New property price index highlights investor muscle
The revamped Property Price Index, which was launched on Wednesday, shows that the collapse in Ireland's housing market during the recession was slightly deeper than previously thought and that the ensuing recovery has been somewhat stronger.
However, while these insights are important, they are not the story. The more critical point is that this new index puts in place a piece of statistical infrastructure that will benefit Ireland for years to come. Because of the improvements that have been introduced, analysts will be able to better understand the dynamics of the housing market, and this will enable policy-makers, households and businesses to make more informed decisions.
Behind the scenes, the new index captures greater detail on property characteristics. This ensures a more standardised basket of properties between time periods, improving the accuracy of measured price movements. In addition, the new index provides better market coverage. Because its predecessor was based on mortgage data, it completely missed cash sales which account for about half of all housing transactions in Ireland.