SINGAPORE - The Urban Redevelopment Authority (URA) has revamped its method of deriving its property price index (PPI) and expanded its data coverage to better reflect the market here.
The new methodology, used to calculate Wednesday's flash estimates for the first quarter's PPI, takes into account more property characteristics to reflect price movements.
Previously, the index was computed based on attributes such as a property's tenure, completion status, property type and region.
Now, it will include the unit's age and size.
The new PPI will be a better reflection of the "greater diversity in unit sizes and age" in the housing stock, such as the emergence of more shoebox units, since the index was last revised in 2000, said URA.
These factors can have a significant impact on the price of the unit, said Professor Lum Sau Kim from the National University of Singapore's department of real estate, a consultant in the review.
But under the new approach, a technical method called the hedonic regression will strip out the effect of these attributes on its price, to reflect "pure price changes", she said.
The URA follows the lead of the Housing and Development Board, which had revised its resale price index in December last year to give a better reading of the public housing market.
Like the HDB, the index has adopted a new base period in the first quarter of 2009, instead of the fourth quarter of 1998.
In addition to the improved methodology, a more comprehensive set of data will be used to derive the index.
Previously, data from caveats lodged with the Singapore Land Authority were used, leaving out some transactions in the market since it is not mandatory for buyers to lodge a caveat.
Now, data on new units sold will be collected from developers, supplemented by stamp duty data from the Inland Revenue Authority of Singapore as well.
"With this, the improved PPI will capture all private housing transactions," said the URA.
The new method was tested on data from 2014 and showed the same downward trend in prices as the old PPI, though some changes in quantum were slightly larger.
URA said the same approach will be adopted for private residential rentals as well.