Source: AAP Image/ James Ross
House prices are going one way just as every other price in the economy is going the other. This means that if you inflation-adjust house prices, they look even cheaper. House prices are down only about 5-10% in cash terms, but when inflation-adjusted, they are down far more — back to 2017 levels.
The next graph shows what I’m talking about. Inflation-adjusted house prices rose extremely sharply during the pandemic, pulling them out of the lull they fell into during the 2017-18 price correction. That sharp rise is being reversed again now, and if the forecasts of high inflation and falling high prices are correct, it has a way to go.
Does it make sense to inflation-adjust house prices? We often talk about inflation-adjusting wages.
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