CSO revises property price index to include cash purchases

The Central Statistics Office has responded to criticism of how it calculates property price trends by substantially revising its price index, which is now set to include cash purchases for the first time.

The new index, which tracks house prices across the country, had been due to launch this week but has now been postponed and is expected to be published by the end of September.

Including data on cash purchases may lead to a substantial revision of the index. The most recent index for example showed that prices across the country rose by 6.6 per cent in the year to June, but once it is reconstituted, this figure may change.

Since its launch in 2011, the index has been based on mortgage data from lenders only but now it will be based on stamp duty returns. Given that cash buyers accounted for about 47 per cent of all transactions in the first six months of the year, and more than 50 per cent in previous years, the index has to date only reflected price trends in about half of the market.

New index

The new index will replace the existing monthly Residential Property Price Index and will be based on stamp duty returns made to the Revenue Commissioners, which is the same data source as the Residential Property Price Register (RPPR), maintained by the Property Services Regulatory Authority.

It means that it will cover both cash and mortgage-based transactions for the first time, as well as all market purchases of houses and apartments. When the index was first launched in 2011, e-stamping had only been introduced, and the CSO was unable to access Revenue data, hence the reliance on mortgage statistics.

The CSO said the move represents a “significant methodological improvement” over the existing index, as in addition to the stamp duty information, data from the RPPR will be matched with Building Energy Rating certification data provided by the Sustainable Energy Authority of Ireland, and locational characteristics from the GeoDirectory and census 2011 small area population statistics.

The new index will also include regional indices, giving a breakdown of price and transactions trends in specific areas, such as Dublin city and Dún Laoghaire–Rathdown, as well as statistics drawn from Eircodes.

It will also include details on the characteristics of sellers and buyers.

One omission in the new index is data on institutional buyers, such as the likes of real estate investment trusts, and it will also exclude non-market transactions.