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ScaredEitherWay

House Price Growth Over 10 And 25 Years

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There's been a myth that house prices double every 10 years, so I had a very quick look into it. Working with a very cut down and averaged data set from just 1971, I did two checks:

1] Do house prices always double every 10 years?

2] By how much do house prices increase every 25 years?

So here are my initial, simplified, findings:

Double Every 10 Years?

I compared 01/71 with 01/81, then each month thereafter until now.

01/81 to 06/93: Yes, they did double

07/93 to 05/02: No, they did not double

06/02 to now: Yes, they have doubled

So then I took today's price forward to see "if prices do not move by one penny, at which point from now will they NOT have doubled in the past 10 years" - and the answer was by March 2010.... so not long then before it's not true again.

How Much Every 25 Years

Obviously with such a small data sample, during some years of rapid growth, this was never going to prove too much. Starting with 01/71, 25 years brought me to 01/96, so these figures represent from 1996 to now, comparing growth over the past 25 years.

01/71 to 01/96: 11.50x more

01/72 to 01/97: 10.19x more

01/73 to 01/98: 7.76x more

01/74 to 01/99: 6.97x more

01/75 to 01/00: 7.85x more

01/76 to 01/01: 8.04x more

01/77 to 01/02: 8.41x more

01/78 to 01/03: 9.42x more

01/79 to 01/04: 8.35x more

01/80 to 01/05: 7.23x more

01/81 to 01/06: 6.97x more

01/82 to 01/07: 7.52x more

01/83 to 01/08: 7.38x more

01/84 to 01/09: 5.88x more

That trend is definitely getting smaller.

Source of Data: http://www.acadametrics.co.uk/FTHPI%20Nati...August%2009.xls

Edited by ScaredEitherWay

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Im far from a housing bull, but all these comparisons (is it better to have a property investment, or stockmarket investment) seem to say that the stock market is best BUT include reinvested dividends. In so far as i can see the property comparison is just the Haliwide price index and doesnt add to that the rental yield. I suspect houses MAY be a better long term investment than the stock market.

Obviously thats not including mortgage/leverage costs, which all the BTL squad seem to love so much (ie i have to subsidise my tenants in the same way id have to pay into a pension, overlooking the fact that paying into a pension is paying yourself, paying a BTL mortgage is paying a bank)

I think houses may well be the best long term non-speculative investment if you pay cash, but with long term house price growth traditionally barely above long term interest rates i think mortgaged buyers may have a different experience. THIS MEANS YOU BTL FILTH SCUM.

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Houses barely change in value, it's the currency they are traded in that does.

You could make that argument for price changes in anything, surely - which is why cash is not a 'store of value' without interest, as its purchasing power is eroded through inflation.

e.g. Mars bars barely change in value, it's the currency they are traded in that does.

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