Deflation? For whom?

MrDT

StevieJ wrote: »

1988/89 I was paying £440 a month for a bog standard first time buyer home:cool: Hope this contributes to the debate

2009 - we could be paying as little as £207 a month on a 25 year (10 year fixed) mortgage from Brittania BS for a small 2 bed terraced house in an ok area if we decided to buy today. This is based on asking price of £65k with a £30k deposit, don't know what it'll sell for, £60k maybe.

Might as well live a little longer in rented and buy the 3 bed semi in a year or two, give the 'ladder' a miss

I love living in the sticks, it's like the bloody twilight zone - the prices you guys argue over are in a whole other world :rotfl:

poppy10_2

StevieJ wrote: »

Any substantial increase in inflation should act as a support for house prices :cool:

Only if it accompanied by wage inflation. As it is the cost of living is going up while pay deals are being frozen or cut. This further reduces the amount available to people to spend on housing.

ninky_2

carolt wrote: »

http://www.telegraph.co.uk/telegraph/multimedia/archive/01369/2103_Real_cost_1369124a.pdf

The only thing that's gone down - by a lot - is the cost of mortgages.

interesting the cost of TV/ internet has gone down almost a third.

StevieJ

ninky wrote: »

interesting the cost of TV/ internet has gone down almost a third.

My Internet has gone from 24.99 BT to NIL (for 12 months) O2 :T

StevieJ

MrDT wrote: »

2009 - we could be paying as little as £207 a month on a 25 year (10 year fixed) mortgage from Brittania BS for a small 2 bed terraced house in an ok area if we decided to buy today. This is based on asking price of £65k with a £30k deposit, don't know what it'll sell for, £60k maybe.

Might as well live a little longer in rented and buy the 3 bed semi in a year or two, give the 'ladder' a miss

I love living in the sticks, it's like the bloody twilight zone - the prices you guys argue over are in a whole other world :rotfl:

Mine was a result of high interest rates BR 30 times higher than now :eek:

dopester

skap7309 wrote: »

ad9898, once again you speak my mind - and word it better! This deflation talk is rubbish, everything around me IS going up in price. Just look at the CPI to see it is still 1.2% above government targets - and rising.

You might be misunderstanding deflation.

Even if asking prices for things are going up - it will mean fewer of those items, except for essentials - are bought.

People cutting back to what they can afford, and pay-cuts and unemployment adding to it, together with fear about their own ability to keep earning, and increasing their savings cushion.

The fact some items are going up.. lets say cars, LCD TVs, X-Box or whatever, doesn't mean more people are going to buy them. It is a deflationary vortex for the people making and selling those items - and it takes a while to fully play out to an extent that people here can see how deflation works.

ninky_2

StevieJ wrote: »

Any substantial increase in inflation should act as a support for house prices :cool:

but what's the point of the house being worth more if that money buys less?

ad9898_3

StevieJ wrote: »

It is becoming confusing, Merv penning a letter about why it is too high, while at the same time applying remedies based on it being too low

Great point Steve, just goes to show, the powers that be don't have a clue of how to get out of this situation, so they are doing the next best thing by actively reducing the monthly expenses of the biggest proportion of people who are likely to vote/not vote for them at the next election......... mortgage holders.

dopester

carolt wrote: »

Interested to see what those like dopester, Sir Humphrey etc, who IIRC were great believers in the oncoming 'deflation' problem, think of today's figures.

You always sided with !!!!!! on inflation, as opposed to arguments for deflation.

We are just in transition to heavy deflation. Doesn't happen overnight. It has been coming for a year+, as a few of us have warned. The confusing numbers aren't confusing to me... just another step-phase into heavy deflation.

Wookster

dopester wrote: »

You might be misunderstanding deflation.

Can you explain then? What is the difference between correction over over-egged asset prices and deflation?