Hyperinflation And Buying A House

[waitingscot]

The government is spending lots of phantom money. This means that despite deflation in the short term due to the economic contraction, pretty soon we are going to get very high inflation, possibly hyperinflation.

That means the prices go us.

That means houses will cost more in £s.

That means the downward trend in house prices going on at the moment is only temporary and will suddenly reverse when high inflation kicks in.

That means we should all buy a house soon or quite soon to avoid getting caught out once inflation starts.

Have I got that right?

[waitingscot]

I guess everyone has been struck dumb by the clarity of my argument on this matter.

[LuckyOne]

I guess everyone has been struck dumb by the clarity of my argument on this matter.

This has just been raised on the "How To Survive Hyperinflation, Battoning down those hatches" thread. Might be worth a look.

[Jin]

During Hyperinflation all/ most prices rise but not by necessarily the same amount and not necessarily ahead of the inflation rate.

[newbie]

Yep, it's a question of timing. Buy when you think that the trend has turned and prices are just starting to steadily rise rather than continuing to fall. Simple isn't it.

[jonb]

The government is spending lots of phantom money. This means that despite deflation in the short term due to the economic contraction, pretty soon we are going to get very high inflation, possibly hyperinflation.

That means the prices go us.

That means houses will cost more in £s.

That means the downward trend in house prices going on at the moment is only temporary and will suddenly reverse when high inflation kicks in.

That means we should all buy a house soon or quite soon to avoid getting caught out once inflation starts.

Have I got that right?

No. Just rent - your rent will be worth nothing, and use the money to stock up on tinned food.

[waitingscot]

Well maybes aye and maybe naw.

I thought some said we were heading for a sustained period of deflation like Japan.

So which is it? How can we tell? When will we find out?

Yep, it's a question of timing. Buy when you think that the trend has turned and prices are just starting to steadily rise rather than continuing to fall. Simple isn't it.

[waitingscot]

So you are saying the silence was not due to my astounding logic and exposition after all?

Thanks I'll take a look.

This has just been raised on the "How To Survive Hyperinflation, Battoning down those hatches" thread. Might be worth a look.

[swissy_fit]

The government is spending lots of phantom money. This means that despite deflation in the short term due to the economic contraction, pretty soon we are going to get very high inflation, possibly hyperinflation.

That means the prices go us.

That means houses will cost more in £s.

That means the downward trend in house prices going on at the moment is only temporary and will suddenly reverse when high inflation kicks in.

That means we should all buy a house soon or quite soon to avoid getting caught out once inflation starts.

Have I got that right?

Maybe.

But not just yet. While the debt deflation is offsetting the money printing, it won't happen.

After the debt deflation slows, then maybe. I think there will be time to see the bottom.

[South Lorne]

the following were the annual inflation rates for houses in the UK during a 'high' inflation period of the 70's:

1971 11.9

1972 33.8

1973 36.2

1974 8.3

1975 5.9

1976 8.9

1977 7.6

1978 15.8

1979 29.3

1980 21.2

RPI was:

1971 9.4

1972 7.1

1973 9.2

1974 16.0

1975 24.2

1976 16.5

1977 15.8

1978 8.3

1979 13.4

1980 18.0

...houses did quite well....woudn't say that during this downward spiral.....

Edited December 3, 2008 by South Lorne

[Guest DissipatedYouthIsValuable]

At the moment there's a huge amount of deleveraging going on and an increasing tightening of credit.

Unless the new money ends up as higher wages or everyone can get easy credit at fantastic leverage and are stupid enough to take it on, forget houseprices going back up again.

[Mr Yogi]

the following were the annual inflation rates for houses in the UK during a 'high' inflation period of the 70's:

1971 11.9

1972 33.8

1973 36.2

1974 8.3

1975 5.9

1976 8.9

1977 7.6

1978 15.8

1979 29.3

1980 21.2

RPI was:

1971 9.4

1972 7.1

1973 9.2

1974 16.0

1975 24.2

1976 16.5

1977 15.8

1978 8.3

1979 13.4

1980 18.0

...houses did quite well....woudn't say that during this downward spiral.....

Interesting figures which demonstrate clearly the house price crash of the mid seventies which nobody noticed!

Even though houses were losing real value at 10-15% per year they were still going up in nominal terms. Younger members who have no memories of high levels of inflation will have difficulty getting their heads round this.

[Jin]

the following were the annual inflation rates for houses in the UK during a 'high' inflation period of the 70's:

1971 11.9

1972 33.8

1973 36.2

1974 8.3

1975 5.9

1976 8.9

1977 7.6

1978 15.8

1979 29.3

1980 21.2

RPI was:

1971 9.4

1972 7.1

1973 9.2

1974 16.0

1975 24.2

1976 16.5

1977 15.8

1978 8.3

1979 13.4

1980 18.0

...houses did quite well....woudn't say that during this downward spiral.....

further to my point - according to those figures, in 1975 houses lost nearly 20% in real terms whilst showing a nominal gain of 5.9%

[jac]

i completely agree with the original poster's fears

i have cash in the bank from my sell to rent

it will earn zero interest soon

then we will get hyper inflation as the govt prints money so my savings will be eroded by inflation

we therefore need physical assets to keep up with inflation e.g. precious metals and property

i like index linked gilts and bunds too

[sandster]

Interesting figures which demonstrate clearly the house price crash of the mid seventies which nobody noticed!

Even though houses were losing real value at 10-15% per year they were still going up in nominal terms. Younger members who have no memories of high levels of inflation will have difficulty getting their heads round this.

Yes very interesting numbers, especially if you had a fixed rate mortgage, if there was such a thing at the time.

[renterbob]

Brown and his cronies are lying batards

It is not deflation.

the problem will be HYPERINFLATION.

[Tiger Woods?]

The government is spending lots of phantom money. This means that despite deflation in the short term due to the economic contraction, pretty soon we are going to get very high inflation, possibly hyperinflation.

That means the prices go us.

That means houses will cost more in £s.

That means the downward trend in house prices going on at the moment is only temporary and will suddenly reverse when high inflation kicks in.

That means we should all buy a house soon or quite soon to avoid getting caught out once inflation starts.

Have I got that right?

This is certainly a possibility (it is one of the reasons that some of us hold gold), and if you could buy for cash now, it might be a reasonable thing to do. However, if you are taking out a huge mortgage you have to remember you have to be able to continue to pay that mortgage during the "transition".

[Bloo Loo]

Brown and his cronies are lying batards

It is not deflation.

the problem will be HYPERINFLATION.

wait till they start the third round of debt free issuance.

[penbat1]

HYPERINFLATION ROOLS OK