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Inflation Slips But House Price Growth Surges

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I cannot believe this. Is there no end to this? Where are these figures are coming from? And where is this money from? House price inflation of 11.7% while CPI inflation is down!!.

http://news.sky.com/story/1336642/inflation-slips-but-house-price-growth-surges

Cost of living has risen considerably over the last six years but wages haven't - hence downward pressure on a lot of consumer prices.

Meanwhile, credit is cheap and increasingly plentiful so people can buy money to 'invest' (speculate) in property again - after all there's bugger all incentive to save anything in a bank. Hence house prices have scope to shoot up as they are funded by credit and investors looking for a return on their cash.

Another total disaster in the making, and absolutely no prospect of anything being done to get it under control until after the election. And it's very doubtful if anything will be done even then.

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Cost of living has risen considerably over the last six years but wages haven't - hence downward pressure on a lot of consumer prices.

Meanwhile, credit is cheap and increasingly plentiful so people can buy money to 'invest' (speculate) in property again - after all there's bugger all incentive to save anything in a bank. Hence house prices have scope to shoot up as they are funded by credit and investors looking for a return on their cash.

Another total disaster in the making, and absolutely no prospect of anything being done to get it under control until after the election. And it's very doubtful if anything will be done even then.

We're at the limit already. There is no scope.

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Here are the last 12 months figures showing the latest ones just released by the ONS.

Month RPI YoY% CPI YoY%
Aug 2013 251.0 3.3 126.4 2.7
Sep 2013 251.9 3.2 126.8 2.7
Oct 2013 251.9 2.6 126.9 2.2
Nov 2013 252.1 2.6 127.0 2.1
Dec 2013 253.4 2.7 127.5 2.0
Jan 2014 252.6 2.8 126.7 1.9
Feb 2014 254.2 2.7 127.4 1.7
Mar 2014 254.8 2.5 127.7 1.6
Apr 2014 255.7 2.5 128.1 1.8
May 2014 255.9 2.4 128.0 1.5
Jun 2014 256.3 2.6 128.3 1.9
Jul 2014 256.0 2.5 127.8 1.6
Aug 2014 257.0 2.4 128.3 1.5

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We're at the limit already. There is no scope.

As long as sufficiently cheap credit is available and investors have wealth seeking alpha, the conditions are there to allow prices to continue to rise.

With the banks propped up by the government, as long as the BoE have the stomach to provide endless liquidity/repress interest rates then the charade can continue.

Obviously at some point, the whole thing will implode as it gets increasingly out of control and unstable but who knows when that will be?

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This is horseshit. My area nth Dorset is undergoing a correction right now.

Prices are dropping and have been for months.

Im getting mails from EAs in Herts, that i've not dealt with for years, cropping up in my Spam folder all of a sudden.

As i say, horseshit.

Edited by shindigger

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Load Excel

Enter regions in column A

Type =RANDBETWEEN(10,20) in corresponding column B cells

Inflation amounts generated

Press F9 if London is too low

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It coincides with today's Scottish independence scare that house prices could be wiped out if Scotland votes for independence - so it's probably no coincidence.

A theme of "Vote No to continue the lovely house price increases".

The stats don't even have to be that accurate- very little in the news that might affect the vote seems accurate - if it ever is.

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The Department for Business Innovation & Skills released construction price and cost data for Q2 2014 this morning.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/354905/14-p158e-Construction-Output-Prices-Commentary-2014Q2_final4.pdf

The output price index shows a 6.0% overall increase over the past year, with private housing output prices up 7.2%, whereas public housing is only up 2.7%.

ConstructionOutputPricesQ2_2014.gif

So output prices are showing high inflation, but what about input costs?

This is the year-on-year change for house building (calculated from an Excel spreadsheet accompanying the BIS release, available here):

ConstructionInputPricesHouseBuildingQ2_2

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As long as sufficiently cheap credit is available and investors have wealth seeking alpha, the conditions are there to allow prices to continue to rise.

With the banks propped up by the government, as long as the BoE have the stomach to provide endless liquidity/repress interest rates then the charade can continue.

Obviously at some point, the whole thing will implode as it gets increasingly out of control and unstable but who knows when that will be?

