The Domain Group uses a refined median price statistical model
to estimate house and unit prices for capital cities. To modify the effects of
an over-representation of high or low value sales in a given period, this model
uses compositional adjustment that divides sales data into various price
sectors.
The median price for each of these price strata is calculated then all
the various price strata medians are combined to estimate an overall median house
price for the capital city.
In addition to moderating the impact of compositional bias
in median house price measurements, the Domain Group methodology also acts to
neutralise the seasonal impacts of house price data.
The Domain Group model features the same stratified
methodology used by the Australian Bureau of Statistics for its established
house price index, although with some refinements.
Details of the background to the Domain Group methodology are
described in the Reserve Bank of Australia paper Measuring Housing Price Growth –
Using Stratification to Improve Median-based Measures.
Details of the ABS stratified methodology can be found at House Price Indexes: Concepts, Sources and Methods, Australia, 2009
For further details contact Dr Andrew Wilson senior economist
for the Domain Group
