Wednesday, August 28, 2013

Australian Houses Priced in Gold / Silver Ounces

It's been over 12 months since I last updated these charts on the blog, which was largely a result of Residex deciding to charge for their property indices. Luckily I still had the data from when it was publicly published and have included the last 12 months by manually gathering the figures from their blog. The Gold & Silver price used was 'bid average' AUD via Perth Mint.

Key Figures:

Sydney (Ounces to buy a house)
Precious Metals Peak (January 1980): 103oz Gold, 1811oz Silver
Housing Peak (February 2004): 1100oz Gold, 69,143oz Silver
Latest Figures (June 2013): 504oz Gold, 32,405oz Silver
Based on Current Spot Price: 451oz Gold, 26,161oz Silver

Melbourne (Ounces to buy a house)
Precious Metals Peak (January 1980): 67oz Gold, 1181oz Silver
Housing Peak (February 2004): 661oz Gold, 41,538oz Silver
Latest Figures (June 2013): 411oz Gold, 26,381oz Silver
Based on Current Spot Price: 368oz Gold, 21,298oz Silver

Brisbane (Ounces to buy a house)
Precious Metals Peak (January 1980): 62oz Gold, 1091oz Silver
Housing Peak (February 2004): 600oz Gold, 37,696oz Silver
Latest Figures (June 2013): 309oz Gold, 19,882oz Silver

Based on Current Spot Price: 277oz Gold, 16,051oz Silver

(Spot Price ratio calculated on A$27.35 & A$1585 & June house prices)

The ratios have seen a large spike over the last 12 months in favour of housing (becoming more expensive priced in Gold & Silver) as a result of rising house prices and falling Gold & Silver prices.

I have included a number above which calculates the ratio based on spot price (today) versus house prices to June because we have seen a significant shift in the price of Gold and Silver since the monthly average in June when Gold was A$1418 (spot now A$1585, +12%) and Silver A$22 (spot now A$27.35, +24%). House prices may have seen some change since June, but is unlikely to be of significance (relative to the change in Gold/Silver prices).

The correction in precious metals has dragged on longer than I expected, but it remains my opinion that we have only experienced a cyclical bear market within a structural bull market (like we saw in the middle of the 1970s). So I think we will see these ratios turn lower again, with Gold & Silver to outperform Australian property prices by a large margin.

Click any of the charts below to enlarge them.

Sydney House Prices in Gold / Silver Ounces

Melbourne House Prices in Gold / Silver Ounces

Brisbane House Prices in Gold / Silver Ounces

The data I use from Residex only goes back to the late 1970s, it's interesting to see these ratios expanded over the long term which shows a repeating cycle of Gold's value against Australian houses (much like Gold also cycles against wages, oil & stocks as previously discussed on the blog).

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  1. Thanks BB again
    Always appreciate your efforts with these charts. Interested to know your thoughts on how low you expect the gold/house price and silver/house price ratios will go at the end of this cycle, likewise the gold/DOW ratio?

  2. Assuming that Gold does not form part or the basis of any future global monetary system (in which case trends over the last 100 years would likely become completely irrelevant) then I still think there is a good chance Gold & Silver head into a bubble and the ratios against property to drop to a third or less of what they are now (which may come as a result of falling house prices and rising Gold/Silver). Sydney house prices at $715k, if ratio against Gold drops to 150oz (1/3 of current level, but still well above the lowest point seen in 1980) this would imply AUD Gold price of roughly $4800 (if no corresponding change in house prices).

  3. Thanks for updating the chart. Its very informative.

  4. Forgotten stock ?

  5. It has been a couple of years since I've had any significant capital in the junior mining sector, may look to return once this precious metals correction has finished playing out.

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  8. Thanks Bullion Baron For sharing this Chart !!

    Charts Shows Different countries (Sydney,Melbourne,Brisbane) with < a href=Gold/Silver Ounces.very informative data providing by you really nice.

  9. thanks Baron for post this chart !! it is very informative and also providing per ounce data of gold and silver for a particular country.