Housing
What real house prices mean
Nominal versus inflation-adjusted house prices: why a real house-price index changes the long-run story, how it is derived, and when to use each measure.
House prices are almost always quoted in the money of the day. A nominal index answers the question a seller asks: has the number on the price tag gone up? But a price tag is only meaningful against what that money could otherwise buy. A real house-price index divides nominal prices by consumer prices, so it answers a different and often more revealing question: has housing become more expensive in purchasing-power terms? This note explains the difference and why long-run comparisons need the real version.
Nominal versus real
A nominal price is measured in current currency. If an index reads 169 in one year against a 2015 base of 100, the average price is about two-thirds higher than in 2015, in the money of the later year. A real price adjusts for the fact that the later year's money is worth less. Deflating a house-price index by a consumer-price index removes the part of the increase that is simply general inflation, leaving the change in housing's relative cost.
The distinction is small over a single year and large over decades. Over a long period, general inflation compounds, so a nominal index can rise substantially while the real index is flat. That is why the republished series carries both: the nominal index on the main page, and a real index, set to the same 2015 base, for comparisons across long spans and across economies with different inflation histories.
How the real series is derived
The real house-price index is a deflated version of the nominal one. The producer takes the nominal index and divides it by a measure of consumer prices — the same kind of price index used to track the cost of living — then rebases to 2015. In the OECD analytical collection that Younivi republishes, the result is a clean 2015=100 series that puts every economy on the same footing regardless of its currency or inflation record.
The latest observations make the point. New Zealand's real house-price index stood at 127.5 at December 2025, against a nominal index of about 169 on the desk's own series: a good part of the nominal climb since 2015 was general inflation. The gap differs by country. Greece recorded 156.2 on the real index at December 2025, the United States 151.5 at June 2026, Spain 150.6 at March 2026, and the United Kingdom 107.6 — a market barely above its 2015 real level despite a much higher nominal price tag.
Why this matters for long-run comparisons
Real measures are the only fair way to compare housing across long periods or across countries with different inflation. A nominal comparison across a high-inflation economy and a low-inflation one would mostly rank their inflations, not their housing markets. Real comparisons strip that out: they ask whether housing has become more expensive relative to the basket of goods and services households actually buy.
The trade-off is that real numbers are a construction. The deflator is a consumer price index, and housing is only one part of it; different deflators would give slightly different real values. A real index also inherits the coverage and methodology of its source. So the real series is best read as a robust statement about direction and rough magnitude, not as a precise price.
When to use which
Use the nominal index to describe what happened to price tags, to track a recent move, or to match a loan balance or a savings deposit, which are themselves nominal. Use the real index for long-run questions — has housing outpaced the cost of living, and by how much — and for any cross-country comparison where inflation histories differ. When the two tell different stories, that gap is information: it says how much of the headline increase was inflation rather than housing.
Neither is a valuation of a particular home, and neither is a forecast. They are two scalings of the same underlying series, and the choice between them is a choice about the question.
Where this fits in the wider picture
Inflation is the quiet variable in most housing conversations. A homeowner who bought decades ago can see a large nominal gain while the real gain is smaller, because the money they would realise buys less than the headline suggests. Savers feel the mirror image: an interest rate that is positive in nominal terms can be negative in real terms when prices rise faster. The same adjustment that clarifies house prices clarifies the return on cash.
This is why reference desks publish both nominal and real versions rather than picking one. The nominal series connects to the money in a contract; the real series connects to purchasing power over time. Read together, they prevent two common errors — treating a nominal rise as a real gain, and treating a period of high inflation as a period of rapid real house-price growth. The real index is the corrective. Over any window short enough that inflation is small the two measures will look similar, and the distinction earns its keep over decades and across economies with very different price histories.
How to read this on Younivi
The real HPI page on the House Price desk shows the deflated 2015=100 series for each economy with the source citation, alongside the nominal index and the year-over-year change on the desk's other pages. Companion notes cover the index base and the price-to-income ratio. Figures are republished official data, may lag the producer, and are not financial advice about any property decision.