The claim

The seemingly inexorable rise in house prices has been the subject of political debate for decades, with many blaming Australia's tax rules for favouring investors at the expense of first home buyers.

In a July 30 tweet, Greens leader Adam Bandt claimed house prices are rising by $1,200 a day, warning that younger workers have been locked out.

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"House prices are going up $1200 a day," Mr Bandt said. "Great for property investors, a disaster for every casual worker with smashed savings."

Is it correct that house prices are rising by $1,200 a day? RMIT ABC Fact Check investigates.

The verdict

Mr Bandt's claim is overreach.

While his claim accords with the average daily increase in the median house price in Sydney, the situation in the rest of the country is different.

For the eight out of 10 Australians who do not live in Australia's largest city, on average prices are rising at less than half that pace.

Depending on the measure used — and the timeframe applied — median house prices for Australia's eight capital cities are rising at an average daily rate of between $465 and $576, and at lower rates in areas outside the state capitals.

Background to the claim

Mr Bandt's claim came just days after federal Labor junked a controversial plan to make housing more affordable by tightening negative gearing rules and reining in the capital gains discount for assets held for at least 12 months.

Australia's tax treatment of housing has long been criticised as overly generous for investors and distortionary, with investment properties often effectively taxed at a lower rate than income from other sources, such as wages.

Negative gearing rules, for example, allow investors to use losses on rental properties to offset taxable income.

Further, when an individual sells an investment owned for at least 12 months, only 50 per cent of the capital gain is subject to capital gains tax, under laws introduced by the Howard government in 1999. (Under Labor's proposal, this would have been increased to 75 per cent).

Two days after suggesting that house prices had been rising by $1,200 a day, Mr Bandt made a similar claim on Twitter.

"Supercharged by tax breaks for investors, house prices are shooting up more than $1,000 a day," he wrote.

"[M]illions of Australians are seeing the dream of home ownership become a nightmare."

Measuring house prices

Measuring house price movements can be tricky. As the Reserve Bank noted in a discussion paper, there are two main problems: it is only possible to track price movements for houses that have been sold; and, using simple average or median prices can paint a misleading picture if the composition of the housing stock is changing over time.

For example, an increase in the proportion of smaller or outer suburban (and hence, less costly) houses as a share of the total could wrongly suggest prices have fallen.

"Quality also varies through time with changes to existing dwellings and the construction of new, typically higher-quality, housing," the Reserve Bank said.

"Hence, movements in house prices can reflect pure price changes, changes in the mix of houses sold and changes in the quality of houses."

Policy changes can also have an impact.

Property data analysis company CoreLogic notes that the introduction of the first home buyers grant meant a larger share of properties purchased were "on the cheaper end of the spectrum", resulting in a significant decrease in the average price of transacted properties.

Several statistical approaches are used to tackle these problems.

House attributes such as location, size, available parking or the number of bathrooms can be analysed in an attempt to make "apples-to-apples" comparisons. This is known as a hedonic approach.

Another approach is to break the housing market into subsets that are qualitatively similar to measure price changes, in a process known as "stratified analysis".

Yet another approach is to measure price changes by examining repeat sales data for the same houses over time. This provides an indication of price increases for the same houses, although it can be tricky where renovations have improved the quality (and hence, the value) of an existing dwelling.

Fact Check relied predominantly on two sources of house price data, both of which are monitored by the Reserve Bank to track median dwelling price movements: CoreLogic's monthly series, and Australian Property Monitors' quarterly estimate, as published by real estate platform Domain.

The CoreLogic series relies on hedonic analysis to calculate median prices, while the Domain/APM measure uses a "stratified median".

The Australian Bureau of Statistics also produces a measure of house prices using a stratified approach based on data supplied by CoreLogic. However, price changes are reported as an index rather than in dollar amounts.

This makes the ABS series less relevant for assessing Mr Bandt's claim.

Mr Bandt made his claim in relation to "house prices", as opposed to "other dwellings" such as units and townhouses. He used the present tense, claiming house prices "are" rising by $1,200 a day.

In his tweet, Mr Bandt did not specify whether he was talking about a specific jurisdiction, or the nation as a whole.

To assess this claim, Fact Check used the latest data available at the time he made his claim, and divided this by the number of days in that reporting period to obtain a daily average figure.

So how quickly are house prices rising?

Growth in house prices around the country has been uneven.

According to the Domain/APM data, the median Sydney house price surged by $106,948 over the June quarter to a record $1,410,133.

That works out at a daily average (over 91 days) of $1,175. Although this applies to Sydney, it aligns with Mr Bandt's claim that "house prices are going up $1,200 a day".

Nationally, the median capital city price increased at a daily average pace of $576, rising by $52,456 during the quarter to reach $955,927.

That represents a daily rate of increase that is less than half the rate claimed by Mr Bandt.

The figure of $1,200 used by Mr Bandt is consistent with information relating to Sydney, contained in the June quarter Domain House Price Report. That report was released on July 29, one day before Mr Bandt made his claim.

"Sydney house prices soared by almost $1,200 a day over the June quarter, a total rise of $107,000, to a new record $1.41 million," the report noted.

"Prices rose more than 8 per cent over the past two quarters, a rare growth only seen three times over the past 30 years. When compared to this time last year prices have jumped 24 per cent, a record performance that has exceeded the boom time results of 2015 and 2002."

Canberra was the only other capital city that came close to matching Sydney, with the median price rising by a daily average of $1,054.

"Canberra house prices have joined the $1 million club, reaching a new record high $1.016 million," the report said.

"They soared by almost $1,054 a day over the June quarter, a total rise of $96,000. This is the steepest price acceleration in almost three decades."

However, other capitals have not experienced this level of growth.

The daily rate in Melbourne during the quarter was $446, in Brisbane it was $357, in Adelaide $358 and Hobart $440. In Perth, prices increased at a daily rate of just $67.

The monthly CoreLogic data tells a very similar story.

It shows Sydney prices grew at an average daily rate of $1,177 during the three months to the end of June — double the national average rate of $571.

There are some signs that the price surge could be slowing.

According to the monthly CoreLogic data, the median Sydney price increased at an average daily rate in July of $824, compared to a national average of $465.

That was down from an average of $1,181 for Sydney, or $569 for all eight capitals.

Nor has the growth in house prices been even across capital cities and other areas.

CoreLogic provided Fact Check with a breakdown.

While Sydney prices rose at a daily average pace of $1,177 through the June quarter, prices rose at an average daily rate of $460 across the rest of NSW.

Nationally, prices for non-capital city areas increased at an average daily rate of $308, compared to $571 for the capitals.

Principal researcher: Economics and Finance Editor Josh Gordon

Sources

• Michelle Grattan, View from The Hill: Labor wouldn't disturb tax cuts, negative gearing in ‘small target' strategy, The Conversation, July 26, 2021
• James Hansen, Reserve Bank, Australian House Prices: A Comparison of Hedonic and Repeat-sales Measures, May 2006
• CoreLogic, ​​Home Value Hedonic Indices FAQs, August 2017
• CoreLogic Home Value Index — Types of Indices
• Domain, June 2021 House Price Report, July 29, 2021
• Australian Bureau of Statistics, Residential Property Price Indexes: Eight Capital Cities methodology, June 15, 2021