About the RMX
The REIV Residential Market Index (RMX) is a residential property price index (RPPI) designed to provide a current, simple insight into real property price trends in Victoria. An RPPI measures the price change of the stock of residential dwellings over time.
All three indices rose last week, with the RMX index rising by 1.2 per cent to 156.6 while the House index and Unit index increased by 0.9 per cent and 1.6 per cent respectively. This marks the new highest point the RMX index has reached since June 2024. The ABS reported that building approvals for houses slightly fell in January in Victoria compared to the previous month on a seasonally adjusted basis. The 2,730 approvals for public and private houses in February was the lowest number of approvals since January 2024. This slowing of new supply might boost the RMX index and House index going forward, should demand remain strong.
Why use a Residential Property Price Index?
There are several areas where RPPIs play a role. Because of the importance of the housing market in the Australian economy, RPPIs are of interest to policy makers, market analysts, researchers, and home buyers and sellers for a range of economic and social reasons. They can be used as a macro-economic indicator of economic activity, for use in monetary policy and inflation targeting, and as an input into the Consumer Price Index.
The REIV team developed the RMX as a more frequent, alternative measure to quarterly medians so members can access the latest price movements as they happen.
Medians or RMX?
Both measures have a role to play in understanding the property market. While the medians are an indicator of sale price during a period, the RMX is a measure of price movement over time.
A limitation of medians and simple median indices as measures of price change is that the properties used to calculate a median are only those traded during the period in question. This comparatively small number of properties are not always representative of the total stock of housing. Changes in the mix of properties sold during a period will therefore affect the sample median price much more than the overall median price of the housing stock. For example, if more higher-end houses sell this quarter than last, the median price will rise regardless of whether that reflects what is going on in the wider market.