''inflation is well and truely with us and wages are climbing rapidly and will catch up''
First bit true but the second, well, thats completely not. Wages will NOT catch up to inflation, that just wont happen. There arnt many guarantees in life for the 'average' person but thats one of them.
Also which figure for inflation will we use, which do u suggest? The one the RBA tell me - the one that says im paying 3% more per year on my goods (while they are inflating our money supply 17% pa) :-) ? the one without fuel and food included? Im surprised anyone could actually even call that an inflation gauge. I think most australians will realise (if they havnt already) that inflation unfortunately will outpace the 'average persons' wages. The government and RBA will make sure of that.
While the RBA continues to print money 10-15%+, it sort of guarantees that the result (increased prices) will be greater than they're so called 'CPI of 3-4%'. If you work an 'average (whatever that is!)' 9-5 job and do that for the rest of your life, then unfortunately your standard of living will slip - its the way our fiat money based system works. Just over the last 10years housing has gone up what? . Somehow i dont think i will be able to adjust my pay to take that into account (would be great though)!! The mathematics of that is actually quite simple - if you are understating inflation in the first place then its hard to know exactly whats where and makes it especially hard to know how much more to ask for!! . And this is the main point why letting inflation run riot can have massive consequences. Its not that inflation being high ALONE is the problem for the RBA - but its what they see as the Publics Perception of inflation going higher. If the public think high inflation is here to stay, then watch out. Once the publics perception of how much prices are rising are adjusted to realistic levels (not the bogus ones and not what CPI says) then it becomes a dangerous game and all of a sudden you get a scrum for the exits.
Anyway with higher inflation and all these 'wages catching up' what will happen to interest rates? and after that what will happen to the economy? And house prices?
At first I believed that house prices will remain stagnant for the next few years. But now im not so sure,, i think that was just wishful thinking. Its hard to believe in falling prices for a lot of people, but when i look at perth (the second most expensive city LOL) and the increases in costs/housing/council rates etc compared to the infrastructure improvements etc etc etc, i certainly think anything is possible even housing falling by the amounts stated in the article.
