HDB index to be closer to prices
The HDB resale price index, last revised in 2002, will be updated from this quarter to give a closer indication of prices.
A major change is the inclusion of all towns, instead of only a representative set of HDB towns, in the calculation.
Flat attributes such as storey height and age, as well as proximity to MRT and shopping centres will also be taken into account, HDB said yesterday.
Currently, only the type of flat (three-room, four-room, and so on), flat model (improved, new generation) and location (west, north, north-east, etc) are considered when differentiating resale flats.
Some towns, such as Punggol, Sengkang and Sembawang, which did not have resale transactions in 2001, are not part of the current index.
The towns and estates which were not included in the current index constitute less than 3 in 10 of the total resale transactions in recent years, said the HDB.
National Development Minister Khaw Boon Wan said in a blog post on Dec 3 that the current index does not reflect the wider range of flats, as well as the greater variance in their age profile.
The new index will use a different computational methodology and the base year will be changed from the fourth quarter of 1998 to the first quarter of 2009.
Back-testing by HDB shows that price movement in the revised index is close to the current one. In the past three quarters, the difference was between 0.1 and 0.3 percentage points.
PropNex Realty CEO Mohamed Ismail said the introduction of the new index is timely.
"We are expecting the revised index to show a greater dip in the coming quarters as the inclusion of these new estates may pull down the overall prices," he said.