dick smith on why houses expensive, page-57

That's an easy one:

"The average cost of building a house in Australia almost quadrupled in the twenty years to June 2008, rising from $65,000 in 1987-88 to $236,000 in 2007-08. Graphs 1 and 2 show that the cost of building a house in Australia has been rising, with the rate of increase greater in the second decade."

reduce by sqm => 236 * .673 = $158K

RBA inflation calculator shows:

65,000 in 1987 = 123,000.

Quality factor is 2.1% pa

=> 123 compounded at 2.1 over 10 years = 151.5

=> 158-151.5 = 6.5%

=> @ .055% pa above the inflation rate

Conclusion: marginally over the inflation rate