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Debate House Prices
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Is inflation starting to hit the housing market?
Comments
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Graham_Devon wrote: »Buy a fridge today and it may well be cheaper than next year if inflation hits it.
A fridge like a house is a wasting asset. The investment value is in the land.0 -
It doesn't follow that house prices aren't correlated with inflation - a 10 year aberration (followed by a correction) doesn't mean that there isn't a correlation.
The "correction" hasn't finished yet. Far far from it. Will take far longer to deflate than inflate. Inflate was the easy part.0 -
Thrugelmir wrote: »House prices bear no correlation to inflation.
In the USA house prices rose more in % terms in the 10 years from 1996 to 2006. Than the previous 80 years.
What changed is that everybody thought financial engineering by using derivatives had reduced risk to such a low level. That banks and other financial institutions could leverage up and up. As we now know this was a fallacy.
Shiller data from 1890 to 2004 shows that house prices increased by an inflation-adjusted 0.4% per year. In the later part of this long period, house prices did of course increase faster than inflation at certain times, however over the long term house prices absolutely look like they are correlated with inflation. That would also make sense, inflation is usually caused by increased spending.
The period you refer to is at least in the context of long history an outlier - i.e. house prices increased by around 87% or so (depends on the source) whereas the total inflation for the period was around 32.6%.
imho
J0 -
Thrugelmir wrote: »The "correction" hasn't finished yet. Far far from it. Will take far longer to deflate than inflate. Inflate was the easy part.
It'll take forever if we keep seeing these YOY house pices rises! :eek:
Indeed, the "correction" hasn't started yet if you look at London in isolation.0 -
Thrugelmir wrote: »The "correction" hasn't finished yet. Far far from it. Will take far longer to deflate than inflate. Inflate was the easy part.
Just because there are other factors at play (market corrections/ supply & demand/ credit supply) still doesn't mean that house prices aren't correlated with inflation.0 -
Thrugelmir wrote: »The "correction" hasn't finished yet. Far far from it. Will take far longer to deflate than inflate. Inflate was the easy part.
when do you think it will re start the correction. and finish? another 10 years? too long to wait for me, i waited long enough (stupidly)Ex HPC fool0 -
james_toney wrote: »when do you think it will re start the correction. and finish? another 10 years? too long to wait for me, i waited long enough (stupidly)
If you know where and when you want it then delaying in property doesn't really help - if you are looking for a home rather than an investment..
At some point you just have to make the decision and go for it.
Getting into the market is the scary bit, once there you then ride with it."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
james_toney wrote: »when do you think it will re start the correction. and finish? another 10 years? too long to wait for me, i waited long enough (stupidly)
Restart? I don't believe the correction has ever stopped. Like a game of chess. The pieces are moving slowly round the board. One move at a time. In attempt to avoid checkmate.
Checkmate being the collapse of a major UK bank.0 -
Harry_Boyle wrote: »It'll take forever if we keep seeing these YOY house pices rises! :eek:
Indeed, the "correction" hasn't started yet if you look at London in isolation.
How about if we look at other areas in isolation?0 -
Graham_Devon wrote: »How about if we look at other areas in isolation?
Be my guest. Do try and remember what you are actually looking at though - i.e. read Thrugelmir's post re:correction hasn't finished...0
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