Monday, July 28, 2014

House Prices in Gold / Silver Ounces (2014 Update)

I last updated these charts in August last year. With 12 months having passed and Residex posting on their blog today with the latest property data (taking us through to June 2014), I thought it an opportune time to publish new charts. The Gold & Silver price used was AUD 'bid average' from 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 2014): 607oz Gold, 39,611oz Silver
Based on Current Spot Price: 592oz Gold, 37,523oz 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 2014): 464oz Gold, 30,278oz Silver
Based on Current Spot Price: 452oz Gold, 28,682oz 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 2014): 344oz Gold, 22,433oz Silver
Based on Current Spot Price: 335oz Gold, 21,250oz Silver

(Spot Price ratio calculated on A$22 & A$1395 & June house prices)

The chart tells the story as Gold and Silver continued to be outperformed by property over the 2013-2014 financial year. This has been a result of stagnant to slightly lower precious metal prices and further exacerbated by strong house price growth (at least in the eastern capitals covered by the charts).

Interesting observations on Sydney:

Sydney houses peaked against Silver in November 2003 (Gold in February 2004) at 79,385 ounces, they fell to less than 25% of that by April 2011 when priced at 16,864 ounces. The fall in Silver price from it's peak over 3 years ago and recent strong growth in Sydney property prices has seen houses bounce to 40,230 ounces of Silver (only half the peak, but well over double the 2011 lows). Anyone stacking Silver ounces with the intent to purchase Sydney property over the last few years has seen a large setback.

Another way to show just how ridiculous Sydney house prices have risen... in January 2011 the price of Adelaide house prices was $410,000 and Sydney was $671,500, a ratio of 1.63 (Sydney divided by Adelaide house prices). In June 2014 the price of Adelaide house prices is $408,500 and Sydney house prices are $825,500, a ratio of 2.02. Though most capitals (all except Darwin as measured by Residex) have seen some growth over the last 12 months, Sydney's has been absolutely phenomenal and is reaching price and speculation levels that rival the last major price peak seen 10 years ago (see charts at 'Sell Sydney Property' on Macro Business). 

Following the last major peak in Sydney prices (January 2004, $573,456) they didn't increase nominally for a 5 year period (May 2009, $573,507). I expect we'll see similar from the next cyclical peak in Sydney property (5 years stagnation in nominal prices) which I think will come later this year or early next. Over the same period (next 3-5 years) I expect rising precious metal prices and a lower Australian Dollar, so do think investors stacking ounces for the eventual purchase of a house will be rewarded (even those in Sydney). Only time will tell if I'm right.

Here are the charts (click any to enlarge).






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4 comments:

  1. Love it, thanks.

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