Real House Prices Are Up 64% Since 2002-03

Real Household Income Is Up 36%. Post 3 showed house prices outrunning wages in nominal terms since FY2011-12. This time I went further back and stripped out inflation entirely — an index of real (CPI-adjusted) house prices against real median household income, Australia, 2002-03 to 2022-23, both rebased to 100 at the start. Same story, but a genuinely different test: this isnt inflation making one side look worse than it is. Three things stand out. The full-window gap is nearly 2-to-1. Real house prices are up 64% over the 20 years; real median household income is up 36%. Strip out inflation entirely and the divergence is still there — this isn’t a story about the cost of living rising, its specifically houses outrunning what households actually take home. Its a two-phase story, not a steady climb. From 2002-03 to about 2012-13, the two lines track each other closely, and the gap even reverses at points — in 2008-09, income actually pulled 9.5 points ahead of house prices, as stimulus payments boosted household income while prices paused through the GFC. The persistent, one-directional gap only opens from 2013-14 on, peaking at 43 index points in 2021-22 during the pandemic price boom. The 2022-23 rate-hike correction barely dented it. Real house prices did fall from their 2021-22 peak (181) to 164 by 2022-23 — a real pullback. But the gap versus income is still 28.5 points, wider than every year in the mid-2010s boom. Even the sharpest tightening cycle in decades only took the edge off, not the gap itself. If two years of aggressive rate hikes only shaved a few points off a 43-point gap, what would it actually take to close it — a multi-year price stagnation, a genuine supply response, or a change on the income side that this chart doesnt capture at all? Methodology: House price index — Bank for International Settlements, Real Residential Property Prices for Australia (2010=100, new amp; existing dwellings, 8 big cities), June quarter of each financial year. Household income — real median equivalised household disposable income ($/wk, June-2023 prices), HILDA Survey via ABS Measuring What Matters, reusing the same validated annual series built for Post 40 (chosen over the ABSs own Survey of Income and Housing, which is more directly median household income but only biennial and was discontinued after 2019-20). Both series independently inflation-adjusted, so the comparison isolates real divergence from general price growth. #AustralianEconomy #Housing #HousingAffordability #Economics #ABS #darrenpoinen.com