Real Aussie house prices 2.5% below peak

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By Leith van Onselen

RP Data’s Cameron Kusher has produced an interesting post on Australian housing values in the wake of Wednesday’s June quarter CPI release from the ABS:

At a headline level, combined capital city home values have increased by 10.1% over the 2013/14 financial year. The latest CPI data showed that inflation was recorded at 0.5% over the second quarter and at an annual rate of 3.0% throughout the 2013/14 financial year.

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…home values generally remain well below their previous peak (in real terms) across the capitals. In non-inflation adjusted terms home values are higher than their previous peak in: Sydney, Melbourne, Canberra and Perth. Once you account for inflation, Sydney is the only city where values are currently higher than their previous peak.

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RP Data’s assertion that Australian housing values are nearing their former peak in real inflation-adjusted terms is broadly supported by the RBA’s dwelling assets data, which was around 5% below its 2010 peak when measured against GDP as at March 2014 (see next chart).

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.