Chart of the Day

For todays chart(s), the Bullion Baron has plotted house price data, but priced in gold and silver (in Australian dollars), over Melbourne, Sydney and Brisbane houses (using Residex data).

The results are interesting, to say the least!



Comments

  1. Nice charts.
    After my weekend chart showing ASX 200 priced in USD, I thought of also creating a chart showing Aussie house prices in USD… haven’t done it (yet) but I imagine they’d show that housing is still in a raging bull market.

  2. Awesome chart! It conveys so much meaning to the Australian investor. Someone in MB made a really good case that gold was a good hedge for instability more than inflation. With so much QE and overvalued RE, it makes you wonder what holds value today.

    -gt

  3. It would be nice to see chart showing average wage in gold and silver.

    In 2000 average full-time wage was almost two ounces (1.9) now it’s less than one (0.85) ounce per week.

  4. Amazing how quickly the price in gold can fall by 35% in less that 1 year several times.

    The price of houses in the USA is ~100 oz which is roughly the 130 year trend

    Sydney house owners were dumb enough not to sell their entire city at 1100 oz in 2004 and rent their city.

  5. How about a chart plotting Australian house prices to the cost in the US converted to Aussie dollars of a big Mac. We could compare this to the same ratio in the US or anywhere else?
    I’m not being flippant but a cost of housing to cost of food ratio and international comparison maybe very easy for the punters to understand

  6. Thanks for the repost The Prince.

    Speaking of Residex data, the June housing stats were released yesterday (one day after I produced the above charts using up to May /facepalm) and the CEO had this to say:

    “I can tell you that in the whole time I have been studying the market I have not seen the makings of such a perfect storm. The June quarter numbers in some states are the worst recorded for more than 30 years (you would probably have to go back to the 1960s to find worse).”

    and

    “Today, all markets are not correcting but some have done very poorly. Poor management of our economy at this point in time could easily bring about that 1 in a 100 year event that was previously avoided.”

    http://blog.residex.com.au/2011/07/18/from-the-ceo-5/

    It has been my opinion that the historical ratios between Gold and housing seen in Australia in 1980 are unlikely to be seen again (under 100 ounces of Gold or 2000 ounces of Silver bought a median house), but if we see this 100 year housing event in Australia at the same time as Gold heads toward the peak in the 3rd stage of the bull market then such a ratio might just come around again.

  7. I’m sorry but all these charts don’t seem to convey any useful information to me.

    A commodity priced in a different currency to a house??????

    • It’s based on the price of Gold in Australian Dollars.

      There isn’t causation between the two sets of data, but the economic conditions that set the price of one could have bearing on the other. For example if we saw deterioration in global commodity demand and the AUD fell lower this could have a negative effect on the AUD (potentially sending the Gold price here higher) and send house prices lower as our economy suffers, this combination would result in a lower ratio.

  8. Lovely BB. Any chance that you or the Princely One could obtain data on housing, gold and wages going back to 1955?

    I know you stated above that 1979 is the earliest date per above. But our reader base have proved to be a resourceful bunch.

    Leith had a graph which showed long run house price/income at 2. However someone took the data back to the 1890’s and for approx. 60% of time (1890-2010) the ratio is closer to 1:1.

    I picked 1955 as I believe that is where the bubble downside has got to go to give up all its gains. Utilising the credit/debt bubble as a proxy for mortgages as per DT.

  9. El Zorro Dorado

    Interesting chart,but not sure how useful it is as the AUDPOG is both a function of currency moves and changes in the USDPOG. Objectively, it shows the effects of the gold bear market from 80 thru 2000, compunded by the weak Aussie from late 90s. Dynamically the chart has limits but it does show that if you had the foresight ( nay vast courage) to put away a few hundred ozes in the early 90s then you could still buy a house now–roughly anyway. The fluctuations in the period 2005 to now reflect not volatility in POG ( except for 1999-2002 its been very consistent and refined in behaviour πŸ™‚ but the gyrations of AUD/USD and each’s underlying trend.