property going up - wheres the next hot spot??, page-23

Kincilla,

Agree with what you said but in the down times/periods of stagnation less building would be occurring as such there would be an oversupply of tradesmen and materials which would possibly bring the new building cost down or at least maintain current prices for an extended period of time as margins are cut. So while inflation as a whole would be going up because of other factors in the economy, building costs would not really be inflating. Building costs will inflate during periods of higher overall demand. Therefore if prices stagnate then inflation will eat away at some of the gains made in the boom times. This is obviously at the macro level as at the micro level we will always have some areas still going up in price, while others may loose more value. This is not a bad thing in fact it is a good chance to accumulate assets into your portfolio ready for the next boom.