NATIONAL Development Minister Khaw Boon Wan said the Housing and Development Board will be revising its resale price index (RPI).
"HDB has been working with a consultant from the NUS Department of Real Estate to review the RPI computation methodology. The review has recently been completed. HDB will be sharing more details soon," he said in a blog post on Wednesday.
Mr Khaw said that with "significant changes in the HDB resale market", the current RPI may not adequately reflect the resale market. "It is therefore timely to review the RPI methodology to better capture price changes over time, and control for the variations in attributes of the resale flats transacted. This will allow the index to continue serving its purpose of providing timely and reliable information on the resale market movements," Mr Khaw said.
To construct the RPI, HDB takes the average resale flat prices for a representative basket, by flat types, flat models and region, based on actual resale flat transactions. The average resale flat prices for each segment are then aggregated to derive the index.
"To be effective and representative, RPI must reflect the prevailing resale market. In recent years, the HDB resale market has actually evolved considerably. First, we now see a wider range of flats, differing in designs and attributes. For example, newer flat models, including taller blocks, are increasingly being transacted in the resale market. We have also reintroduced three-room flats since 2004, after the current RPI was last revised," Mr Khaw noted.
Secondly, there are now a lot more resale transactions for flats in newer towns such as Punggol, Sengkang and Sembawang; however, these towns are not included in the representative basket currently. "In other words, the current RPI does not capture movements in resale flat prices in these towns," said Mr Khaw.
Thirdly, unlike in the past, there is now greater variance in the age profile of flats being transacted in the resale market. Such variance must be taken into account in making price comparisons."