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Debate House Prices
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Economic indicators, useful or meaningless?
Comments
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As is stands we have rampant real inflation, and no real desire to control it properly ( as is evident in our laim systems of calculating inflation) partly because one of the symptoms of such a system of governance makes the rich richer.
Consumer price index fell 0.1% in the year to September. Is that what you call rampant real inflation? Sounds more like deflation to me.0 -
...To be honest the average person doesn't care what some economist refers to as inflation regarding consumption or not. ....
Do they? What evidence do you have supporting your claim as to what the "average person" cares about....We all know life has been getting measurably expensive and therefore real inflation has gone through the roof. My key expenses are travel, beer, entertainment and housing costs ( workmen, utility bills, broadband etc, insurance) all of which has gone up considerably.
Do we?
For example, the annual change in the price of 'Electricity, gas & miscellaneous energy' in September 2015 was minus 3.3%, which doesn't quite match you claim of "gone up considerably".
Given the choice between your personal perception of inflation and actual ONS data, I'd go for the ONS option every time.0 -
And that figure is captured in the RPI.
Our Peruvian bear friend is wondering why house prices aren't included. You spent nothing, I would wager, on the actual purchase of a house this month.
Ah but if my house vaalue goes up by 10% then the capital in it increases by 60k (for example) so living in the house rather than investing the capital elsewhere is costing me an extra 125 per month (at 2.5%) So whilst my food spend remains at 400 per month after my house price has gone up by 10% in a year my housing 'spend' has increased from 1200pcm to 1325pcm which is a big chunk of my total monthly spend. Is this effect included in RPI/CPIh?I think....0 -
Ah but if my house vaalue goes up by 10% then the capital in it increases by 60k (for example) so living in the house rather than investing the capital elsewhere is costing me an extra 125 per month (at 2.5%) So whilst my food spend remains at 400 per month after my house price has gone up by 10% in a year my housing 'spend' has increased from 1200pcm to 1325pcm which is a big chunk of my total monthly spend. Is this effect included in RPI/CPIh?
No.
What happens is that your contribution to the RPI remains unchanged but a new house buyer who has to buy with a larger mortgage increases RPI a little versus if house prices had remained unchanged.
In the US it certainly used to be the case that CPI included 'imputed rent', that is the value of housing services that your house gives you by you owning it. As the value of local rents rose and fell, so your housing costs rose and fell. AFAIK it's still the same.0 -
Do they? What evidence do you have supporting your claim as to what the "average person" cares about.
http://ftalphaville.ft.com/2013/02/20/1393672/the-real-rate-of-british-inflation/Proudly voted remain. A global union of countries is the only way to commit global capital to the rule of law.0 -
Do they? What evidence do you have supporting your claim as to what the "average person" cares about.
http://ftalphaville.ft.com/2013/02/20/1393672/the-real-rate-of-british-inflation/
Yes, in recent years essentials have risen by more than 'luxury purchases' (although I could construct a decent argument that a phone, internet, computer and TV are essentials).
That probably should be set against a longer term picture where the price of food in particular has dropped off a cliff. If you look at the proportion of income spent on food in 1970 (about 25% if memory serves) vs today (about 11% despite eating out much more).
Also, food prices have come down substantially since the article was written, again if memory serves.0 -
No.
What happens is that your contribution to the RPI remains unchanged but a new house buyer who has to buy with a larger mortgage increases RPI a little versus if house prices had remained unchanged.
In the US it certainly used to be the case that CPI included 'imputed rent', that is the value of housing services that your house gives you by you owning it. As the value of local rents rose and fell, so your housing costs rose and fell. AFAIK it's still the same.
Not saying you are wrong about the acutal calculation but I wonder if imputed rent is a fair way to assess the cost of the housing services my house provides to me as a homeowner. I would have thought that cost of the capital committed would be a fairer metric.I think....0 -
Yes, in recent years essentials have risen by more than 'luxury purchases' (although I could construct a decent argument that a phone, internet, computer and TV are essentials).
That probably should be set against a longer term picture where the price of food in particular has dropped off a cliff. If you look at the proportion of income spent on food in 1970 (about 25% if memory serves) vs today (about 11% despite eating out much more).
Also, food prices have come down substantially since the article was written, again if memory serves.
Rent has gone up in London about 5 - 10 % a year for the last few years. That's 30 - 40% of normal income. Travel has gone ballistic in London, now near 10 % of normal pay. The amount you have to save to buy your first house has gone ballistic. For generation rent inflation is astronomical.Proudly voted remain. A global union of countries is the only way to commit global capital to the rule of law.0 -
Btu the impact of rent rises depends on how often people move or whther they are subject to annual uprating. Just cos the rent has gone up 10% for a new rental doesn't mean all rents on average including existing have gone up that much.I think....0
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Eh? You said that "the average person doesn't care what some economist refers to as inflation regarding consumption or not". Why would they care any more about what some analyst with a degree in history and political philosophy refers to as inflation?
Are you going to answer every point with a random link to some article on the interweb?:rotfl:0
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