A Shot In The Arm For Post Budget Blues

[TheCountOfNowhere]

I bought a house, 4 bed detached, nice plot, new build ( so 10% over-priced I guess ) in 1999 for £112K

http://www.thisismoney.co.uk/historic-inflation-calculator

According to the above inflation calculator this amount of money is now worth:

£145600 !!!!!

I sold said house in 2005 for £248K, it's value in line with inflation should have been around £128K

A similar house in Northampton would be around £250K now.

This is still £100K more than the true inflationary value.

This is how much the housing market is detached from reality. It will take a hell of a lot of inflation to make up this price difference and could wage inflation ever keep up ?

[GordonBrownSpentMyFuture]

I bought a house, 4 bed detached, nice plot, new build ( so 10% over-priced I guess ) in 1999 for £112K

http://www.thisismoney.co.uk/historic-inflation-calculator

According to the above inflation calculator this amount of money is now worth:

£145600 !!!!!

I sold said house in 2005 for £248K, it's value in line with inflation should have been around £128K

A similar house in Northampton would be around £250K now.

This is still £100K more than the true inflationary value.

This is how much the housing market is detached from reality. It will take a hell of a lot of inflation to make up this price difference and could wage inflation ever keep up ?

And that's why we're fkd.

[Democorruptcy]

I bought a house, 4 bed detached, nice plot, new build ( so 10% over-priced I guess ) in 1999 for £112K

http://www.thisismoney.co.uk/historic-inflation-calculator

According to the above inflation calculator this amount of money is now worth:

£145600 !!!!!

I sold said house in 2005 for £248K, it's value in line with inflation should have been around £128K

A similar house in Northampton would be around £250K now.

This is still £100K more than the true inflationary value.

This is how much the housing market is detached from reality. It will take a hell of a lot of inflation to make up this price difference and could wage inflation ever keep up ?

Is this a bull or bear thread please?

[chicker]

I bought a house, 4 bed detached, nice plot, new build ( so 10% over-priced I guess ) in 1999 for £112K

http://www.thisismoney.co.uk/historic-inflation-calculator

According to the above inflation calculator this amount of money is now worth:

£145600 !!!!!

I sold said house in 2005 for £248K, it's value in line with inflation should have been around £128K

A similar house in Northampton would be around £250K now.

This is still £100K more than the true inflationary value.

This is how much the housing market is detached from reality. It will take a hell of a lot of inflation to make up this price difference and could wage inflation ever keep up ?

House I sold in 1998 for 75k, similar on market for around 210k.

[MonkeyNuts]

http://www.thisismoney.co.uk/historic-inflation-calculator

According to that web page house prices have underperformed bread between 1999 and 2009

Edited March 24, 2011 by MonkeyNuts

[TheCountOfNowhere]

Is this a bull or bear thread please?

Neither. It's a statement of fact. This is the reality of the housing market today and people need reminding of it.

[roadtoruin]

I bought a house, 4 bed detached, nice plot, new build ( so 10% over-priced I guess ) in 1999 for £112K

http://www.thisismoney.co.uk/historic-inflation-calculator

According to the above inflation calculator this amount of money is now worth:

£145600 !!!!!

I sold said house in 2005 for £248K, it's value in line with inflation should have been around £128K

A similar house in Northampton would be around £250K now.

This is still £100K more than the true inflationary value.

This is how much the housing market is detached from reality. It will take a hell of a lot of inflation to make up this price difference and could wage inflation ever keep up ?

I can see what you're saying but it's based on the rather dodgy assumption that the price in 1999 was 'correct'. In a cyclical market like housing has been for 40 years, the current price will nearly always be below or above the trend-line. A bull might argue your house was 20% underpriced (vs trend) in 1999, which would alter all your subsequent calculations. The person who bought your house in 2005 is presumably by this logic considering that it is now very underpriced. We've had 5-6 years of inflation, but they can only sell that house today for the same price they paid you.

[TheCountOfNowhere]

I can see what you're saying but it's based on the rather dodgy assumption that the price in 1999 was 'correct'. In a cyclical market like housing has been for 40 years, the current price will nearly always be below or above the trend-line. A bull might argue your house was 20% underpriced (vs trend) in 1999, which would alter all your subsequent calculations. The person who bought your house in 2005 is presumably by this logic considering that it is now very underpriced. We've had 5-6 years of inflation, but they can only sell that house today for the same price they paid you.

Granted, It looks from the graph on the front page it was just below the line....we're just below the line again, and it's still 100K over-priced. Even if we assumed I bought at the very bottom of the last crash...the current crash has some way to go.

This HPC thing has a lot of twists and turns to come.

[Sledgehead]

Is this a bull or bear thread please?

I have this mental image of HPCers on their hands and knees with powerful magnifying glasses, all desperately searching for the crum of comfort that may have dropped from TCONers post.

Edited March 24, 2011 by Sledgehead

[Topher Bear]

Since we all tend to agree that inflation figures have been skewed in recent years not least by shift to cpi, then any comparison of inflation adjusted prices is going to provide results which look worse than they are. The fact that bread price rises are higher than house price rises demonstrates this fact well.

I'm sure there is a great economic research paper in this for the scholarly types.

[miko]

I bought a house, 4 bed detached, nice plot, new build ( so 10% over-priced I guess ) in 1999 for £112K

http://www.thisismoney.co.uk/historic-inflation-calculator

According to the above inflation calculator this amount of money is now worth:

£145600 !!!!!

I sold said house in 2005 for £248K, it's value in line with inflation should have been around £128K

A similar house in Northampton would be around £250K now.

This is still £100K more than the true inflationary value.

This is how much the housing market is detached from reality. It will take a hell of a lot of inflation to make up this price difference and could wage inflation ever keep up ?

Someone bought a flat in 1988 for £150k , I paid £50k for the flat in 1993 , I sold for £75k in 1997 the value went up to £100k by the time the sale had completed ( the gain that happened in 4 years happened again in a few weeks) . The same flat is now for sale at £279 k having been reduced from £289k.

[okaycuckoo]

I have this mental image of HPCers on their hands and knees with powerful magnifying glasses, all desperately searching for the crum of comfort that may have dropped from TCONers post.

HPC is in train, no doubt about it. But as the OP said, many twists and turns on a slow descent into hell.