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VeryMeanReversion

There Was No House Price Inflation

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An alternative way of looking at house price inflation:

Since the money supply (£) has grown at the same rate as house prices, the real price of a house has not actually changed.

Housing still accounts for the same proportion of the money supply.

What has changed is that the £ is getting wiped out through inflation and our income/savings have not kept up, in proportion to the money supply.

=> We have all had a pay cut and savings slashed, but few noticed.

Waiting for a house price crash is just waiting for the sheeple to notice that they have signed up to an IO or 25-year mortgage

with a continually reducing real income to service the debt.

As interest rates revert to being above true inflation levels, this will become obvious.

VMR.

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Waiting for a house price crash is just waiting for the sheeple to notice that they have signed up to an IO or 25-year mortgage

with a continually reducing real income to service the debt.

Surely once you've bought a house the nominal debt is fixed and so in this frame of reference is a continually reducing proportion of the overall money supply?

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Surely once you've bought a house the nominal debt is fixed and so in this frame of reference is a continually reducing proportion of the overall money supply?

which is one of the reasons why business loves debt, the second reason being the tax advantage...

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An alternative way of looking at house price inflation:

Since the money supply (£) has grown at the same rate as house prices, the real price of a house has not actually changed.

Housing still accounts for the same proportion of the money supply.

What has changed is that the £ is getting wiped out through inflation and our income/savings have not kept up, in proportion to the money supply.

=> We have all had a pay cut and savings slashed, but few noticed.

Waiting for a house price crash is just waiting for the sheeple to notice that they have signed up to an IO or 25-year mortgage

with a continually reducing real income to service the debt.

As interest rates revert to being above true inflation levels, this will become obvious.

VMR.

agreed 100%

the stealth pay cuts have been so severe a 2007 dentist is now being paid the same living rate as a postal worker of 2001.

oh. the dentist might be able to have more trinkets, but now they live side by side in the same streets.

the postal worker can always cream off some mew.

not that theres anything wrong with being a postal worker. but why do some postal workers live in millionaires houses ?

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I've had nothing but lower pay since 2001. Earnings:

1997-1998 - £18k (£26k with overtime - only job that ever paid me overtime)

1998-1999 - £24k

1999-2000 - £25k

Took on a £65k mortgage in Cornwall

2000-2001 - £30k

2001-2002 - £13k

Took out a 2nd mortgage (flexible) to help me ride out the downtimes

2002-2003 - £10k

2003-2004 - £15k

2004-2005 - £15k

2005-2006 - £8k

2006-2007 - £12k

Gave up staying in with the lights off. Invested in a spot of training, got a magic bit of paper. Sold the house. Banked the cash. Relocated to a city where I can hopefully find proper jobs that don't finish after 2-3 months. Planning to pay cash for a small house post-slowdown/crash

2007-2008 - 3 months into this and I've earnt £1600 so far.

Not claiming. Not signing on. Not on any benefits. Not sure if I could as I have cash in the bank, so not bothered getting them to kill a tree for me to fill in 101 forms just for them to say "no".

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An alternative way of looking at house price inflation:

Since the money supply (£) has grown at the same rate as house prices, the real price of a house has not actually changed.

Housing still accounts for the same proportion of the money supply.

What has changed is that the £ is getting wiped out through inflation and our income/savings have not kept up, in proportion to the money supply.

=> We have all had a pay cut and savings slashed, but few noticed.

Waiting for a house price crash is just waiting for the sheeple to notice that they have signed up to an IO or 25-year mortgage

with a continually reducing real income to service the debt.

As interest rates revert to being above true inflation levels, this will become obvious.

VMR.

I've wondered this before.. but if this scenario is true wouldn't it be reflected in the value of the pound relative to other currencies on the international markets? Unless all currencies have devalued relative to our house prices of course ;)

I think it is because our house prices are way out of whack, not that the pound has devalued.

Edited by sossij

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not that theres anything wrong with being a postal worker. but why do some postal workers live in millionaires houses ?

cos they bought in 95 and unknowingly caught the bottom of the market?

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cos they bought in 95 and unknowingly caught the bottom of the market?

this really isnt a market. its all been controlled. this is no coincidence.

the ageing postman gets a pension. i get ripped off.

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Good on you for retraining.

Yes, cost me 1.5 months' wages too - the same week I was laid off from said job.

AND I had to pay fookin' V-A-T on it!!!!

No tax breaks for honest tax-payers.

Actually, where I was located, I felt grateful the course was available. Stroke of luck it was. I'd been looking at it and nearest was 200 miles away which would have involved travel/B&B too (or sleeping in the car which I did consider)

So, now I live in the civilised world with jobs/access to services..... bring it on. Life-v2 starts now.

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