, The PPI captures average price changes across all dwellings to provide a more accurate snapshot of where the market is at. It’s also a very valuable predictive tool to track property market and economic trends over the longer term, particularly for commercial banking and lending institutions.”
Mr Hobbs said the Professionals Property Index uses the most recent monthly sales information supplied and calculated by RP Data Information Services.
The average price (figure 1) is plotted over time to show the gain or loss in dwelling prices over a given period.  The PPI for February 2009 shows the average Perth dwelling price was $453,137, with prices once again on the increase from the low of $439,108 in December 2008 – driven largely by first home buyers taking advantage of the First Home Owners Grant.
The ‘Index’ value is calculated with each point representing a price shift of $10,000 in the value of an average dwelling. The PPI began with an index value of 100 in January 2000 when the average sale price was $163,602. Since that time the index value has increased to 129.0 points, reflecting an average sale price of $453,137 in February 2009.
The index peaked in July 2008 at 130.6 points, with an average sales price of $469,434.
The PPI also provides percentage change in average dwelling price over time. Figure 2 provides a graphic picture of the percentage price change, highlighting the meteoric rise in 2006 and the positive recent increase from the bottom of the market in December 2008.
“Published monthly, the PPI will provide an easily digestible snapshot of the market – where it is going and by how much it is moving. Armed with this information people can make informed decisions about when to buy and sell, and to generally assess the economic climate,” Mr Hobbs said.
For more information on the Professionals Property Index, contact David Hobbs on 9370 4440.