W
Eh, are house prices considered as part of the annual inflation figure?
*Person A saves €50,000 from wages over 5yrs.
*Person B spends all his paycheque but is 'given' €100,000 from property price growth in 5yrs
Let's say, Person A is German and Person B is Irish. Furthermore, Hans has his money sitting in a savings account, while Sean has his in bricks' n' mortar with hefty mortgage.
How does each of them feel about an 6-7% ECB rate Dec 07?
[the arrogance of quoting oneself, anyway..]
Let's say, Person A is German and Person B is Irish. Furthermore, Hans has his money sitting in a savings account, while Sean has his in bricks' n' mortar with hefty mortgage.
How does each of them feel about an 6-7% ECB rate Dec 07?
sorry, forgot to include link
[broken link removed]
sorry, forgot to include link
[broken link removed]
An interesting article here:
[broken link removed]
Bear in mind the objectivity of the sponsor of said article.
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so to summise,
ppl have experienced massive nominal increases in wealth vis-a-vie house prices, and as such consider themselves to be wealthier and go on a spluge.
but i think the most ppl fail to realise that this increase is only in a nominal term. if they sell and go and buy another they have to pay out what they have gained on the sale.
throw in equity releases and this equates to loss in real income that, currently, is being accelerated in its magnitude on the basis that property prices are increasing. So take 40k out today, still have to pay this back on sale of house. If you go to purchase new house, say it has increased by x percent in nominal terms, then a new house would have increased by a similar x percent and the cost of the equity release in turn increases.
This geometric sequence, tied in with loose leveraging laws/standards, stands to make thing all the more interesting when mid term funding for rish banks starts to tighten...as international commentary downgrades their status. I'm sure alot of ppl have read up on the tulip mania in holland, as well as what drove the 1929 crash to greater depts....borrowing today on future earnings, drives up todays cost, in turn hitting inflation and driving up the repayment costs...
sorry if my train of thought is getting abit waffley-theroritcaly economicly....
quite worrying.
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