Forget the landlord-tenant gripes: Stand by for a tradeable property ASX futures index

The new RP Data-Rismark Daily Home Value Index will be the first set of indices to provide “real-time daily home value indices”, says RP Data CEO Graham Mirabito.

The first edition of the daily index (March 1) is out today and shows gains for Sydney, Melbourne and Brisbane:

Launched in conjunction with the Australian Securities Exchange (ASX) as future tradeable index, it is also offers investors and buyers the world's first home value indices that track asset-class stock.

“For the past three years RP Data and Rismark have had a major research and development project underway to produce accurate daily housing market value indices,” Mirabito says.

“Our new 'hedonic imputation' methodology is an improvement on the previous flagship 'adjacent period hedonic' measurement and has been designed to be a tradable index.”

Mirabito says the primary benefits of the improved index methodology are:

  • Timely updated daily just one day in arrears
  • Not compositionally biased by different buyer segments that are active or inactive
  • All dwellings are included in the measurement not just those that have transacted
  • Non revisionary providing greater certainty about actual market conditions
  • Independently audited by both EWS (headed by Dr Alex Frino who also heads Capital Markets CRC and is a professor of finance at the University of Sydney) and KPMG (process)
  • Designed to be tradable tracks a true portfolio of properties.

The daily updates of the index values will be featured on both the RP Data website as well as at the Australian Securities Exchange.

Brian Goodman, ASX’s product development manager, said in a statement the index would give an important window into the residential market, which makes up a big portion of the average household’s assets.

He also said it would help the ASX develop exchange-traded products, which would allow investors to replicate the return and broad performance characteristics of the Australian residential property market.

“The RP Data-Rismark Daily Home Value indices overcome a number of the shortfalls present in existing property indices and in so doing support ASX’s longer term product development objectives,” Goodman said.

“To develop the daily indices there has been significant investments in new data collection which we have leveraged specifically for our property and finance industry customers. Following the indices launch we will be providing new data and analytics on a weekly basis for property and mortgage market activity that will deliver near real time business intelligence at the local level,” Mirabito says.

The index will not be tradeable until it has passed regulatory hurdles. 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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