Property values through time (with consideration for CPI)

[MarkB]

The attached spreasheet contains Australian Consumer Price Index (CPI) data for each financial year since 1949/50.

Using CPI as a base it is possible to ascertain the real growth in the value of an asset. That is, the growth over and above what simply keeping pace with CPI would dictate.

MB

 

[always_learning]

That's great.

BTW Does anyone have the median housing price data for each capital city for the same time period (1950~present)?

I would like to see which of the following is more true:

• Price increase (san's CPI) tend to show linear growth over time (some years a little more, some a little less, but basically slow-and-steady growth. Gradual growth.
• Home prices in general are flat (san's CPI) year-by-year, but with short periods of significant/massive price growth is rapid. Punctuated equilibrium.

From this can we model the expected pattern 2004~?

 

[Garry K]

Hi AL

I know the Navra site has REI Median Capital city prices 1981-2002.

I'd be interested in your comparison of CPI and Median prices over longer term as well.

I'm guessing your point 2 is closer to the mark.

An example is:

CPI at Sept 1985 (when CGT started) was 71.3, March 2003 it was 141.3.
A property in Melbrne Median price 1985 was $78,300.

So indexed cost base 2003 = 141.3/71.3 x $78,300 = $155,172

Median Melbourne price, end 2003 = $327,500 (8.27% compounding pa 18 yrs on $78,300))

So clearly the Median has outperformed CPI (by a long way) over this period.

Brisbane example is 1983 Median $55,500, x 141.3/71.3=$109,988

Median Brisbane 2002 = $230,000 = 8.21% compounding pa on $55,500.


Let me know when you have drawn up the complete spreadsheet.


Geekay

 

[NigelW]

inflation

This is great work Pitt St.

Exactly the sort of objective analysis that is required to cut through the hype.

Well done.

 

[Garry K]

Hi Ya _______________________
formely known as MB364


In your last post you didn't quote "Pitt St" in your sign off.
Are you like prince who is now known as ~ or something?? Haha.

Any way, to the point.

I now notice your CPI numbers are different to ones ( 2 sources) I have.
The 2003 at 141.3 is the same (March quarter), but all others are different, particularly in the example I quoted in 1985.
Can you check them please.


Geekay

 

[MarkB]

Garry

I never sign off as Pitt_St - I use my initials (MB).


In response to your queries, as noted in the spreadsheet, I used two sources:

1. RBA

2. ATO



The references were included, but the RBA data can be found at:

http://www.rba.gov.au/Statistics/op8_index.html

Then go to Section 5.7 b

- Consumer Price Index (per cent change)

Download the Excel Spreadsheet and note column AA - "Annual Average"

(I would attach the spreadsheet, but it is too big)

If I am wrong, then the RBA is wrong.

I used RBA data for financial years ending 30 June 1950 - 1997 (inclusive)



For the ATO data go to:

http://www.ato.gov.au/taxprofession...005/013/001/010&mnu=4776&mfp=001/005&st=&cy=1

ATO data has been used from 1998 onwards (I used yearly data for the quarter ending 30 June of each of those years).


As mentioned in the spreadsheet it is not a perfect time series set. There are some inconsistencies between the RBA and ATO data. However, these inconsistences are relatively minor (a % here or there) and for the purposes of what I posted the spreadsheet immaterial (IMHO).


I hope this clears up any confusion.

MB

 

[Garry K]

Hi MB

I see it all said the blind man.......


I checked your ATO link, the figures are exactly the same as mine.

I was looking at the December quarter figure each year, whereas you appear to have used the March quarter figure each year.

For example the ATO figures for 1990 are:

March 100.9
December 106.0

So quite a difference ie about 5% in 12 months.

But at the end of the day, your spreadsheet tells us what we want to know.

Well done.

Garry

 

[MarkB]

Originally posted by Garry K

I was looking at the December quarter figure each year, whereas you appear to have used the March quarter figure each year.

I've used June quarter (qtr ending 30 June).

So the figures are all F/Y CPI.

MB