'Real' values show houses outperforming units

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Even with inflation factored in, Australian dwelling values have increased nearly 200% since 1993, according to the latest figures from RP Data.

RP Data's report on real value, which considers inflation, also show the latest downturn in prices are worse than the raw value change numbers had previously shown. Whereas overall dwellings were shown in March to be down 1.8% over the past year, they actually are down 4.3% when inflation is included, according to RP Data's figures.

Unit values, which seemed to have shown a slight 0.5% growth in March from the year earlier slipped down 2% when inflation was factored in. Houses went from a 2.6% drop down further to 5.1%.

"When analysing asset performance, it is important to determine the real value, taking into consideration the impact of inflation," said RP Data research analyst Cameron Kusher.

He points out that since March 1993, the Consumer Price Index (measuring inflation) has rising 43% over this period, at an average of 2.7% each year. At the same time, property prices have increased by a total 241% over this period, averaging 8% growth per annum.

The national median priced dwelling in March 1993 was $134,544. If property values increased only by inflation, it would have reached just $205,285. Instead, the dwelling median in March 2009 was $458,909, some  $253,624 above the inflation figure.

Over the past 16 years, houses have bested units, growing 8.3% in value per annum, compared to units, at 6.9%, according to new "real" data considering inflation released this week.

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