Yeah, well, we're at that point. London's 30% past the point where the banking system collapsed. The cost of living is crippling people.

People in London need to be in a couple both earning 100K a year to get a starter flat in a crappy area.

It;s not just debt that provides fuel for th ebubble, it's willingness of RICH people to live in squalor.

Edited by TheCountOfNowhere

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The present disinflationary slump is already worse than 2008. The bloated pig is going down!

BxpUFgbCAAARRtM.png

I suspect we wont be seeing any pay rises for a time to come.

House prices versus actual real costs have to come down one way or another.

It feels like 2007 all over again. The criminals who have orchestrated this should be locked up this time ( when the crash comes ).

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It feels like 2007 all over again. The criminals who have orchestrated this should be locked up this time ( when the crash comes ).

Yep, sure does. Next government will come in and blame the previous lot for what happened. Whilst yet again, nobody is held accountable!

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So it seems fair enough to say that where they can sell private houses the house builders are making even more of a killing - with input inflation near zero.

There can be timing differences between input costs and output prices, but yes, this is basically official confirmation of what we've already seen in the builders' published accounts. They've simply increased their gross margins.

Help to Buy: price-gouging helping hard working families.

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It's the result of banks lending at higher multiples of joint incomes. More people are using both incomes to service mortgage debt, so they have less disposable income to spend to push the prices of everything except houses higher. They also have less time to spend any money because any rise in house prices means they have to work more hours to buy one.

It's a pity retailers cannot see that bankers are sucking up what used to be their profits by capturing what used to be disposable second incomes.

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I was in the cinema this morning and overheard a conversation where two women were bemoaning having to look after their working daughter's children. It had meant the women's time was no longer their own and the end of last minute cheap holidays. I couldn't resist chipping.


Me "You are doing unpaid work for bankers"

Them "What?"

Me "When you bought your house were you working?"

Them "No. I stayed at home to look after the children"

Me "Banks have persuaded people to do joint income mortgages so both parents have to work to service more mortgage debt. You have to do unpaid childcare work so they can pay more money to bankers"

Them "I'd never thought of it like that.... but you are right. I am an unpaid child care worker"

Me "Just remember when the BBC are happy house prices are higher, it means your daughter has to work more hours to buy one and as a result, so do you."

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I was in the cinema this morning and overheard a conversation where two women were bemoaning having to look after their working daughter's children. It had meant the women's time was no longer their own and the end of last minute cheap holidays. I couldn't resist chipping.

Me "You are doing unpaid work for bankers"

Them "What?"

Me "When you bought your house were you working?"

Them "No. I stayed at home to look after the children"

Me "Banks have persuaded people to do joint income mortgages so both parents have to work to service more mortgage debt. You have to do unpaid childcare work so they can pay more money to bankers"

Them "I'd never thought of it like that.... but you are right. I am an unpaid child care worker"

Me "Just remember when the BBC are happy house prices are higher, it means your daughter has to work more hours to buy one and as a result, so do you."

Good stuff!

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Great news prices going up but not strong enough to sustain the recovery...

Great news, the cost of living is going up but not strong enough to sustain the recovery...

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The rate if inflation may have decreased but it is still outstripping wages, this is with the dodgy fiddled inflation figure.

It isn't good news for most of the population but if you go by BBC coverage everyone has just won the lottery.

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And there's the problem - the sheeple can't think outside of the box.

They don't even know the box exists. Until I stumbled across this site I was exactly the same- totally oblivious to the way the world works with zero interest in what all those men in suits were doing in the City. Most people will live and die without ever asking themselves such basic questions like how come their savings always remain safely in the bank when they 'know' that the same bank lends that same money out to other people, people who might not pay it back?

It's not true of course- but it's what most people think- and it's totally incoherent- yet if you ask most people where the banks get the money they lend out they will tell you it's other people's savings. But if you then ask them if they are happy for their savings to be lent out in this way they will deny this is even possible! :blink:

The fact that the banks do not 'lend out' anyone's money, that they simply create the money they lend from thin air is actually the reality- but not one person in a thousand understands this to be the case.

So the incredible fact is this- almost the entire population do not understand the most basic facts about money and where it comes from- the thing they spend their lives working for and worrying about. And that's exactly how the PTB like it.

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