No winners at house-price game
Soaring inflation and stagnant wages means that if you bought a place after 2006, the real value of it will have gone down, even though its market price has increased.
Research by LSL Property Services found that house prices increased 11 percent between 2006 and 2011.
But in the same period, inflation has risen by 17 percent, while salary growth is up only 15 percent.Ray Boulger, of mortgage broker John Charcol, said:. "'he house price falls in the Nineties were much worse than most people think they were, because inflation was so high. People think that they bought a home at a certain price. When they sell it they regard what they make as a real gain, whether it is due to inflation or not. They simply don't factor it in, although they should.'
High inflation and falling property values is a toxic combination that looks set to continue.The National Institute of Economic and Social Research is forecasting a further five years where inflation outstrips property prices. Economist Simon Kirby said: 'When people have equity in their homes because their house price has outstripped inflation, they feel that they need to save less for retirement and so they spend more now.'