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SE1 House Prices Overvalued

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Wednesday 23 April 2008 9.35pm
Although that's a fanciful notion, Mapmaker, it is unfortunately wide of the mark.

CPI was introduced to provide a measure that is harmonised with the equivalent measures throughout the EU. In fact its more official EU name is the Harmonised Index of Consumer Prices.

CPI also takes out of the equation volatile elements that are affected by short term policy such as housing costs (directly affected by interest rates). As such, it more accurately reflects underlying inflation caused by macro-economic conditions, rather than being influenced unduly by shorter-term factors.
Thursday 24 April 2008 9.33am
Because of course if the cost of housing goes up it doesn't become more expensive to live. Oh no. Very sensible. Sensible also to base public-sector wage increases - for people who are often key workers such as teachers and nurses - on this. Oh yes. They won't be tempted to strike will they?

CPI at 2%, teachers pay rise at 3%. Why would they want to strike? BTW did anybody mention Gordon Brown's raid on the poor to pay the rich?

As we're not a part of the Euro, we can choose to measure target inflation however we wish. As Gordon Brown has used smoke and mirrors to be economical with the rest of his truths, there is no reason to believe that choice of the CPI rather than RPI was for reasons otherwise than it gave a lower measure.
Thursday 24 April 2008 10.07am
How you measure inflation is basically a political issue as you are all now seeing. Of course you can leave certain things out and put others in and the decision on that is down to the government and the statistics office....and if we're knocking gordon brown who after all has been in charge of the economy for the last few(!) years perhaps we can all appreciate how much more we are all paying in tax these days....this may not at first glance seem imporatant in the inflation picture but its money we all pay out one way or another and the tax element of everyone's disposable income is going up and set to rise much higher going forward.
Thursday 24 April 2008 4.07pm
I think it may not be the greatest time, but if you are going to buy anywhere SE1 is a good place to buy - In fact so much so that I am a first time buyer who has just bought in the area.

SE1 is central with money being invested and is not an Islington/Notting Hill or similar where prices have already rocketed. Comparitively it certainly has further to go up rather then down.

I think you can get too hung up in trying to second guess the market, something which we Brits seem to be obsessed with. The tabloid media will always whip up a frenzy such that it is either going up so quickly that it's impossible to get a purchse through in time or about to crash and either way if you hang about trying to work out when the market is right at the bottom you won't ever get round to buying.

My house is somewhere to live and whilst a mortgage is slightly more than renting if prices grow moderately, as is likely in a location so close to central london and has been the case even in the past few months, then I will make a profit such that renting/mortgage is about the same in the moderate term. Plus I'll have the benefit of actually owning my own place and being able to put my own stamp on it. If I'm wrong and prices go down then will just have to ride it out until they come up again.

Either way I'm not going to worry about it every day until I come to move - but instead am going to enjoy living in SE1 and enjoying a brisk walk to Borough market and along the South bank every saturday - surely that's priceless!
Thursday 24 April 2008 7.13pm
Well said Gorse.

And Mapmaker, remind me what measure the Conservatives used to measure inflation?
Thursday 24 April 2008 10.38pm
Gorse - well said - and congrats on buying a place in SE1, I'm sure you'll spend many happy years in your new place.
Friday 25 April 2008 9.16am
RPIX? Why?

Gordon Brown told us the old 2.5% target on the RPI was the same as 2.0% on the CPI - a gap of 0.5%. The gap today is much larger.

That's deceitful on his part.
Friday 25 April 2008 9.48am
Right. And the Tories had a real grip on the economy.

What is the best way to judge inflation? I doubt you know, Mapmaker, and, I admit, neither do I. But the US Department of Labor has an interesting take on it.

"The 'best' measure of inflation for a given application depends on the intended use of the data. The CPI is generally the best measure for adjusting payments to consumers when the intent is to allow consumers to purchase, at today's prices, a market basket of goods and services equivalent to one that they could purchase in an earlier period. It is also the best measure to use to translate retail sales and hourly or weekly earnings into real or inflation-free dollars."
Friday 25 April 2008 10.14am
kmitchell wrote:
Right. And the Tories had a real grip on the economy.

You are absolutely correct. They took over, in 1979, an economy burdened with high unemployment, still suffering the after-effects of the 1970s. Strong medicine - and nobody would deny that with the benefit of hindsight it could have been done better, but something major had to be done and there were no precedents - meant that by 1997 the economy was in such good shape that even the Labour party took ten years to destroy it as they have done quite so neatly. Economy destroyed during a boom; that has taken some doing.

The banks are borrowing money from taxpayers so that they can then lend the same money back to the taxpayers at a higher rate of interest than they borrowed it from them in the first place. Clever, eh?

I have no problem with the Government changing its choice of inflation measure. I DO have a problem with the Government claiming that having aimed to keep RPI at 2.5, it would achieve exactly the same effect by aiming to aim to keep CPI at 2%. It clearly is not the same effect as RPI is now well above the old target. Inflation is out of the box.
Friday 25 April 2008 5.05pm
sorry slightly off topic..

what should the ppl who Dont follow the technical details do..

im guessing it would be worth their while spending a few hundred pounds
to take their financial paperwork along for a full personal advice session with a good professional

does that sound right?
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