Puzzled by inflation

Question:
If a house were to increased in value in a year but that increase was the same as inflation, are you better or worst off?

Taking into account mortgage rates, rent saved, interest relief etc......

Or are there too many factors to determine a correct answer.

phoenix_n said:

Question:
If a house were to increased in value in a year but that increase was the same as inflation, are you better or worst off?

Taking into account mortgage rates, rent saved, interest relief etc......

Or are there too many factors to determine a correct answer.

Click to expand...

Well, most people get paid with wages rather than houses so any increase is bad news because your paper wages now have less house purchasing power. However, the purchasing power of house owners is protected because their assets have increased commensurate with the decline in purchasing power of their paper money.

If your yearly salary has increased in line with inflation (nonsensical government figures or otherwise) and houses have increased in line with this figure then you are indeed no worse off.

Always remember that for workers, inflation robs them of their wealth and wages must be inflated by an equal measure just to stand still.

Even for public sector workers this is unlikely to occur.