Explain inflation to me

[Dan Maynard]

42 minutes ago, donnk said:

Worst case is a big correction in houseprices, that will sink the economy.

Inflation will erode house prices, should be a good thing if they come down in real terms without a crash.

[openspaceman]

32 minutes ago, Dan Maynard said:

Inflation will erode house prices, should be a good thing if they come down in real terms without a crash.

Inflation erodes the buying power of a wage packet and not necessarily fixed assets, they remain priced by supply and demand.

[Retired Climber]

1 hour ago, Dan Maynard said:

Inflation will erode house prices, should be a good thing if they come down in real terms without a crash.

How so?

[donnk]

9 hours ago, openspaceman said:

Inflation erodes the buying power of a wage packet and not necessarily fixed assets, they remain priced by supply and demand.

 

yep. cash in the bank is hurt far more than a tangable asset like property (not all though), gold, antique etc etc

 

Not all grim though some very good opportunities come up during a recession, foot and mouth a few years ago for example, smallholdings were going for a song as they went bump one after the other...

[trigger_andy]

9 hours ago, Retired Climber said:

How so?

Because demand for housing far out strips supply by a huge factor. So much so that there will still be a mass of buyers who will not only weather this coming storm but will hardly even notice it and will still pay record prices. The low end of the market might suffer a bit but I envision the worst that will happen is they sell for their asking price and not significantly over like we see today. 
 

I believe the BoE is doing away with stress testing Mortgage Applicants. Couple this with 30 year plus or even multi-generational Mortgages and potentially prices will even increase and not fall at all. 
 

Also, the “rich” are getting richer and the poor poorer. Buy-to-let still seems to be a huge cash generator. Couple that with an ever increasing asset value that’s of a limited quantity I think this segment will increase significantly as will rents. If you can afford it buying a place to rent out will be a cracking Pension Pot. 

[Steve Bullman]

19 minutes ago, trigger_andy said:

multi-generational Mortgages and potentially prices will even increase and not fall at all. 

That’s almost a certainty 

[Retired Climber]

32 minutes ago, trigger_andy said:

Because demand for housing far out strips supply by a huge factor. So much so that there will still be a mass of buyers who will not only weather this coming storm but will hardly even notice it and will still pay record prices. The low end of the market might suffer a bit but I envision the worst that will happen is they sell for their asking price and not significantly over like we see today. 
 

I believe the BoE is doing away with stress testing Mortgage Applicants. Couple this with 30 year plus or even multi-generational Mortgages and potentially prices will even increase and not fall at all. 
 

Also, the “rich” are getting richer and the poor poorer. Buy-to-let still seems to be a huge cash generator. Couple that with an ever increasing asset value that’s of a limited quantity I think this segment will increase significantly as will rents. If you can afford it buying a place to rent out will be a cracking Pension Pot. 

That seems to be an argument for the opposite. 

[trigger_andy]

13 minutes ago, Retired Climber said:

That seems to be an argument for the opposite. 

How so?

[Retired Climber]

27 minutes ago, trigger_andy said:

How so?

Dan said he thought inflation would erode house prices, I asked "how so?", and you gave an argument which appears ( to me at least) to support the opposite (that house prices will not be eroded). 

[trigger_andy]

31 minutes ago, Retired Climber said:

Dan said he thought inflation would erode house prices, I asked "how so?", and you gave an argument which appears ( to me at least) to support the opposite (that house prices will not be eroded). 

That makes no sense at all but ok. 🤣🤣🤣