Stats NZ has a new website.

For new releases go to

www.stats.govt.nz

As we transition to our new site, you'll still find some Stats NZ information here on this archive site.

  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+
Property maintenance in the consumers price index

Property maintenance materials and services had a combined expenditure weight of 2.64 percent in the consumers price index (CPI) at the June 2008 quarter. The concepts, sources, and methods used to compile the property maintenance materials class and the property maintenance services class are explained in this article.

Position in the CPI structure

Property maintenance, which falls within the housing and household utilities group of the New Zealand Household Expenditure Classification used in the CPI, represents expenditure by owner-occupiers on repairing and maintaining their residential properties. Expenditure on alterations, additions, and improvements to properties occupied by owners is included in the home ownership subgroup. Expenditure on alterations, additions, and improvements to owner-occupied properties increases the size, capacity or quality of the properties, whereas expenditure on repair or maintenance materials and services is to keep properties in or restore them to good working order. Expenditure by landlords on, or relating to, the properties they rent out is not included in the CPI.

 Expenditure weight for property maintenance
  June 2008 quarter
 Group, subgroup, or class  Level   Expenditure weight (%)
 Housing and household utilities  Group  22.75
 Property maintenance  Subgroup  2.64
 Property maintenance materials  Class  0.67
 Property maintenance services  Class  1.98
Item and sample selection

The property maintenance materials class contains a wide range of representative materials purchased by households to undertake repairs or maintenance themselves. These items, which were selected for the CPI basket based on expenditure data from the Household Economic Survey (HES), include items such as roofing iron, concrete blocks, plasterboard, timber, spouting/guttering, insulation, house paint, wallpaper, nails, building hardware, and plumbing hardware.

Property maintenance services are those performed by service providers in and around the property with the aim of returning the property to its former state (rather than improving or adding additional facilities, which relates more closely to the home ownership subgroup than the property maintenance subgroup). These services, also selected for the CPI basket based on HES data, include interior and exterior house painting, paving, electrical wiring, plumbing, and lawn mowing services. Where households pay businesses to carry out the repairs or maintenance, the total value of the service, including the cost of the materials used, is included under property maintenance services.

Price collection

Property maintenance materials are directly observed by price collectors who visit suitable retail outlets (such as hardware stores) in the 15 CPI urban areas: Whangarei, Auckland, Hamilton, Tauranga, Rotorua, Napier-Hastings, New Plymouth, Wanganui, Palmerston North, Wellington, Nelson, Christchurch, Timaru, Dunedin, and Invercargill.

The total costs of sampled property maintenance services (i.e. the cost of labour and any associated materials used to complete the property maintenance service) are collected from a sample of trade businesses via postal questionnaires. Paving services are collected from respondents based in the main urban areas, while the remaining services are priced throughout the country (with an emphasis on the main urban areas). Postal questionnaires ask property maintenance service providers to supply their charges for 'standard' trade jobs. Specifications for the standard jobs in each instance are developed with input from trade businesses. These specifications outline, for example, materials used or the size of a roof’s external area to be painted.

Estimation

Regional elementary aggregates for property maintenance materials are calculated using a 'geometric mean of price relatives', or Jevons formula. The New Zealand item-level index is then calculated by combining the regional elementary aggregates, which are weighted according to regional population weights.

With one exception, prices for the sampled property maintenance services are used to directly calculate New Zealand item-level indexes. This is because limited sample sizes do not support robust estimation at the regional level.

On 1 July 2009, the government introduced higher levels of funding for the 'Warm up New Zealand: Heat Smart' initiative (which replaced the previous home insulation programmes), administered by the Energy Efficiency and Conservation Authority (EECA). Homeowners with houses built before 2000 are eligible for funding to help insulate their houses, and install clean and efficient heating.

Discounts available to consumers on heating and insulation as part of the Heat Smart initiative were first reflected in the CPI for the September 2009 quarter. During this period, the property maintenance services class fell 0.7 percent. Had the effect of the subsidy not been incorporated, a small rise would have shown. The effect of the initiative was incorporated within services, rather than materials, as consumers cannot use the subsidies to purchase only the insulation materials or clean heating equipment.

Monthly data is obtained from EECA. The impact of the subsidy on the cost of installing insulation and clean heating is then estimated and applied within the property maintenance services class each quarter.

Quality assurance

The aim of the CPI is to measure the price change of the same product at each sampled outlet or business over time. In practice, sampled products may become unavailable, may change, or may become unrepresentative. There may be changes in legislative requirements or industry standards that result in a 'standard' job's specifications becoming out-of-date. When this occurs, there may be a change in quality and an adjustment should be made so that only the 'pure' price change is shown in the CPI. For example, a price increase (decrease) that is deemed to be purely the result of better (poorer) quality materials or service should be adjusted for and the price change not shown.

 

Back to Price Index News

  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+
Top
  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+