Residential property price index to track sector

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Chea Serey, assistant governor of the National Bank of Cambodia (NBC), the central bank. SUPPLIED

The National Bank of Cambodia (NBC) and the National Institute of Statistics (NIS) launched the Residential Property Price Index (RPPI) which compiles economic and financial statistics to analyse and evaluate economic processes, following the pre-Covid-19 boom in the real estate and construction sectors.

At the launch event organised by the NBC on June 6, NIS director-general Hang Lina said the dissemination of RPPI results by the central bank’s Department of Statistics is under the technical assistance of the International Monetary Fund (IMF) in collaboration with the NIS.

She said the property and construction sector is one of the major economic sectors which has boosted Cambodia’s economy, with an average of nine per cent gross domestic product (GDP) growth from 2000 to 2019.

The sector has also helped to drive growth in related sectors, such as banking, finance, insurance, construction, wholesale, retail and transportation.

As such, the RPPI is an important indicator of the progress of the real estate and housing sector, she said.

“Timely monitoring and controlling will help address various risks, including effective countermeasures, and help strengthen Cambodia’s economy while avoiding any economic operations that might arise from a real estate crisis, as some countries have experienced in the past,” Lina pointed out.

NBC assistant governor Chea Serey said the workshop is the fourth time both institutions cooperated to improve the quality and dissemination of statistics to promote the importance of policy and decision-making, and encourage stakeholders to provide data.

“The introduction of the RPPI is an accomplishment [for stakeholders] to compile economic and financial statistics which will enable analysis and evaluation of economic processes, especially in real estate and construction,” she said.

The growth of the real estate and construction sectors is part of diversification of economic activities, which could increase resilience against any economic impact and provide jobs.

According to the 2019 census, the sector helped to boost economic growth, representing over two per cent of GDP while employing nearly 500,000 workers.

However, Serey pointed out, the residential sector has also been a source of instability and economic crisis.

Of the 50 economic crises in the last few decades, more than two-thirds have been triggered by rising housing prices.

Resolving a crisis will be time-consuming and resource-intensive because the focus on this sector is associated with other important sectors, especially the financial sector, according to the IMF.

Serey noted that the real estate and construction sectors have become important pillars of economic growth, and information and data related to the sector are even more important for economic and monetary policy makers.

“It will help to monitor macroeconomic imbalances and assess risks which can happen in related sectors, especially the financial sector,” she said.

“The introduction of RPPI will play a crucial role in monitoring, evaluating and formulating development policies as well as measures to minimise risk in order to maintain macroeconomic stability.”