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Toxic Teds Ghost

Inflation

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Are house prices predicted increased shown on your site before or after inflation.

The increases are so small and the inflation rate slightly higher this might show if prices are really increasing

Errr. Just clarify which the data your question applies to.

If it is the Nationwide derived HPC front page graph, then the data is inflation adjusted. You can make your very own HPC replica graph by downloading the data from Nationwide (http://www.nationwide.co.uk/hpi/historical.htm).

Non-inflation adjusted data makes it difficult to compare data over time. A product price of £100 in 1901 would certainly not compare to a £100 price in 2001 in everyday terms.

Commentator's (such as David Smith, The Times economic editor) have pointed out the the house price crash of the late eighties was considerably overplayed. This because they have conveniently used non-inflation adjusted figures at a time when inflation was knocking around 8%. This is stupid. Inflation adjusted figures provide us with a picture of real value as opposed to nominal value.

Worked example to highlight the difference between nominal and real prices.

I made this up quickly, so don't bust my ass if I forgot something. All data figures are fictional and bear no resemblence to any data either alive or dead.

Year 1900, House A is worth £100.

Year 1901, House A is now worth £105. Inflation is 10% over the last year.

Nominally, House A has increased by value in 5%. This would be the figure splashed over the local Telegraph. Estate agents screaming to buy before everybody is priced out, as no one will ever be able to buy again.

In real terms, House A has fallen in value. It should have been worth £110 if no change in price had occured, but it is only worth £105. That's a fall in real terms of around 5%. This is the figure that is hidden away in Nationwide archived data, but does resurface to form the infamous HPC front page graph.

Feel free to post comments. Go on KON, I know you love your figures...

:o

Edited: Dohhh! I mixed up a $ and £...

Edited by werewolves

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  • 301 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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