Real residential property prices: United States vs. Australia

Residential property can reveal insights about the financial stability of a country’s economy. The FRED graph above shows the annual changes in the residential property prices for both the United States and Australia for the past 20 years. While the size and location of properties obviously affect residential property tax values, so do the financing of these properties and financial market conditions.

For example, the Financial Crisis of 2008 dramatically dampened U.S. property prices. The U.S. house price index reflects the economic turmoil during that time, when annual house prices declined as much as 19.6% in the third quarter of 2008 from their levels during the same quarter of the previous year. The crisis also trickled down to Australia, causing local property prices to decline, although not as deeply as in the U.S.

In 2019, price declines in Australia’s housing market repeated those from 2008. While Australia’s economy was doing relatively well before this occurred (interest rates and unemployment were relatively low), policies were put in place to enforce tighter lending standards for housing. This caused property prices to decrease, which led to fewer jobs in careers such as construction, insurance, contracting, and so on. This, in return, caused a decrease in spending, which hurt Australia’s economy.

How this graph was created: Search FRED for “real residential property prices” and click on the U.S. series. From the “Edit Graph” panel, use the “Add Line” tab to search for and select the Australian series. Change the units to “Percent Change from Year Ago” then click “Copy to all.” Finally, start the graph on 2000-01-22.

Suggested by Natalie Robinson and Maria A. Arias.

Categories: Research