The complication here comes from the fact that Australians are both owners of housing assets and consumers of housing services. We don’t just own housing and the land on which it is built, but we also live in that housing, and on that land. And that housing and land provide us with valuable services.
If housing is fairly valued – in the sense that the price of housing is equal to the present discounted value of the future rents – then the rise in prices implies an increase in the expected future cost of housing services.