Tomorrow sees the launch of a much needed house price index by the Central Statistics Office (CSO). It is particularly welcome since the other leading actual price indicator, the Permanent TSB/ESRI quarterly index has not been published since 18th January, 2011 and its delay in publishing the quarter one index is particularly curious – the index has come in for some criticism on here because PTSB now has a very small share of the Irish mortgage market and the index excludes cash transactions. The index launched by the CSO tomorrow will also exclude cash transactions but at least it will be based on the eight main mortgage lenders in the State. The CSO says that it will also provide an indication of the total value of all property transactions (cash plus mortgage), presumably sourced from the Revenue (the tax authorities that collect stamp duty on property transactions and who keep records also of exempt property transactions). There will be an update here tomorrow when the actual index is unveiled. The index was announced on 28th April, 2011 and there is some background information here.
Going forward, the index may become the most cited index because it will be monthly, will be issued shortly after the reporting period, will cover most mortgage transactions and by providing information on the full market (cash + mortgage transactions) we should get a better sense of how prices are changing. Given that we have had an almighty boom and bust, price discovery is needed now more than ever.
What the index will not provide will be prices – we WON’T find out what the average price of a house or apartment is; we’ll just see how prices have changed since 2005 so the index might start at 100.0 in 2005 and might be 70.0 today. The index will help us understand how prices have moved.
Whilst tomorrow’s new index is to be welcomed, it is no substitute for the House Price Register – the latest on which is that the Property Services (Regulation) Bill which will give legislative effect to the Register was restored by the Oireachtas on 25th March 2011 but appears not to have been debated or worked on since.
Perhaps it’s my suspicions nature regarding all things financial, coming from the government .But don’t they have a vested interest in talking up the prices of property? This fact does immediately call into question the reliability of these figures?