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Nominal Drops Vs Real Drops

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I've read on here that many people think that the HPC over the next 5 years or so will be mainly inflation-based, rather than actual ££ drops.

That would make sense if average salaries are going up in line with inflation, but take the private sector for example, there's been pretty much 0% rise in salaries since 2007, maintaining the same earnings-price ratio. Factor in other things have got more expensive (reducing disposable income), then surely houses have got "more expensive" rather than "cheaper" with recent inflation, no ?

Maybe I've missed something ?

Unless wages go up I don't see how inflation will erode house prices.

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I've read on here that many people think that the HPC over the next 5 years or so will be mainly inflation-based, rather than actual ££ drops.

That would make sense if average salaries are going up in line with inflation, but take the private sector for example, there's been pretty much 0% rise in salaries since 2007, maintaining the same earnings-price ratio. Factor in other things have got more expensive (reducing disposable income), then surely houses have got "more expensive" rather than "cheaper" with recent inflation, no ?

Maybe I've missed something ?

Unless wages go up I don't see how inflation will erode house prices.

CPI Inflation erodes house price because people have less money to bid up houses and as people leave their home (the 3D - death debt divorce), then more supply hit the streets and nominal price will go down.

The massive money supply expansion during the last 10 years is kind of coming home now... in the form of higher CPI prices.

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I've read on here that many people think that the HPC over the next 5 years or so will be mainly inflation-based, rather than actual ££ drops.

That would make sense if average salaries are going up in line with inflation, but take the private sector for example, there's been pretty much 0% rise in salaries since 2007, maintaining the same earnings-price ratio. Factor in other things have got more expensive (reducing disposable income), then surely houses have got "more expensive" rather than "cheaper" with recent inflation, no ?

Maybe I've missed something ?

Unless wages go up I don't see how inflation will erode house prices.

Agreed - confusing for me too - pay freeze since 2007.....

Personally I think QE2 will be mega in scale and confirm my worst fears - I expect my salary to increase by 50% and not to feel 1 penny better off.

Timescale?......

2013

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CPI Inflation erodes house price because people have less money to bid up houses and as people leave their home

Having less money to bid up houses would reduce the price of houses in real £££, not just in "real terms".

I don't see how printing money will fix anything (sure it's inflationary since there's more money swimming about) but unless the man in the street is getting a pay raise I don't see how "inflation" is going to result in only a nominal HPC.

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Total clap trap. 80% of the private sector has had a payrise since 2007. Payrises lag price inflation.

First prices go up then wages follow, there is not one example to the contrary (over the long term).

As I keep saying, between 1975 and 1985 wages doubled unemployment tripled..............................go figure.

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Total clap trap. 80% of the private sector has had a payrise since 2007. Payrises lag price inflation.

According to the National Statistics, it's been pretty weak.

http://www.statistics.gov.uk/cci/nugget.asp?id=10

"In the year to June pay growth (including bonuses) in the private sector stood at 0.8 per cent compared with 2.9 per cent in the public sector". Take out bonuses and it's much lower than 0.8. The trend is downwards.

I don't see how 0.8% pay rises is going to erode house prices much.

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According to the National Statistics, it's been pretty weak.

http://www.statistics.gov.uk/cci/nugget.asp?id=10

"In the year to June pay growth (including bonuses) in the private sector stood at 0.8 per cent compared with 2.9 per cent in the public sector". Take out bonuses and it's much lower than 0.8. The trend is downwards.

I don't see how 0.8% pay rises is going to erode house prices much.

You are missing the point.

You are looking at wage inflation through the recession and then trying to extrpolate to predict the future. Firstly, 80% of the working population had payrise through the recession, that right at the height of the doom and gloom. Price inflation is now at 5%, recent publicised pay awards have been circa 2-3%. You see the trend now?

Wage inflation lags price inflation. Are you seeing anything cheaper?

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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