I had to chuckle when I read this article today about how house prices increased in the north (144%) more than the house prices in the south (107%) over the last decade.
While the figures may be true in percentage terms, I really don't believe they reveal the truth.
Ultimately the reason why people love their house price going up is because they feel wealthier and so can potentially remortgage part of this wealth to spend on consumer goods.
However house price values increase in percentage terms in these surveys while wealth is an absolute value.
let me explain
Average house prices in the north have a lower average base level e.g 100k while southern properties have a higher average base level e.g 200k.
If northern properties double they are now worth 200k - an increase of 100k of wealth.
If southern properties increase by only 75% they are worth 350k an increase of 150k.
Therefore those in the south have increased their absolute value of wealth by an extra 50k compared to those in the north, though their percentage increase in wealth is lower
Remember forget the headlines, look at the underlying story and the assumptions made.
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