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value of money over time ??

  • 22-05-2016 4:25pm
    #1
    lalababa
    Registered Users, Registered Users 2 Posts: 1,742 ✭✭✭


    Googling the value of £1000 irish pounds in 1970 I got 13k euros today (from something called consumer price index?). Googling the average dublin house price 1970 I got £6000 , which would be according to google 80k today, but the average dub. house price today is 320k. So do these indexs give much of a comparison ? :confused:


Comments

  • #2
    yupya1
    Registered Users, Registered Users 2 Posts: 173 ✭✭yupya1


    Well I'm no expert and not sure quiet sure what you are asking but I'm interested in this also.
    So the Consumer Price Index(CPI) is very much relevant and was put in place to be used to track the decreasing purchasing power of money.

    The CPI tracks the price of everyday shopping items like bread, milk etc (essentially a weekly shop) and means it would take 13k today to buy items what cost 1K£ in 1970 so the value of money has decreased by c92% (open to correction)

    But on top of that, the price of houses has increased through market factors at a even higher rate! and that's why there is a difference.
    Kinda like washing up liquid might increase a couple of cents year on year at about 1% of its total value but houses in Dublin can increase 5,10 even 20% of its value month on month!

    So supply and demand really I suppose

    What I always wondered was why people would pay off their Mortgage early as the money they pay now could be worth a lot more than in 20years time with a static repayment amount?

    Maybe Ill work it out someday...unless anybody knows?


  • #3
    keano89
    Registered Users, Registered Users 2 Posts: 72 ✭✭keano89


    If you compare 1970 Ireland to Ireland in 2015 there is no comparison. Adjusting average income in 1970 into todays money you will find a massive difference between the 1970 average and the 2015 average. This is useful at showing how much over time our economy has improved. Just look at the improvement in our GDP per capita rank over that time. The underlying economy is totally different, workers are more educated now, more professional jobs in Ireland. This is the reason why you notice a big difference. CPI is useful at controlling for inflation.


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