The RBA is using new charts that make Sydney house prices look less bonkers

Yesterday the Reserve Bank’s Monetary Policy Decision Statement noted that “further easing of policy may be appropriate in the period ahead.”

Today, the RBA released its Chart Packs updated to 2 April 2015 which revealed another insight into the lines of thinking at Martin Place.

Previously the “Housing Prices” chart in the Reserve Bank’s Chart Packs have been presented using a linear or arithmetic scale, with prices spaced equidistantly.

On a linear scale, housing prices in Sydney were seen to be galloping towards the top of the chart.

Log scale

In this month’s Chart Packs, however, the Reserve Bank has shifted seamlessly to a log scale, whereby equal percentage changes in housing prices are plotted as the same vertical distance on the scale.

On such a logarithmic price scale, therefore, the vertical distance between $750,000 and $850,000 (approximately a 14 per cent increase) is more than 50 per cent shorter than the distance between $450,000 and $550,000 (approximately a 22 per cent increase).

Naturally enough, this has the effect of appearing to dampen the line on the chart which denotes housing prices in Sydney.

This post originally appeared at Pete Wargent’s blog. Pete Wargent is a buyers agent and the co-founder of AllenWargent Property Buyers (London, Sydney, Brisbane). Pete is a market commentator with a range of top finance qualifications. He is a three-time finance author, including Get a Financial Grip which was rated Top 10 Finance Books of 2012 by Money Magazine and Dymocks. You can find Pete on Twitter.

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