Stagflation is an economic environment where there is Inflation and Recession / Slow Growth. It seems that today, some really Smart Rich People like Bond King, Bill Gross and George Soros are expecting the Stagflation Scenario as the most likely scenario to play out in the next few years.
Since there is Inflation, some of you may be interested to hedge by buying properties. Is this a correct strategy? I have not analyzed historical Stagflation Situation enough to give you an answer of my own, but luckily, Bernard Hickey has done some homework for us.
Since there is Inflation, some of you may be interested to hedge by buying properties. Is this a correct strategy? I have not analyzed historical Stagflation Situation enough to give you an answer of my own, but luckily, Bernard Hickey has done some homework for us.
Bernard Hickey gives a very, very interesting report on what happened to New Zealand house prices during the Stagflation Era of the 1970s.
It seems that NZ Real House Prices (adjusted for Inflation) fell by 39% during the Stagflation Era, between September 1974 and December 1980, mainly because of Inflation. Actually, the house prices were flat to slightly lower, but inflation brought down Real House Prices. It took 22 years for the NZ House Prices to recover back to the 1974 level.
So, before you rush out to buy a house, please do your homework.
It seems that NZ Real House Prices (adjusted for Inflation) fell by 39% during the Stagflation Era, between September 1974 and December 1980, mainly because of Inflation. Actually, the house prices were flat to slightly lower, but inflation brought down Real House Prices. It took 22 years for the NZ House Prices to recover back to the 1974 level.
So, before you rush out to buy a house, please do your homework.
Best wishes,
Ooi
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