UK house prices continue their long, slow drift lower

AG47

In most cases, if you are in the market for a house, you’ll find that your wages are rising faster than house prices are.

https://moneyweek.com/510317/uk-house-prices-continue-their-long-slow-drift-lower/

The huge disconnect between property prices and wages is slowly correcting.

Either property prices come down in relation to everything else, of big inflation pushes everything else up nearer to property correct ratio.

GreatApe

Id be fine with 10 years of no hpi and 3% wage inflation

Vs wages property prices would be lower
But its still better to buy today and pay 2% mortgage rather than 5% rent

Herzlos

Still better to get into a house when you find one you like and can afford it, rather than trying to play the market - you may save a bit of money but the risks are high.

AG47

GreatApe wrote: »

Id be fine with 10 years of no hpi and 3% wage inflation

Vs wages property prices would be lower
But its still better to buy today and pay 2% mortgage rather than 5% rent

You mis the inflation is real terms, this is key.

What if property stays the same for ten years and eveything else has massive inflation. It could be the equivalent of a 50% HPC:T

lisyloo

and eveything else has massive inflation

This is unlikely for a variety of reasons.
We employ the Bank of England to support economic stability and keep inflation within certain range.
If we do have brexit chaos is very unlikely we'd see high wage inflation.
Imported good could go up but that will be mitigated by people changing their basket of goods to home grown produce i.e. behaviour will change to mitigate so some extent.

Herzlos

AG47 wrote: »

You mis the inflation is real terms, this is key.

What if property stays the same for ten years and eveything else has massive inflation. It could be the equivalent of a 50% HPC:T

Yeah, but what'd be causing the house prices to stagnate whilst the rest of the economy boomed? You're back at the same "house prices need to correct" argument, but trying to do it over 10 years rather than 0.


House prices are a function of affordability - if wages go up then prices will go up as people can afford more. Conversely, the only way house prices will drop far is if suddenly people stop being able to afford them (or have some huge moral shift away from ownership), and that's only going to happen if a lot of people lose their jobs or there's some other huge cost of living increase.

Even then, a huge drop will result in a pretty quick correction as people capitalize on the reduction. Say it dropped 50% overnight, there'd be plenty of investors willing to buy up half price property so the price would come back up quickly. If it didn't, it's because the outlook is seriously bleak.

AG47

lisyloo wrote: »

This is unlikely for a variety of reasons.
We employ the Bank of England to support economic stability and keep inflation within certain range.
If we do have brexit chaos is very unlikely we'd see high wage inflation.
Imported good could go up but that will be mitigated by people changing their basket of goods to home grown produce i.e. behaviour will change to mitigate so some extent.

You are looking at it the wrong way around.

Inflation is an expansion of the currency supply, higher price is just the result of inflation.

They are expanding the currency supply exponentially

Malthusian

So my house is going to be around the same price as now but this is a bad thing as I'll be much richer (as will everyone else).

Wow. Terrifying. I wonder if I should spend my increased earnings on a rose-scented handkerchief to blub into about the fact I'm not even richer thanks to house price growth. Or maybe jasmine.

This reminds me of when the Guardian printed a shock-horror survey that the average Briton lived in 2.5 rooms, up from 1.5 rooms in 1980. This extremely positive dramatic increase in living standards was naturally presented as if it was a crisis, because under-occupancy or some such scat.

Malthusian

AG47 wrote: »

Inflation is an expansion of the currency supply, higher price is just the result of inflation.

No, an expansion of the currency supply is expansion of the currency supply. Inflation is higher prices. If the economy is in 1% deflation and I print a couple of extra five pound notes or buy a couple of gilts off the banks, there is still deflation even though the money supply is expanding.

They are expanding the currency supply exponentially

No they aren't. "Exponentially" does not mean "lots".

westernpromise

AG47 wrote: »

Inflation is an expansion of the currency supply

So are you talking about M0, MB, M1 / M2 / M3, or MZM?

AG47

westernpromise wrote: »

So are you talking about M0, MB, M1 / M2 / M3, or MZM?

They are all fake, cooked the books

There are trillions of units of currency made regularly off the books.

They just type them in, add a zero on the end and book it’s times ten