Jump to content
House Price Crash Forum
The Masked Tulip

In Real Money, British House Prices Are Down By 70%

Recommended Posts

I don't know what to make of this - basically arguing that house prices have fallen against gold so that there has been a huge crash in UK house prices.

As most people wanting to buy a hosue do not have everything in gold I do not know how realistic this article is. Kind of lost interest in Moneyweek's claims on house prices. Have a read and let me know what you think about it.

http://www.moneyweek.com/investments/property/uk-house-prices-in-ounces-of-gold-02110.aspx

Share this post


Link to post
Share on other sites

The value of an asset during a bubble contraction dips against the value of an asset undergoing an bubble inflation?

Shit...Sherlock...

Share this post


Link to post
Share on other sites

The value of an asset during a bubble contraction dips against the value of an asset undergoing an bubble inflation?

Shit...Sherlock...

Yes, why not compare house prices with the price of another asset that is inflating - coffee beans for example?

Share this post


Link to post
Share on other sites

Non article really, could do the same 'analysis' with wine, vintage ferraris, televisions, coffee, tulip bulbs; in the 80s televisions cost several hundred pounds, far more than now, so a house then cost 50 tvs, now a house cost 800 tvs a massive 16x as much....

Thanks, that is exactly how I read it... oh, and man who owns gold ramps gold in financial mag IMPO.

Share this post


Link to post
Share on other sites

What a blow to hear this.

Instead of living in a nice comfortable house, with a fast-reducing mortgage, I could be living in a tent, cackling over my hoard of gold bars....... mine, all mine, hahahaha!

Useful knowledge indeed!

Share this post


Link to post
Share on other sites

What a blow to hear this.

Instead of living in a nice comfortable house, with a fast-reducing mortgage, I could be living in a tent, cackling over my hoard of gold bars....... mine, all mine, hahahaha!

Useful knowledge indeed!

Well to be really useful it needed to be published 12months ago with 100% certainty that the then predicted rise in Gold would happen.

But it wasn't - only nutters were predicting a massive gold bull run immediately after - a massive gold bull run.

I think the very few souls who do this sort of thing successfully keep a bit back and live in very nice rented houses or hotels, not tents though. Or more likely own several tasty houses & trade in and out of the market - now wouldn't that be nice? If a bit unethical.

Share this post


Link to post
Share on other sites
As far as advocates of sound money are concerned, the UK housing market peaked in 2005. Since then it has fallen by more than 70%.

House prices are now at levels last seen in the early 1990s, at the bottom of the last bear market. The average house price is currently 25% below its average of the last 40 years.

"But, but, but," I hear you say. "The housing market has barely fallen. The latest Nationwide and Halifax data has been showing year-on-year price rises. The crash never really came. This is insane. You're talking rubbish."

Am I?

House prices haven't risen – sterling has fallen

Certainly, data from Nationwide, Halifax, Rightmove, the Land Registry and any other reputable source you care to mention, shows that house prices rose dramatically between 2005 and 2007. There was a sharp correction of perhaps as much as 20% in 2008-9. But since then the market has rallied. There are even reports that prime London property is now changing hands at record prices.

For example, Nationwide reported an average UK house price of around £151,757 in early 2005, rising to £186,044 by October 2007. That then fell to £147,746 by February 2009. But it was back at £167,802 by last month.

However, all this data measures our housing market in our own national currency. And we all know what has happened to that.

As I said in my opening sentence, for sound money advocates, it's a very different story. The supply of gold cannot be increased by quantitative easing. Nor is deficit spending on the current scale possible under the discipline imposed by a gold standard.

Long-time readers know I like to post the charts of mathematician Tom Fischer, now Professor of Stochastic Financial Mathematics at the University of Wuerzburg, Germany. These charts show how many ounces of gold it takes to buy the average UK house. He has recently updated them.

The average house price is now around £168,000. Gold is around £825 an ounce. So it would cost you just over 200 ounces of gold to buy the average house. That's the same as in 1994, at the bottom of the last housing bear market.

The average house price back then however, was between £60,000 and £65,000 – one third of where it is now. That gives you an idea how much sterling has depreciated since then, and thus how savers have been robbed. You have your modern, government-sponsored system of money, credit, boom and bust to thank for that.

Interestingly, just as it does now, the average UK house cost just above 200 ounces of gold in 1970. Back then, a sterling buyer would pay £4,874 for the average house. If ever you needed an example of how gold maintains its purchasing power over extended periods, while that of fiat currencies evaporates, there you have it.

