The Urban Redevelopment Authority (URA) could revise the property price index (PPI) to provide a more up-to-date picture of the private residential market, media reports said.
There has been concern that the PPI, which is used to monitor prices in the private property sector, does not accurately depict the market since it does not consider the different types of units available, their quality and size. The index also includes too few transactions.
Moreover, some say the PPI’s ability to be timely is also hindered by the fact that it is issued only quarterly.
URA said it is reviewing the need to revise the index, in view of the revision of HDB’s resale price index (RPI). It noted that reviews are done periodically in order to “understand other ways of computing property price indices and ascertain the robustness of the PPI”.
A spokesman explained that the review may take time since the index is more complex.
“Unlike the RPI, the PPI is computed for both completed and uncompleted units. Additionally, there is greater diversity in private housing,” he said.
The index is based on transaction prices from caveats lodged and utilises a moving average method. This implies that the weights used to compute the PPI are obtained by taking the moving average of the values of properties that were transacted in every market segment over 12 quarters.
But Associate Professor Sing Tien Foo of the National University of Singapore’s department of real estate noted that the index fails to take into account the changes in the quality of property in various locations.
Romesh Navaratnarajah, Singapore Editor of PropertyGuru Group, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
