Jump to content
House Price Crash Forum

Long-term Ftse Vs Property


bdon

Recommended Posts

0
HOLA441

Someone kindly answered this question but I can't find the figures.

Over the past 100y the FTSE has increased by 5% above inflation yoy, property has increased by about 3% above inflation yoy.

[v grateful if anyone can get the actuals]

so actually buying a house (whatever the price) is no worse really than putting your cash in a tracking ISA

which leads me to think that many BTL people will simply not sell, even if they are having to pay (subsidize rents) as in the long term things will go up so it's not really that much different from stocks --- plus you have a place and a roof over your headd

timing the market vs time in the market (as someone once said)... ie the longer you're in it the better as predicting falls/peaks is a fools game

thoughts learned ones

Link to comment
Share on other sites

1
HOLA442
2
HOLA443

I've asked for a graph a few times. Found one eventually.

Presumably doesn't account for reinvestment of dividends which would make the equity line steeper.

The data I have seen shows the gains are very similar (equity>house), although payments for a house must be made which makes it more suitable for many.

equity_vs_houses.JPG

post-6034-1182714666_thumb.jpg

Link to comment
Share on other sites

3
HOLA444
which leads me to think that many BTL people will simply not sell, even if they are having to pay (subsidize rents) as in the long term things will go up so it's not really that much different from stocks --- plus you have a place and a roof over your headd

Ok, consider;

When was the last time your share portfolio's...

boiler broke down?

needed redecorating?

had a tenant void?

needed a new roof?

and so on.

'nuff said.

Link to comment
Share on other sites

4
HOLA445
Ok, consider;

When was the last time your share portfolio's...

boiler broke down?

needed redecorating?

had a tenant void?

needed a new roof?

and so on.

'nuff said.

or fell 20% because of bad press

or 5% because of an dull lunch

or x% because of investment bankers getting greedy

everything falls and rises and falls and rises

was just askin'

the facts are out there and I believe there both < 6%

Link to comment
Share on other sites

5
HOLA446

The graph appears to show a fairly close relationship between equities and house prices with a bit of a time lag for inertia as you would expect.

Interesting to see that this didn't hold true with the fall in the stock market 2000 - 2003 when house prices continued upwards regardless.

But as they say - past performance is not indictation.....

Link to comment
Share on other sites

6
HOLA447
The graph appears to show a fairly close relationship between equities and house prices with a bit of a time lag for inertia as you would expect.

Interesting to see that this didn't hold true with the fall in the stock market 2000 - 2003 when house prices continued upwards regardless.

But as they say - past performance is not indictation.....

Is there any reason for a relationship? I always believed they were independent.

Link to comment
Share on other sites

7
HOLA448
Is there any reason for a relationship? I always believed they were independent.

Well, as I understand it, the value of equities are a barometer of the economy. If companies are doing well (share price increases), employing more people and paying them well, then house prices increase as a consequence (hence the lag between performance). A lot of people probably have no interest in the FTSE100 etc but ultimately this 'should' be a good indicator of how well the economy is doing. There is also the knock on effect of investment performance in pensions, endowments, ISAs etc.

I'm surprised that the fall in the value of equities in the early 2000's did not have a knock on effect with house prices, not least because of the number of mortgage linked endowment policies that were about.

Link to comment
Share on other sites

8
HOLA449
Ok, consider;

When was the last time your share portfolio's...

boiler broke down?

needed redecorating?

had a tenant void?

needed a new roof?

and so on.

'nuff said.

Never to all the above questions for me but I've only been renting my flat out for a year and a half while I'm out the country :P

Link to comment
Share on other sites

9
HOLA4410
Well, as I understand it, the value of equities are a barometer of the economy. If companies are doing well (share price increases), employing more people and paying them well, then house prices increase as a consequence (hence the lag between performance). A lot of people probably have no interest in the FTSE100 etc but ultimately this 'should' be a good indicator of how well the economy is doing. There is also the knock on effect of investment performance in pensions, endowments, ISAs etc.

I'm surprised that the fall in the value of equities in the early 2000's did not have a knock on effect with house prices, not least because of the number of mortgage linked endowment policies that were about.

