Great Graphic: Home Ownership and Measuring Inflation

This Great Graphic
was in the Financial
It shows home ownership rates several EU
countries.  The useful chart also shows those who own (red bar) and those
who pay a mortgage, or housing loan (light blue) and those that rent (dark

A few observations jump out at us.  Home
ownership is the lowest in Germany.  It is the highest in Spain. 
However, look at Italy.  Home ownership is almost as great as in Spain,
but the larger red bar means that fewer Italians have mortgages on their
homes.   Denmark and the Netherlands have the highest percentage of
home ownership supported by mortgages.

In the United States,  home ownership
stood at 63.7% at the end of Q2.  It averaged 65.3% over the past half
The peak was reached in
Q2 2014 at 69.2%.   A 2012 survey, the most recent we found, suggests
that nearly 30% of American homeowners do not have mortgage debt.

There are two components of shelter costs in
the US measures of inflation.
  There is rent, and there also is a
function for the owner equivalent (OER).  OER in the US is nearly 25% of
the CPI basket.  However, OER is not included in the EU measure of
inflation.   While home ownership is roughly the same, a little more
than 60%, more Europeans can do it
without debt.

This is
one of the examples of our general point about comparing inflation. 

The major central banks have all adopted an inflation target of about 2%. 
However, while the target is broadly similar, the basket of goods and services
they target is strikingly different.  A while back, we created a table
that compares CPI measures between the US, EU, Japan and the UK, which
we repost here:



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