In this research note we depict the Purchasing Power Index of the median Melbourne property (PPI) over time. This is one of the indicators we use to analyse real estate trends.
To find out how to interpret the chart please see 3 January 2023 post on the Sydney property market.
Like Sydney, the Melbourne property market has been stuck in a downtrend channel (green dotted lines) for over a decade.
The green dotted lines on the chart show that each property cycle the PPI had lower highs and lower lows (i.e., property prices became extremely expensive over time).
Should future property cycles form with higher highs and higher lows then this should be of concern.
On 12 February 2022 we published a research note concluding, “The Sydney PPI in the future will get much, much cheaper than today. This could be achieved by house prices falling, higher inflation, higher interest rates or any combination of these”, which is what actually happened! The Sydney property market peaked in February 2022 and subsequently fell.
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Authored by QED Realty and BIDsquare.