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.

Last week the RMX index and House index slightly fell by 0.3 per cent and 0.8 per cent respectively while the Unit index increased by 2.1 per cent. Yesterday, The ABS reported that building completions for units fell in the December quarter in Victoria, while the number of houses finished rose. This slowing of new supply might boost the Unit 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.

RMX Methodology

There are several methods for calculating RPPIs. The method utilised for the RMX is the stratification method. This involves separating all the residential properties in Victoria into sub-groups called strata, then calculating medians for these strata.

The subgroup medians are then given a ‘weight’ based on the number of dwellings in that subgroup (based on the 2016 census information) to obtain an overall measure of price for the state. This means that if more properties at the upper end of the market sell during the period in question, more ‘weight’ is given to the lower-end strata to balance the impact on the RMX.

Currently the REIV tracks three indices: the RMX, which includes all residential properties in Victoria; the House Index, which includes all houses in Victoria; and the Unit Index, which includes all units, apartments and townhouses in Victoria.

*Weekly minimum sample size (i.e. the minimum number of sales in the reporting period required to display an index result) is determined via a confidence level of 95%; an estimate of population size based on the average of sales in the month in question from previous years; and a confidence interval of 3 percentage points. This means that in 95% of cases the index value calculated from our minimum sample size will fall within 3 per cent of the index value if it were calculated from all sales in the period when collected.

RMX MEDIAN PRICES

Index based on total properties in the region

Price based on properties sold during the period

Updated weekly for a current price trend

Updated quarterly for a more macro view of the market

Indicates overall pricing changes, taking into account the total supply in the region

Medians can be influenced by type of properties sold during the period.