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House prices and food prices - are you getting richer?

In this article I will present how prices have changed with respect to earnings rather than how they have changed with respect to government inflation figures. We all know that governments rig the inflation figures so that they can announce that we are all getting richer every day in every way.  They use the rpi or cpi to adjust prices and come up with "household income" figures to obscure what people are really earning.  The real figures that interest you and me are how much we can buy with our wages.

Suppose you are 25 years old and earning an income that is just higher than half of the population earns so you are just in the top half of wage earners (the median income).  Did your parents find it easier than you do to buy a house?  Lets take a look:

House prices in terms of individual full time median earnings
Back in the 1970s houses only cost four times their income but now they cost almost 10 times your income!  In 1997 there was a massive rise in house prices, what happened? In 1997 the people voted for Tony Blair and Gordon Brown, a vote that means you will probably never own your own home  (see The Roots of New Labour).

The government's own data for house affordability has taken a trip to dreamland:

Sort of credible you may think but look at the source data below:
Its good that you and your wife (who is probably wanting kids) earn £58000 a year.  The £58000 is interesting because according to the ONS the median full time earnings in 2010 were £25948. So, according to the government between you and your partner your average annual earnings are greater than the sum of your annual incomes. If you are typical and one of you works part time I don't know how you will get to the £58000 the government says you have.

The fairest measure of house prices is to use a single average full time median income.  Any other comparison measure, such as household income etc., will be subject to changes in composition and can be rigged to make the government look good.  I can't help but feel that the government was fooling itself in the noughties with a false measure and so missed the catastrophic overvaluing of housing.

So much for house prices, but surely items like food, petrol and train fares have got cheaper.


Well, no, they are actually slightly more expensive.  Food got quite a lot cheaper between 1997 and 2006 but that has passed.

Getting better every day in every way?  No, they are taking the piss!

What did Blair and Brown do that deprived you of ever being a home owner?  They swelled the population massively:

They get all the teachers and news people to tell you that this was a wonderful thing, not only are you getting richer every day but you have all of these wonderful new playmates - lucky children!  Thank goodness we are a progressive society getting more modern and moral every day.  Its a shame that we are all worse off every day and, if you do not own your own home now, you probably never will.

It is only when politicians provide a regulated market that allows the continuous creation of independent new businesses and the abundance of employment that people can have freedom.   Importing vast numbers of people to hold down wage rates and increase the price of property prevents people from enjoying this freedom.

If you found this article interesting link to it, tweet it (TinyURL  http://tinyurl.com/b86bqaj ),  and tell your friends! If you don't act then who will?   

POLITICAL THOUGHTS click here to see the whole POLITICAL THOUGHTS magazine POLITICAL THOUGHTS!


See

Immigration, house prices and boom economics

Getting richer every day in every way

Postmodernism-poststructuralism-postmarxism


Sources:

Earnings: http://www.ons.gov.uk/ons/about-ons/what-we-do/publication-scheme/published-ad-hoc-data/labour-market/december-2012/historical-median-and-percentile-gross-weekly-earnings-gb-and-uk-1968-2012.xls

Rail fares: www.parliament.uk/briefing-papers/SN06384.pdf
Petrol prices: www.theaa.com/public_affairs/reports/Petrol_Prices_1896_todate_gallons.pdf
Plus the following from AA web site petrol price report:
2006 400.97
2007 467.34
2008 406.88
2009 492.34
2010 555.08
2011 602.36
2012 600.08
(pence per gallon).


Chicken prices: http://www.ons.gov.uk/ons/rel/cpi/consumer-price-inflation/average-price-of-selected-food-items/average-price-of-selected-food-items-.xls

Population data: http://www.ons.gov.uk:80/ons/rel/pop-estimate/population-estimates-for-england-and-wales/mid-2002-to-mid-2010-revised--national-/chd---figure-2--annual-population-growth-rates-for-england-and-wales--1961-2011.xls

House prices: http://www.ons.gov.uk/ons/rel/hpi/house-price-index/november-2012/rft-annual-nov12.xls


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