More data sources to improve property price index, IMF says
EXPANDING DATA SOURCES will help improve the Bangko Sentral ng Pilipinas’ (BSP) Residential Real Estate Price Index (RREPI) and its coverage of the property market, the International Monetary Fund (IMF) said.
“The authorities are strongly committed to making improvements to the published RREPI for the Philippines,” the IMF said in a technical assistance report released on Tuesday
“Reliable property price indices and other indicators of real estate markets are essential for the assessment of developments and risks in property markets and understanding the linkages between property markets and financial soundness, as well as to IMF surveillance.”
The IMF said it conducted a technical assistance mission in the country in January for the development of hedonic methods for the BSP’s property price statistics.
It also made recommendations on “accessing and using more comprehensive administrative data sources for the compilation of property price statistics.”
The BSP currently releases the RREPI on a quarterly basis. The RREPI tracks the average price changes of residential properties across different housing types and locations.
This provides the central bank with insights into the property market, which is regulated due to bank exposure.
Latest data from the central bank showed that the RREPI rose by an annual 6.1% in the January-March period but slowed from the 6.5% growth in the previous quarter and 10.2% expansion a year ago.
“Given that a basic stratification type approach is used to compile the indices, the methods should be updated to ensure compatibility with international statistical standards,” the IMF said. “The BSP should apply hedonic methods for accurate quality adjustment of the price indices.”
It recommended that the BSP use a “time dummy hedonic method with a four-quarter window length to compile quality-adjusted indices.”
“The authorities should devise a longer-term strategy to broaden the coverage of the residential property market by identifying new data sources, e.g., listings data from websites or administrative data,” the IMF added.
Still, the IMF noted that the BSP produces a “good quality data set with a large number of observations” regarding inflation on residential property loans.
“Due to the continued efforts of the BSP to apply additional validation as part of the quarterly reporting template, it is noticeable that the data quality improves over time,” it added.
Meanwhile, in order to harmonize with other countries, the IMF also recommended changing the name of the RREPI to Residential Property Price Index.
The BSP must publish the revised RREPI “as soon as possible,” ideally by December this year, it said.
“The BSP should communicate with users and stakeholders during the process of revising the RREPI. This will include providing users with advance notice of the revision and meeting with them to request feedback,” it said. “The BSP should draft communication documents, both technical and non-technical, that will clearly explain the reasons and extent of the revisions to the data.” — Luisa Maria Jacinta C. Jocson
