Hi cloudnine, I think he has a point, and you do also. Sure, CPI figures hide all kinds of statistical anomalies. Median wages are - in my opinion - a better measure of likely house price direction.
The ratio of 'median house prices'/'median wages' has risen strongly from ~3 in the 90's to ~6-7 now. To date, it's been considered all OK because debt issuance made up the difference. But the house price growth cant continue to outstrip wages growth forever, especially if debt is the mechanism for it.
At some point the ratio has to revert back downward, but how will it happen? Could we get a wages explosion because of inflationary pressure? Or will we get asset prices falling because of deflation? Or both? We all know what the world's governments are gunning for - inflation!
