Now I know this has been absolutely done to death, that Millennials cannot afford houses because they spend their money on avocados and sourdough.
But what I haven’t seen people do is put the data together to see if there is any link between avocado prices and housing.
There wasn’t actually an Avocado index, so I have used wholesale avocado data (Selinawamucii), and then rebased it to 100 to align with the Brisbane Property Index (ABS).
As you can see from the data there is no correlation between house and avocado prices, and it actually returned a beta score of (0.097), this means that the prices of avocado’s are inverse to the price of houses (in Brisbane at least), so in theory, if you wanted to purchase a house you should stock up on avocados as when they go up in value, the price of houses fall.
It is quite interesting to see though, that avocado prices are quite volatile, this is due to a few different factors.
Firstly, the export market, which Australian Avocados go mainly to the Asia-Pacific region with $1.6million (USD) going to Singapore and Malaysia each in 2019.
The second item impacting Avocado prices is the lead time to production around 3-5 years for a variegated plant.
The recent fall in Avocado prices has been from a combination of exports being shut down due to covid and new avocado crops producing fruit.
And since we know that Avocados and House Prices have a negative correlation it means that the fall in avocado prices has been outweighed by the rising cost of house prices.
To answer the question of Avocados and House Prices, Correlation or Causation.
There is no data to indicate they are intrinsically linked in anyway, but hopefully once more data is available (earliest Avo wholesale data available is 2011) we can better understand if there is any lead indicators Avocados can give us about house price movement.