simple exercise in understanding house prices

all the people who like to use a graph to show the rise in house prices, for the last 10,20,50 or 100 years....and complain that the rise cannot be sustained into the future, should do this simple experiment....

simply turn the graph upside down....

now look at it, this will give you a good idea of just how much the dollar has deflated in the same period.....together with the true cost of inflation

or to put it another way, the buying power of the dollar reduces each year...it buys you less and less

The dollar has lost its buying power by over 95%...so yesterdays dollar now buys you only 5 cents......
so how does the graph look now..
viewed from a different perspective....ie; the diminishing value of the dollar

the true CPI is running at over 10% pa...and could be as high as 15%

then add the massive amount of money the govnuts world wide have been throwing out the window since the commencement of the GFC ...I would think the dollars diminishing buying power would have acclerated enormously in the past 3 years.


City house prices should still show a premium compared to houses in the outer suburbs.. like comparing a Jaguar car to a Honda jazz.

ps I did not actually have a graph and turn it upside down....to prove this point....just figure it should give you a simple, easy example of looking at the subject from the other side.