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Over A 20 Year Period Property Cannot Outperform Shares.

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Ultimatley property and equities are co-dependent, arent they? Equities do well if the economy does well. If the economy does well, housing should also do well. But logically equities HAVE to outperform property as the fundamental value of property is based on the desirability of the economy that property is located in. Correct? A house in Westminster is worth more than a house in Somali because its in Westminster.

However, if the masses demand 2nd and 3rd properties + more single households continues than in theory property CAN outperform equities. Cant it?

Thoughts, especially in favour of the view that property CAN outperform equities over the long term.

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No contest. Stocks/Equities outperform property 4:1

http://www.forbes.com/lifestyle/2005/05/27...tml?partner=rss

"But if you take a longer view--say 25 years--you'll find that the S&P 500 has actually stomped the real estate market, from Boston to Detroit to Dallas. From the start of 1980 to the end of 2004, home sale prices increased 247%. A pretty sweet deal, it would seem. Over the same period, however, the S&P 500 shot up more than 1,000%."

UK probably the same.

Renting IS the way to go folks. TTRTR may be our unsung hero after all? Especially when rents are stuck because incomes are npot increasing and renters are unable to pay more!

Edited by Realistbear

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If we are to learn anything about buying property (especially as a first time buyer) the first and foremost lesson we should acknowledgw and pass on to others is the absolute and total relevance of timing.

Someone raised the issue a while back that anyone who first time bought back in 1973 and then came to sell some twenty years later in 1993 would find that their house value had remained unaltered.

If there is a lesson to be gleaned from this it is timing is everything and never buy at a peak in the housing cycle.There are good times to buy and there are bad times to buy.There are very good times to buy and there are very bad times to buy.

NOW IS ALMOST DEFINATELY THE VERY WORST TIME SOMEONE COULD EVER PICK TO BUY IN THE HISTORY OF THE BRITISH PROPERTY MARKET.......................................

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But in the long-run can property outperform shares? I just dont se how that is possible other than if - as has been the case for the past few years - people invest more in property than shares and the sheer number of people (demand) drives up prices even if the fundamentals arent there. But in the long-run we always return to the fundamental value of an asset ("reversion to the mean"????)

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We are seeing a return to some degree of trust in shares and the stock market and that is indeed a very good thing as there needs to be a viable alternative to the over ramped u.k. property market.

But you and I and almost everyone else on this forum are trying to talk some sense into some very ignorant people in the masses.We have a disease in this country called property speculation and it will be cured for some while with the crash that will unfold.Up until people see that property can crash big time just the same as any other asset we are wasting our time and breath on them.

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But property wont crash big time until the masses stop investing money into property. I dont think this will happend until there is a sustained slowdown/recession in the economy. Unless exports pick up I think the economy will slowdown drastically after 2008 when public spending should slow, even if Govt borrowing rises sharply.

2008 will be the year to wait until.

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But property wont crash big time until the masses stop investing money into property. I dont think this will happend until there is a sustained slowdown/recession in the economy. Unless exports pick up I think the economy will slowdown drastically after 2008 when public spending should slow, even if Govt borrowing rises sharply.

2008 will be the year to wait until.

The current HSC (High Street Crash) is shaping up to be a serious economic factor. CBI's report this week says its the worst for 22 years. This may be the trigger as the knock-on effect on jobs will be proportionate. No sales= no wages= no jobs.

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"No contest. Stocks/Equities outperform property 4:1

http://www.forbes.com/lifestyle/2005/05/27...tml?partner=rss

"But if you take a longer view--say 25 years--you'll find that the S&P 500 has actually stomped the real estate market, from Boston to Detroit to Dallas. From the start of 1980 to the end of 2004, home sale prices increased 247%. A pretty sweet deal, it would seem. Over the same period, however, the S&P 500 shot up more than 1,000%."

UK probably the same."

House I bought for £18.75k in 1978 was up for £270k+ last year

House I bought for £4.75k in 1971 now about £200k+

House I bought for £5k in 1978 now about £300k (approx £30k spent).

So UK not necessarily the same.

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"No contest. Stocks/Equities outperform property 4:1

http://www.forbes.com/lifestyle/2005/05/27...tml?partner=rss

"But if you take a longer view--say 25 years--you'll find that the S&P 500 has actually stomped the real estate market, from Boston to Detroit to Dallas. From the start of 1980 to the end of 2004, home sale prices increased 247%. A pretty sweet deal, it would seem. Over the same period, however, the S&P 500 shot up more than 1,000%."

UK probably the same."

House I bought for £18.75k in 1978 was up for £270k+ last year

House I bought for £4.75k in 1971 now about £200k+

House I bought for £5k in 1978 now about £300k (approx £30k spent).

So UK not necessarily the same.

A few examples may skew the figures. E.g. Buying Microsoft shares bought in the early years have outperformed the housing market by several thousand percent. Just as your three examples have outperformed the national market. You may also have timed the purchases. For the purposes of determining which investment is best you have to look at a considerable time period and a broad average of the commodity in question.

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One of the big differences is if 20 years ago I had bought a house in Manchester rather than London. It would have increased an awful lot, not as much the South East, but an awful lot.

If I'd had shares I might be left holding Marconi, BT and Rolls Royce. I would have had to hold my nerve through stock market crashes, dot coms and all.

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Ultimatley property and equities are co-dependent, arent they? Equities do well if the economy does well. If the economy does well, housing should also do well. But logically equities HAVE to outperform property as the fundamental value of property is based on the desirability of the economy that property is located in. Correct? A house in Westminster is worth more than a house in Somali because its in Westminster.

However, if the masses demand 2nd and 3rd properties + more single households continues than in theory property CAN outperform equities. Cant it?

Thoughts, especially in favour of the view that property CAN outperform equities over the long term.

Don't forget the effects of leverage. It's pretty easy to borrow £80,000 to buy a £100,000 property. It's pretty hard to borrow £80,000 to buy £100,000-worth of shares. So you can make five times as much money from the same percentage increase with property compared to shares -- or lose five times as much, of course.

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Generally, stocks and shares will outperform the housing market, but are considered riskier investments, so that shouldn't be surprising.

Zorn's observation shows a great naivety of investing in stocks and shares. There are many ways to gear stocks and shares investments, such as options or spread betting, but in all cases (including property), gearing increases exposure to risk (greater losses) but enables greater returns.

Most investments are a risk/reward balance.

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Guest muttley

Generally, stocks and shares will outperform the housing market, but are considered riskier investments, so that shouldn't be surprising.

Zorn's observation shows a great naivety of investing in stocks and shares. There are many ways to gear stocks and shares investments, such as options or spread betting, but in all cases (including property), gearing increases exposure to risk (greater losses) but enables greater returns.

Most investments are a risk/reward balance.

Most investors are oblivious to geared investments on the stock market.(I include myself.I know what an option is,but have never used one)

Therefore,for most people,a house is their best investment over a 20 year period.

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Do you children always need to be reminded of LEVERAGE?

Do you need to be reminded that you started buying at the bottom of an enormous bust, and you've managed to ride the biggest bubble in history to it's very top?

In a rising market gearing can be great, but in a bust the consequences can be disasterous.

As many are about to find out.

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Guest muttley

Do you children always need to be reminded of LEVERAGE?

Did you know that leverage works both ways?

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  • 337 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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