How low will the house price / gold ratio go?

The cost in gold of the average house over the past 40 years is 275 ounces. We're already below that. But that doesn't mean we can't go any lower. At the peak of the market in 2005, the average UK house cost an unprecedented 700 ounces. In London it was almost 1,100 ounces. At the bottom of the market in 1980, when gold spiked to $850 an ounce, the average UK home cost just 50 ounces. It also spent several years around the 50 ounce mark during the 1930s.

Fischer is convinced we're going back to 50 ounces for the average UK home. I have a slightly more sober, long-term target of 100 ounces, although I wouldn't rule out 50. Once the ratio hits 100, I'll look at rolling my portfolio out of gold and back into housing.

I'm confident we'll get there within the next three years. Gold need only rise by a third from here (from £825 to £1,100 an ounce), and house prices fall by a third (£168,000 to £110,000), to give you a 100:1 ratio. Both look very possible given the underlying fundamentals.

Or, as is more likely in my view, gold could double from here to £1,650 per ounce, while nominal house prices stay the same. I'm sure those up top would rather see this latter scenario, with nominal house prices remaining unchanged. People will believe that the so-called value of their houses is unaffected, so they won't be too upset. All the while the value of their money is destroyed. But we have so few savers, who cares about that? As one of my correspondents puts it, "nominal house prices remain unchanged, so the muppets are happy".

It's all an example of confiscation or appropriation through the stealthiest tax of all – the inflation tax. And right now, it's a policy that's being pursued worldwide more vigorously than ever before. As governments try to inflate away their own and everybody else's debts, we've already seen artificially low interest rates, quantitative easing, and multiple bail-outs. All we need now is another deflationary bust – that would get them really printing.

Got gold?

Share this post


Link to post
Share on other sites

I've done it again :(

Bart, where are you? - Erase please :)

Dare I say he has you on "Ignore"

Share this post


Link to post
Share on other sites

At least you can tell who hasn't got gold on here :rolleyes:

Share this post


Link to post
Share on other sites

Dare I say he has you on "Ignore"

Pauses to wipe away a nostalgic tear

I blame all those male-only mod parties he has to attend.

It's turned him, it really has :(

All secrets, frills, & champers. Very Bilderbergian

Share this post


Link to post
Share on other sites

I have 20 quids worth, can I buy a house now?

Ex-Ratner?

If so, it might deserve a place at Fort Knox alongside the tungsten

Share this post


Link to post
Share on other sites

Over and over and over I hear this topic. Yes, for a small number of people the price of residential property in the UK, priced in gold, or $ or € or whatever is important. However this makes up a tiny % of the market. The cost of a UK house in Uk £ is what is most important to nearly everyone in this country. And by a long long long long long long way.

Yes it may be interesting to compare it to these other currencies if you choose, however not very useful unless you are one of the small number it will actually make a difference to.

Share this post


Link to post
Share on other sites

Over and over and over I hear this topic. Yes, for a small number of people the price of residential property in the UK, priced in gold, or $ or € or whatever is important. However this makes up a tiny % of the market. The cost of a UK house in Uk £ is what is most important to nearly everyone in this country. And by a long long long long long long way.

Yes it may be interesting to compare it to these other currencies if you choose, however not very useful unless you are one of the small number it will actually make a difference to.

OR, you could act & join that 'small number' who see paper currencies for what they really are?

Share this post


Link to post
Share on other sites

I don't know what to make of this - basically arguing that house prices have fallen against gold so that there has been a huge crash in UK house prices.

As most people wanting to buy a hosue do not have everything in gold I do not know how realistic this article is. Kind of lost interest in Moneyweek's claims on house prices. Have a read and let me know what you think about it.

http://www.moneyweek...gold-02110.aspx

"REAL" Money????

REALS(silver) & Escudos(gold) were Pirate cash!

Share this post


Link to post
Share on other sites

I'm guessing very very few HPC people (let along ordinary folk) have enough gold to buy a house (or even 1/4 house), so moot point this one!

And those that do, probably have a fortune anyway so overall it makes little difference to their wealth.

Hands up anyone who put enough money into gold such that where they wouldn't be able to buy a property had they saved cash, they now can because they have gold ... and so has benefited from this "Crash" to be able to buy a house.

I am guessing it's a rare bird that fits that category.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.