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Mikhail Liebenstein

House Price Graph on the Front Page - where next?

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So anyone who has followed HPC for a few years will be very familiar with the Average House Prices Adjusted for Inflation Graph.

What is interesting with the graph is how stubbornly it has stuck to the broad rising and falling pattern with an ever so gentle upward incline, this despite it being clear that prices are massively out of kilter with average earnings which have not really kept pace with inflation.

More recently we have had a period below the red averaged long term trend line, but it does feel given the average wage situation that prices cannot rise any further and so potentially the pattern could get broken................unless of course...............................what Hammond and May are now instigating is an inflate away the debt plan.

This would seem to be the case to me. They want to end austerity and spend on projects, and it looks like we are going to switch to using fiscal policy. That said, I can't see interest rates going up just yet, I think they will try and get inflation running somewhere between 3% and 5% before they do anything - this almost seems to have been signaled by out new data light Bank of England decision making process.

What thoughts do others have on this?

 

 

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