cross-posted from: https://lemmy.world/post/19930828
this post was submitted on 22 Sep 2024
1306 points (97.2% liked)
Political Memes
5483 readers
2030 users here now
Welcome to politcal memes!
These are our rules:
Be civil
Jokes are okay, but don’t intentionally harass or disturb any member of our community. Sexism, racism and bigotry are not allowed. Good faith argumentation only. No posts discouraging people to vote or shaming people for voting.
No misinformation
Don’t post any intentional misinformation. When asked by mods, provide sources for any claims you make.
Posts should be memes
Random pictures do not qualify as memes. Relevance to politics is required.
No bots, spam or self-promotion
Follow instance rules, ask for your bot to be allowed on this community.
founded 1 year ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
You need to look at the rent for the cost of housing. That's what goes into inflation. House prices are high because inflation is low. Or more correctly, they are high because interest rates are low, which is because inflation is low.
Imagine you have a rock-solid investment opportunity. You are sure, it will generate a return of 10k until the next year. Say you can borrow money for 5%pa. If you borrow and invest 100k, you get 110k back and have to pay 105k back, for a profit of GBP 5k. But if everyone thinks the same, they are not just going to let you have free money. If they can't adjust the payout, they will adjust the price. So, at that rate of interest, the price has to be 200k for that 10k opportunity.
The point is that if rents are constant while interest rates go down, then the cost of buying must go up.