While the nominal or non-inflation adjusted home value will give you a rough idea of growth, the true picture is only reflected once you take inflation into account and adjust home values against it. Cameron Kusher for The Property Observer says that this is the ‘Real’ home value- a significant insight for those investing in the property market.
For instance, prices over the capital cities showed a cumulative hike of 2.8% over the first quarter of 2013, yet in real terms, the growth should only be considered 2.4% (little below) as there was a hike in Consumer Price Index by 0.4% too.
Over the last 17 years, calculating upto the March 2013 quarter, home value has increased roughly 3.4 times whereas the real value has increased only 2.2 times. This then is the effect of inflation, something that cannot certainly be ignored. Kusher smartly illustrates the falls in home values across the capital cities (including both the cases in his argument: inflation-adjusted home values and the non-inflation adjusted ones).
Home value spurts in recent future will keep very close to inflation; may be a notch higher due to the low cash rate environment prevailing now.
You can read the full article here.
Do you know the difference between your real and nominal home value?
A weakening Aussie dollar could be a real cause of merriment for the foreign investors. It might even bring the expats back to Australia. Patrick Stafford for the Property Observer writes that a bottoming out currency would mean more purchasing power for the foreign investors and they would not like to miss out on this opportunity of investment.
The shift in demography is impacting the Australian property market like never before and it is worth studying the macroeconomic patterns pertaining to population, wealth of the nation, and age before making any sort of real estate decision. An article on the ‘Before It’s News’ website sheds light on few recent real estate trends.
Australia is closer to the US than any other country when it comes to the property market; its trends and its rising and falling sentiments. Having said this, Australia is faring a lot better because it has got its economic foundation firmly in place. Nicole Gurran for the BRW writes that the baby boomer housing bust which the US is facing might become the story of Australia too, albeit with a few marked differences.
An exuberant economy has triggered enough buyer confidence to push median house prices close to peak levels. For the record, the median prices are trading one percent short of the peak point. Barring a few cities, the trend is visible around Australia’s spectrum. For the March Quarter, National Median house prices have risen by 1.7% from $542,463 to $551,685. The price rise is attributable to various factors.
