Correlation of Indices
Every property investor may wonder if there is a correlation of indices between house prices, interest rates and inflation. So the information behind the individual charts for interest rates, house prices and inflation have been incorporated into one chart as seen below.
Bearing in mind that the chart shows the change in the indices rather than the underlying actual prices, it is interesting to see that there is a very close correlation, as you might expect, between inflation and interest rates (although the gap widens and narrows)but this does not display at all for the increase in property prices.
Whilst interest rates undoubtedly do have a bearing on property prices, it does not, on the face of it, suggest this from this chart.
The role that interest rates do have on the effect of house prices is to suck out money from the economy at the right or wrong time.
I would like to invite anyone who has a considered view on the role of these indices as well as other factors, on property prices. So come you you Scribblers!
All contributions may be published and I look forward to hearing from any party wanting to correct me!
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