I am new to this Forum and i am a Hedge Fund Manager.
If you take the Halifax Housing Index it peaked in October 2007 so we are approaching the 3 year anniversary of its peak, since then prices are down 16.19% so an average of approximately 5% a year. If you add on RPI inflation at an average of another 4 to 5% a year over the last 3 years. In reality we have prices down close to 30%.
This is because actual falls have only accounted for half the fall, inflation has done the rest. Or put another way the money today in 2010 is worth about 15% less as regards purchasing power than what it was in 2007.
2 caveats here, i find it incredible that we believe any price indexes produced by by two of the largest players in the mortgage market !!!!!! the Halifax who are already surviving only on state welfare and the Nationwide. No vested interests there then. Also the "official" RPI figures are very likely doctored to the down side by 2 or 3%, all government statistics are artificially rosy.
We saw a lot of this coming ( an out of control credit boom that stretched property prices massively above incomes) therefore we predicted the crash which so far is approximately 15% nominal and 15% inflation loss. We understood that the response would basically be panic and default to pure Keynes, and therefore a mountain of money printing. Therefore anything that is more finite than the money printing would increase in value, or correctly be measured in more of the freshly devalued currency.
Which is why we bought a lot of physical Gold and Silver for the very simple reason is more finite than the money printing.
