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TheDarkKnight

Annualised Percentage House Price Growth Since Records Began?

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Hi there,

I'm looking as per the title for the annualised percentage growth of UK house prices averaged over as far back as possible. I see that the Land Registry which is great for data only goes back to 1995 I believe, which isn't very useful.

So I wondered if anyone could post links to % growth over the longest time frames available please :)

I seem to remember it being about 7% pa but that was based on a short period so isn't very useful.

I would like this as I'm looking to plan out the expected returns based on buying a house and having that extra expense (and therefore less money to invest in stocks and shares etc) versus continuing to flatshare for 5 or 10 years, and using the extra money that frees up to invest further in stocks and shares at my given risk profile and expected long term return after charges.

^ I am of course taking into account the other pros and cons of ownership and rental not just the monetary side of things.

Thanks :)

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400 years of inflation adjusted data for Norway, Amsterdam and the US - long term trend is between zero and 1.3% per year

http://83.143.248.39/faculty/kpetrov/Other/Course%20Archive/ECO%20402b%20Topics%20In%20Macro/Readings/Shiller%20-%20Long%20Term%20Perspective.pdf

(this is a great paper by the way)

+1.

"The cause of the home price boom does not seem to be an unsatisfied hunger for land services or housing services, above other goods and services:"

How very true.

"long term trend is between zero and 1.3% per year"....this is an obvious fact that some investors ignore....any long term trend for any investment will always be 0%. new industried and booms come and go and there are fortunes to be made, and lost, but over-all...everything had an intrinsic value which, long term, never changes.

Basically, a sheep will always be worth 2 goats.

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There's probably data in the Barker Report. 'Last 30 years' though is pretty much since 1971. So if you believe we've been in an anomalous period of credit explansion since 1971 it won't go back far enough.

Edit: There's a chart of UK and Europe wide real price trends since 1971 (a popular start date?).

The other factor is population growth. Long term real growth probably also requires long term positive demographics/population growth. Scepticus is your man on demographics.

http://www.barkerreview.org.uk/

Building on analysis presented in the Interim Report, Kate Barker presents choices for Government depending on its objectives for housing.
  • The UK has experienced a long-term upward trend in real house prices, 2.4 per cent per annum over the last 30 years. This has created problems of affordability. In addition, the volatility of the housing market has exacerbated problems of macroeconomic instability and has had an adverse effect on economic growth. To improve macroeconomic stability and deliver greater affordability for individuals a lower trend in house prices is desirable:
  • In order to deliver a trend in real house prices of 1.8 per cent an additional 70,000 houses each year in England might be required.
  • To bring the real price trend in line with the EU average of 1.1 per cent an extra 120,000 houses each year might be required.
Edited by Red Knight

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You may also be interested in this report I came across the other day.

'Household Projections to 2031,England'

Which is looking at one of the drivers for demand - household formation.

The summary makes interesting reading:-

* 252,000 new households per year (29 per cent increase by 2031)

But 2/3rds of that increase will be in the formation of 1-person households and c. 50% of those will be > 65s.

http://www.communities.gov.uk/documents/statistics/pdf/1172133.pdf

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Finally, a very recent paper by GMO

https://www.gmo.com/Europe/CMSAttachmentDownload?target=JUBRxi51IIA1YdxRKKPedFi61O2OglanIRVoizJpKZd2dGP3C21iwmdNBThDJxxZFF9ysrk8Jg1eLI%2b6M6F%2fBFNwmfMFN9NRiq3W81KPaIUKTo%2b3vT%2bj8A%3d%3d

Between Errors of Optimism and Pessimism –

Observations on the Real Estate Cycle in the

United States and China

Detailed examination of housing cycles in general and the US (touches on UK and other) housing cycle and Chinese cycle in particular. Again note the emphasis on household formation and population growth as demand driver (along with expansion of credit of course and other factors)

Some excellent charts, data, peak/trough cycle indicators and so on. Recommend you read it.

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"long term trend is between zero and 1.3% per year"....this is an obvious fact that some investors ignore....any long term trend for any investment will always be 0%. new industried and booms come and go and there are fortunes to be made, and lost, but over-all...everything had an intrinsic value which, long term, never changes.

Basically, a sheep will always be worth 2 goats.

Completely false. The intrinsic value of anything is subject to permanent change. What price an acre of boggy oil-rich land 400 years ago? What price a nice strong ox or cart horse in the UK compared to 200 years ago?

In addition, real increases in wages and GDP mean that we have more real income to spend on things, including housing.

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But 2/3rds of that increase will be in the formation of 1-person households and c. 50% of those will be > 65s.

http://www.communiti...pdf/1172133.pdf

smashing finds RK, this last quote is rather subject to the methodology, that appears to be extrapolativce of social trends, ie doesn;t take into account cost as a driver - put simply, in my view, all these single households will simply tend to house-share

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smashing finds RK, this last quote is rather subject to the methodology, that appears to be extrapolativce of social trends, ie doesn;t take into account cost as a driver - put simply, in my view, all these single households will simply tend to house-share

Also it wasn't clear to me how they're saying these 1-person > 65 households come about. Do they mean 'death' of partner in 2-person households due to ageing? Divorce?

They further point out 1-person households can be in any type of house.

But doesn't it suggest overall additional demand is likely to be higher for smaller homes rather than larger? In places >65s (retirees) would prefer to live rather than commuters?

But I may be in danger of extrapolating too far........

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Also it wasn't clear to me how they're saying these 1-person > 65 households come about. Do they mean 'death' of partner in 2-person households due to ageing? Divorce?

They further point out 1-person households can be in any type of house.

But doesn't it suggest overall additional demand is likely to be higher for smaller homes rather than larger? In places >65s (retirees) would prefer to live rather than commuters?

But I may be in danger of extrapolating too far........

you're the 2nd person to have suggested this to me actually, I think it makes sense

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There's probably data in the Barker Report. 'Last 30 years' though is pretty much since 1971. So if you believe we've been in an anomalous period of credit explansion since 1971 it won't go back far enough.

Edit: There's a chart of UK and Europe wide real price trends since 1971 (a popular start date?).

The other factor is population growth. Long term real growth probably also requires long term positive demographics/population growth. Scepticus is your man on demographics.

http://www.barkerreview.org.uk/

Maybe because 1971 was when decimalisation was introtrudced?

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Maybe because 1971 was when decimalisation was introtrudced?

Great replies guys, thank you! I will get reading all of this at the weekend - I moved 300 miles south last week and started a new job yesterday!

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  • 343 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%



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