If I buy a home priced in lunch menus: they've fallen over 20 years
A lunch menu in Plaza Castilla cost 7 euros in 2006 and 15 today. On that pattern, housing has not doubled since the bubble peak.
English · Original discussion in Spanish · Published
Comparing house prices with the price of a set lunch menu suggests property has not become as expensive as it seems: what has collapsed is the purchasing power of money. Someone who bought at the 2006 peak and sells 50% higher today may actually be selling cheaper in menus.
Housing prices are almost always measured in euros, and that's the trick. A lunch menu in Plaza Castilla cost **7 euros** in **2006**, at the height of the real estate bubble. Today that same menu costs **15 euros**. Housing, by contrast, has not doubled since that peak: it sits somewhat above it.
## Housing in lunch menus
That contrast is what reframes the discussion. If you measure a home in menus rather than euros, the result flips. Someone who bought in **2006** and now sees their flat **50%** more expensive in euros may be selling it cheaper in menus. The nominal rise exists; the real one does not.
This reasoning is not a statistical fluke. It is the same logic that applies to potatoes or coffee: when the currency loses value, prices in that unit rise even if the good is not worth more.
## Wages and inflation
The other side of the calculation is wages. If the menu has multiplied by a little more than two and housing has not, the conclusion is that inflation has eroded the purchasing power of paychecks. It is not that housing has become unaffordable because of its price: it is that the money used to pay for it is worth less.
This effect is especially noticeable for those who bought at the peak and compare their capital gain with the shopping basket. The gain in euros falls short against the rising cost of everyday life.
## Caution with the comparison
A lunch menu is not a price index. It is a specific product from a specific bar, and its evolution may reflect labor costs, energy or the rent of the premises, not just the depreciation of money. To talk about general purchasing power you would need a broad index and a long series of wages. The comparison helps to sense the phenomenon, not to quantify it precisely.
Housing prices are almost always measured in euros, and that's the trick. A lunch menu in Plaza Castilla cost **7 euros** in **2006**, at the height of the real estate bubble. Today that same menu costs **15 euros**. Housing, by contrast, has not doubled since that peak: it sits somewhat above it.
## Housing in lunch menus
That contrast is what reframes the discussion. If you measure a home in menus rather than euros, the result flips. Someone who bought in **2006** and now sees their flat **50%** more expensive in euros may be selling it cheaper in menus. The nominal rise exists; the real one does not.
This reasoning is not a statistical fluke. It is the same logic that applies to potatoes or coffee: when the currency loses value, prices in that unit rise even if the good is not worth more.
## Wages and inflation
The other side of the calculation is wages. If the menu has multiplied by a little more than two and housing has not, the conclusion is that inflation has eroded the purchasing power of paychecks. It is not that housing has become unaffordable because of its price: it is that the money used to pay for it is worth less.
This effect is especially noticeable for those who bought at the peak and compare their capital gain with the shopping basket. The gain in euros falls short against the rising cost of everyday life.
## Caution with the comparison
A lunch menu is not a price index. It is a specific product from a specific bar, and its evolution may reflect labor costs, energy or the rent of the premises, not just the depreciation of money. To talk about general purchasing power you would need a broad index and a long series of wages. The comparison helps to sense the phenomenon, not to quantify it precisely.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (0 replies).
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