Maybe the dinner tables of the middle-classes have been quieter during the last 6 months as house prices plummeted through the floor. I’ve shown the drama by plotting house prices for the last 57 years (click the charts to see them at full size) ………
Flat House Prices
But actually it’s all about how you look at things, & in particular just plotting prices isn’t the way to look at things, because a £1000 drop in price now isn’t as important as it was back in 1952. This can work for you if you are an investor (it’s called the power of compounding), so when I read The Money Gym I decided to do a picture to illustrate why there is no great event happening to the housing market really. To compensate for the point about the value of £1000 being less after time, one plots prices as a log thus ………
Flat House Prices
Thus we can see the consistency of the trend without any distortion. This gives the good news that the present price decline for flats & houses is nothing special, but also the bad news that it wouldn’t be terribly surprising to see the decline continue as far again.
It all depends upon how you look at things!
