Australian House Prices

I put together this chart of house prices for the six Australian State Capitals and Canberra from the official government data:



There is also data available for Darwin but it was too erratic and Darwin is so small that I dropped it. And I also computed the year over year rates of change:



Next, I'll try to come up with the real changes in house prices adjusted for inflation in the prices of other goods and services. That will give a better idea of what we might expect in the future. General inflation was much higher in the late 1980s than recently and so the average rate of house price appreciation over this period is misleading I think.

After the initial subsidence in prices around 1990 there was an "echo boom" that was more noticeable in some cities, particularly the smaller ones. And, again, recently the rate of price increases subsided or prices fell absolutely (in Sydney in particular) but now we are in a new period of house price inflation, especially outside of Sydney. The echo boom in Perth is much greater than the initial boom there. This is entirely related to the boom in the mining industry.

I've noticed that there is a four year cycle in the US housing market, just as there is in the US stock market. It seems this same four year cycle could be present in Australia, superimposed on the longer 16 year cycle. By this interpretation, we are now near the peak of a four year cycle and should see a reduction in the rate of increase in prices over the next couple of years. 2009-10 could be a good time to buy a house.