The Housing and Development Board (HDB) will be sharing more details about a revised computation methodology for the Resale Price Index (RPI), as the existing one may not adequately reflect the resale market, said National Development Minister Khaw Boon Wan on Wednesday (Dec 3).
In a blogpost, Mr Khaw said HDB has been working with a consultant from the NUS Department of Real Estate to review the RPI computation methodology, and the review was recently completed.
He cited three reasons why the RPI, which HDB publishes every quarter, may no longer by adequate. The first was that in recent years, the HDB resale market has evolved considerably; there are a wider range of flats differing in designs and attributes, he noted.
“For example, newer flat models, including taller blocks, are increasingly being transacted in the resale market. We have also reintroduced 3-room flats since 2004, after the current RPI was last revised,” he wrote.
Secondly, there are a lot more resale transactions for flats in newer towns, such as Punggol, Sengkang and Sembawang, but these towns are not included in the representative basket currently.
“In other words, the current RPI does not capture movements in resale flat prices in these towns,” he said.
Thirdly, unlike in the past, there is a greater range of variety in the age profile of flats being transacted in the resale market, and such variance must be taken into account in making price comparisons, the minister stated.
“It is therefore timely to review the RPI methodology to better capture price changes over time, and control for variations in attributes of the resale flats transacted,” Mr Khaw wrote. “This will allow the index to continue serving its purpose of providing timely and reliable information on the resale market movements.”
Source : Channel NewsAsia – 2 Dec 2014