Sunday, Dec 16, 2007
House prices, bubbles and inflation
FT: Hold tight, the central banks have no plan
"I looked at the Nationwide house price index for the UK. After adjusting for inflation, the result is a line with two interesting characteristics. The first is that there is a surprisingly stable linear trend, with only a moderate upward shift. Real prices go up over time but not by much, and any deviations from the line are followed by a return to trend. The second is that past bubbles were relatively symmetric - both in extent and in time." Unless there has been some structural shift, there is going to be one of the most serious housing downturns ever"
Posted by confused76 @ 11:14 PM (407 views) Add Comment
2 Comments
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1. Cheekie Charlie said...
"Higher inflation would make it easier for indebted mortgage holders to cope with a multi-annual fall in real house prices"
Not if wages don't increase with inflation, infact Gordon the moron has been using below inflation pay awards to try fiddle CPI down. Which means that for the vast majority even higher inflation if their wage rises can't match it. And it will not help the inevitable rise in the unemployed.
2. stillthinking said...
"Yet there is nothing the central banks are offering at this stage to alleviate a solvency crisis."
Can't they give free Tippex thinners out?