The inflation years

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Yo dudes in soon be Christmas one chart today this is from the bank of International settlements and it’s been presented by McKinsey global but the basic fact is it from the Bank of England national settlements and they don’t get things while another get things too far wrong on a subject like real house price index 1972 2008 so it’s not too far wrong right that established what the done is tied everyone together for the countries that you’ll see on the right there in 1970 now in 1970 there might be coming off our a housing boom or housing bust but there will been zeroed at the number 100 Sophie go down to 99 any time it’s below the price of housing in that particular country in 1970 but what’s basically lump pointing out with this chart is in most countries these have been the decades of housing price inflation now in if you got housing price inflation that’s quite a lot of price inflation because what’s been happening is that more and more of the household budget has been promised to pay off mortgages or other sorts of housing could rents get pushed up as well obviously so as this happens more and more money is being pushed into housing now housing into strange one it’s in the mentality is being kind of constructing over the last and these couple of decades now properly three since 1980s housing some sort of investment when it’s really am a fake it is is is like more like a car really that there is no reason besides a great height thing or special circumstances that the price how should go up because our law bought me say as long as land was available production costs should be coming down they should have been finding ways of building cheaper houses that they could level some ground round the corner from you and build a house cheaper with better materials make a better house the new cheaper than your house was built in the old days that should have been the way it goes on tour ways houses should be consumables they should be am outgoings because they have to be maintained etc etc but this great meme has swept the Western world and I wonder me self while they are that it’s some sort of investment and often an investment for your retirement which is very strange whining you wouldn’t buy a car for your retirement with you and the really are very similar things or at least should be should be treated as such houses should arm if you really put a lot of money into its maintenance and keep it is the maintenance up very well in other words you put a lot of money into it you might just hold the value but if you don’t maintain it while the value should go down but we can see that from 1970 arm in most all Western countries that the price is gone up radically now we can wonder why and I think we know why but the overall wondering is to why the country should go along with this sort of thing it’s such a waste of money putting extra money promising so much of the household budget into buying a house when really the prices should not be going up at all of some circumstances obviously in a restricted amp area for land and people flooding in the sale and demand prices should go up anyway so since 1970 was startled bottom Germany housing prices are inflation went been taken into account the other sort of inflation CPI type inflation will have been taken into account and Germany is the only one with house prices that are real terms are lowered nowhere 40 years ago to 40s nett 70 123 440 years ago and visited 2008 and Germany has had a little boost since I due to reasons so that they’re probably on the on the zero line Japan have come down from their great boom and are still on their way downwards and probably harming charting never levelled off so be slightly above zero and surprise Switzerland’s prices are haven’t gone up that certainly gone up lately since people were piling into Switzerland/the Swiss franc as so I imagine they have actually gone up a lot I would have thought that Sweden would been higher so I’m quite amazed that Sweden stayed so low that the lowness of Sweden is looking across 150 so even in real terms house prices in Sweden are half as much again 50% more are hundred thingy house is now 150 thing is that in real money inflation all taken into account in real money arm that have gone up 50% which is an awful lot of you know because inflation is taken into account over a am a 40 year power of a incapable of building a better houses in Sweden why are people paying so much for houses in Sweden and then we move on and get and this is why I stress this is from the bank of International settlements Attwood got the USA next with that and then there there house prices where up am doubled this is visibly will way the with the way the Bank of England national settlements has dealt with it and have drop down what 25 maybe 30% across-the-board and Mrs 2008 and are now all we can can plug-in to what I’ve been doing in many of these are or what are they world economic news is at US has prices look like they’re levelling off and if the data were the common economy was good enough United States would economy would I think the house prices would hold on/start going up now it’s only going to be because the world economies are on a downward trend in that golden pulldown the United States economy and bring down the United States house prices so we can think of the United States and they have gone from 210 to 180 why should they be 80 more why should they not now go back down to the 1970 prices what’s so different now than they where in 1970 was and is more housing in the United States is no reason at all why there house prices should be up there and that’s the whole overall things I’m talking about here why you should these house prices be up there and they go to hold up their because the powers that be are governments and specially central banks I can to try and hold them up there because the overall economy via the banking system would take a big crashing if the house prices started tumbling more but it’s like Han plate spinning they have a natural propensity to fall down is and has prices have a natural natural propensity to go up they have a natural propensity to go down and sources central banking forces mainly or banking forces in in the boom can get them to go up but generally they have propensity to go down and about the United States Italy and France and then Canada we know that the Canadian boom which has just started to turn now and what can happen what so to keep it up why should Canadian house prices stay at Norway slightly different there was sensible to laughter 1990 imagine oils got something to do with that Australia and housing boom which has started to crack but the central bank of Australia who seem very bright bunch of bunnies are doing all they can to keep it from crashing starting a spiral to pull it down low they are now withdraw them lowering interest rates and going to try and keep them up Ireland used to be up in the did they happen now I thought they were in the lead once but we know that they’ve crashed down 5060% and again you think well that’s it you can’t go down further than 50 or 60% yes you can is no reason that Ireland should still now be all there in 2008 be further down now double the prices they were in 1970 in factories as does the raised a definite and changes in Ireland that they are house prices on sale in the mind should be higher but not much much much higher Netherlands there is no reason at all I can’t I can’t think the Netherlands hasn’t changed that much it’s a desirable place they are productive but why should house prices be three times more than they where in 1970 UK the same day short of land are not building houses but to be 3 1/2 times more than they where in 1970 bizarre and it’s good to take an awful lot of manipulation to keep the house prices up their Spain have started to come down now that they’re coming down slowly and Belgium at the top same as the Netherlands advocate actually Belgium have got a not very working French part and an efficient that such speaking part am but they’ve is no reason they should be up there at all and what will happen if they come down over will have to happen to keep them up an awful lot is contact have to happen to keep them up central banks are going to be central to it obviously because is really not much central governments can do it must be down to the central banks they are going to have to pump somehow huge quantities of money into the hands of the people so they can afford to keep paying their mortgages a and have enough money out there that new people coming into the scheme will buy houses at annual and never rated rate from the people had already have them but it must be central bank action and that goes back to 1970 what the chart shows is an awful lot of crash possibilities those all of those are spinning plates that have to be manipulated up because their natural propensity is now to come down we have had for decades 40 years of inflating housing prices on the block on a mean that there it’s a good investment that prices can’t come down but it was never like that and in a written economic it’s not like that they are consumables that really should cope always down in price like Doesn’t mean economic sit right but what really has changed to make housing such a good investment arm from 1980 onwards nothings changed not really except more mortgages have been given more easily to more people have taken the meme up and bought the houses at elevated prices and forced other people to buy them even more elevated prices and that is a Ponzi scheme