Adjusting price movements for inflation: Tweet of the day

When it comes to tracking market performance, context is everything.

RP Data senior research analyst Cameron Kusher tweeted out a graph showing the difference between September home price values in the capital cities and their previous peaks.

While much has been made of recent home value growth, particularly in Melbourne and Sydney, Kusher shows the importance of taking inflation into account.

His graph shows that Melbourne home values, which in September were up 6% from their previous peak in nominal terms, actually fell below their recorded high point when adjusted for inflation.

In Sydney, prices appear 21% higher than ever recorded before, but in real terms are 8.1% above their previous peak.