I have been a big fan of the CSO’s Residential Property Price Index since it’s launch in May 2011. Their figures have so far covered the period of Jan 2005 to Dec 2011.
However, they are now imo in dangerous territory of misleading the public on current residential prices (and drops.)
This is because not only are they based on transaction dates (at prices often agreed by buyer and seller weeks or months before, therefore most likely at slightly higher prices than currently achievable), they also do not include Cash Transactions.
The CSO use Revenue figures for Coverage of stamp duty returns versus mortgage drawdown returns. But they only have figures from 2005-2009. In 2009 just 6% of transactions (by volume) were in cash.
Latest reports are that Cash Transactions are now up at 15-25% of all sales. And cash sales are usually at lower prices than mortgage sales. If this is true, the CSO is understating, perhaps substantially, the decline in prices.
Namawinelake has also picked up on this and offers a commentary on the Dec 2011 figures here
He also mentions “The CSO expects to have monthly data from the Revenue Commissioners from mid-2012 and it expects that it may subsequently be able to show the market size with its monthly release of the residential index.”
This CSO updated data would be very welcome. At the very least, it now being Feb 2012, they should have the 2010 stamp duty return figures.
Indeed, and I think you have another month after closing during which to pay Stamp Duty, which I believe is the transaction date that will be provided to the CSO. In our own case, without even a mortgage involved to complicate things it was a full three months between paying booking deposit and paying stamp duty.
However, with property there is no standard product type.
The pricing model uses simple variables such as:
• Location Dublin - postal district or local authority area
• Property Type - detached, bungalow, semi-detached or terrace
• Number of bedrooms - 1-2, 3, 4, 5+
• Floor area - Actual floor area in metres squared
• New or old property
• First time buyer
So, for example, all 4 bedroom terraced houses of 160 square metres in Dublin 6 are counted as the same.
If you have a situation where cheaper houses of this type sell more and more expensive ones sell much less frequently (for reasons such as because less people can affod them or sellers are less willing to sell and take their larger loss) then the index will generate an RPPI that is higher than actuality. So in general when cheaper houses of a given type sell more, the index gives a higher drop than reality.
Even within this classification, there is much room for variation.
It currently the best index because it is the only one that is based on actual sales prices rather than asking prices.
I do not view the RPPI as flawed. It does track other indices.
The CSO do not publish the underlying data, even anonymously. So it is not possible to perform your own analysis. The promised property price database will enable such analysis.