The failure of endowment policies has been brushed aside by lenders, they now offer interest only mortgages - no need to worry about an endowment performing poorly.

I think that the stock market crash in the early 2000`s helped to push up property prices, in a way. As people stopped investing in the markets (either directly or throught pensions/endowments), their money had to go somewhere - property.

Edited by Prof
Link to comment
Share on other sites

10
HOLA4411

A property investor uses as little of his own money as possible to fund a property portfolio...yet makes plenty of profit.

I doubt investors of shares borrow money so even if shares out-perform the property market, it's easier to profit from property much, much earlier.

Link to comment
Share on other sites

11
HOLA4412
12
HOLA4413
Over the past 100y the FTSE has increased by 5% above inflation yoy, property has increased by about 3% above inflation yoy.

Yeah but as is aaaaalways posted here, you cant borrow 100k from a bank to invest in shares. This is all about gearing. Or "leverage" as our yanky friends call it.

If you have 10k to invest, yep you get 5% of that in shares. If you borrow a hundred grand to buy a place, you get 3% of 110k. You do the math!

Ok, consider;

When was the last time your share portfolio's...

boiler broke down?

needed redecorating?

had a tenant void?

needed a new roof?

and so on.

'nuff said.

hehe you can always spot the non-homeowners. Dude. Insurance. I pay £25 a month to cover drainage, gas, electrics. Boiler breaks down? I have a 24hr hotline to call and its fixed in hrs (as actually happened!). For an extra tenner I could cover m'white goods too. I didnt think that was good value though. Roof gets blown off? Well yep theres building insurance too - when combined with content insurance this isnt actually much more per month either.

Sure there are some probs, but as above, gearing is the real attraction to investors. Of course this works both ways, if prices go down then you lose a whole lot more!! Thats why Id be steering clear at the present time. Not because my tenant might ask me to paint the walls a new shade of magnolia lol!

Im no fan of HPI and im not saying BTL is a great way to go, but at least get our arguments right.

Link to comment
Share on other sites

13
HOLA4414
14
HOLA4415
This is a very good article that compares property to shares

Fool

Thank you! Just what I was looking for. It would appear both are about equal in terms of averaged returns over the long term. I do however take the point about gearing.

Link to comment
Share on other sites

15
HOLA4416

Yes yes. We've been through all this before.

On the one hand btl'ers are imbeciles that haven't a clue how to invest their money properly - the returns on every other investment are better.

But on the other hand the evil btl'ers are cunning swine making unreasonable untaxed profits by borrowing money and then getting other people to pay for the borrowed money. Its not fair etc.

Link to comment
Share on other sites

16
HOLA4417
A property investor uses as little of his own money as possible to fund a property portfolio...yet makes plenty of profit.

I doubt investors of shares borrow money so even if shares out-perform the property market, it's easier to profit from property much, much earlier.

You know I know a guy from BEAR STEARNS he said much the same thing.......

Link to comment
Share on other sites

17
HOLA4418
Yeah but as is aaaaalways posted here, you cant borrow 100k from a bank to invest in shares. This is all about gearing. Or "leverage" as our yanky friends call it.

If you have 10k to invest, yep you get 5% of that in shares. If you borrow a hundred grand to buy a place, you get 3% of 110k. You do the math!

hehe you can always spot the non-homeowners. Dude. Insurance. I pay £25 a month to cover drainage, gas, electrics. Boiler breaks down? I have a 24hr hotline to call and its fixed in hrs (as actually happened!). For an extra tenner I could cover m'white goods too. I didnt think that was good value though. Roof gets blown off? Well yep theres building insurance too - when combined with content insurance this isnt actually much more per month either.

Sure there are some probs, but as above, gearing is the real attraction to investors. Of course this works both ways, if prices go down then you lose a whole lot more!! Thats why Id be steering clear at the present time. Not because my tenant might ask me to paint the walls a new shade of magnolia lol!

Im no fan of HPI and im not saying BTL is a great way to go, but at least get our arguments right.

Dude. Borrowing ain't free. Add up the long term costs of mortaging etc and balance that against long term regular investing. Dude. Yawwwwwwn.

Why do I get the image of all hat and no cattle in this thread.

Link to comment
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.




×
×
  • Create New...

Important Information