Quite a gain (and no profit) until you look at inflation.
It appears people who bought in 2007 have made money when they have lost it in ‘real terms.
What do I mean by that? What exactly does ‘real terms’ mean?
Everyone knows that £100 today doesn’t buy what £100 could have bought you ten years ago and much less than 20 years ago … that’s the effect of inflation.
‘Real terms’ means the price value after adjusting for inflation and expressed in constant Pound Sterling, reflecting buying power relative to another year. For example, the ‘actual’ price of a Mars bar in 2000 was 26p, yet its ‘real price’ (expressed in today’s prices) is 74p. Why 74p? Because 74p is what a Mars Bar costs today.
What price in the past has the same spending power today? So, looking at the £187,008 average price for a Swindon house in autumn 2007 (as mentioned above), one would need £311,517 today to buy the same amount of ‘retail goods and services’ (e.g., cars, food, Mars Bars, holidays etc.) – that is what ‘real terms’ mean.
That means even without any house price falls (which many are predicting),