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Optobear

House Prices Beat Gold

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Controversial... but here goes.

Looking at Nationwide, and based on their longest data set.

http://www.nationwide.co.uk/hpi/downloads/..._since_1952.xls

Q4 1952 average was £1,981

Q4 2007 average was £183,959.

That is 97 times. Older houses are up by 120 times.

Gold on the other hand

http://www.measuringworth.com/datasets/gold/result.php

shows that gold in 1952 in dollars, $35, now about $983.

which is just 28 times.

So long term ... housing has it.

Actually my real reason to post wasn't to wind up the gold bugs, it was to emphasise that houses have gone up by almost 100 times. Yes 100 times. I find that amazing. Truly amazing.

The inflation multiplier over that period based on rpi is around 20 times.

http://www.safalra.com/other/cumulative-hi...l-uk-inflation/

So how the heck does housing do it? Or is it just crazy? Looks 5 times overpriced based on inflation, around 3 times overpriced based on gold. I'm keen to see prices fall, but wouldn't want to see my house fall to 20% of its current value!!!! That would hurt.

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Controversial... but here goes.

Looking at Nationwide, and based on their longest data set.

http://www.nationwide.co.uk/hpi/downloads/..._since_1952.xls

Q4 1952 average was £1,981

Q4 2007 average was £183,959.

That is 97 times. Older houses are up by 120 times.

Gold on the other hand

http://www.measuringworth.com/datasets/gold/result.php

shows that gold in 1952 in dollars, $35, now about $983.

which is just 28 times.

So long term ... housing has it.

Actually my real reason to post wasn't to wind up the gold bugs, it was to emphasise that houses have gone up by almost 100 times. Yes 100 times. I find that amazing. Truly amazing.

The inflation multiplier over that period based on rpi is around 20 times.

http://www.safalra.com/other/cumulative-hi...l-uk-inflation/

So how the heck does housing do it? Or is it just crazy? Looks 5 times overpriced based on inflation, around 3 times overpriced based on gold. I'm keen to see prices fall, but wouldn't want to see my house fall to 20% of its current value!!!! That would hurt.

does that take into consideration yield? You can lend gold at the lease rate and lend houses at the rental yield.

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The inflation multiplier over that period based on rpi is around 20 times.
Q4 1952 average was £1,981

hm, £1981x20= £39620

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hm, £1981x20= £39620

Exactly, falling to 20% of current average price. I find that figure absolutely shocking. Maybe 1952 was a particular low point for houses? Possibly because there was a great deal of post-war rebuilding going on keeping house prices lower. Or maybe we are set for an 80% fall... Who wouldn't have negative equity under that situation?

Optobear

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hm, £1981x20= £39620

House prices rise more in line with wages rather than inflation.

Gold has been increasing at 6.2% on average compounded to current levels, whereas houses have been increasing at a compounded rate of 8.6%.

This relatively small year-on-year differences makes a significant difference when compounded.

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Guest muttley
Gold has been increasing at 6.2% on average compounded to current levels, whereas houses have been increasing at a compounded rate of 8.6%.

And stocks?

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So how the heck does housing do it? Or is it just crazy?

Credit. How much mortgage credit is outstanding now, compared to then, do you suppose?

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Maybe it would be fairer to compare the two in the period since the end of the gold standard. Since Q1 1972 houses are up 30.6 times, gold up 28 times. What's the cost of maintaining and insuring a house compared with the cost of storing and insuring gold?

If you ride the cycles in each market then you'd have made more than that 30.6x by now, and at the moment the market to be invested in is gold.

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Houses beat gold hands down when you also consider your friendly bank manager will traditionally let you buy a house with a 5% deposit.

Plus you get to live in the investment!

Or others will pay you rent so they can live in it.

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Maybe it would be fairer to compare the two in the period since the end of the gold standard. Since Q1 1972 houses are up 30.6 times, gold up 28 times. What's the cost of maintaining and insuring a house compared with the cost of storing and insuring gold?

If you ride the cycles in each market then you'd have made more than that 30.6x by now, and at the moment the market to be invested in is gold.

But as we all know, gold was at $800 in the early 80s, whereas houses have gone up x6 or x7. I know you picked 1972 for a valid reason, but gold has been a rubbish investment of the last 25 years, the period in which you could have bought, lived in and paid off a house.

Gold should be compared to currency, bonds and stocks and other liquid investments, rather than to property, which is principally for living in. If it is compared as an investment, then it should be compared to BTL.

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Maybe it would be fairer to compare the two in the period since the end of the gold standard. Since Q1 1972 houses are up 30.6 times, gold up 28 times. What's the cost of maintaining and insuring a house compared with the cost of storing and insuring gold?

If you ride the cycles in each market then you'd have made more than that 30.6x by now, and at the moment the market to be invested in is gold.

Maintaining and insuring the house is more than offset by the little forgotten matter of LIVING in it while it appreciated...

No comparison in this rather artificial comparison (housing wins). Not sure about stocks tho' :blink:

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Octobear did not give me any stats on stocks!!

Ah-so,

give me a chance. Seems that FTSE is a relatively recent invention (I'm too young and callow to know that without searching on google).

The best long term I can find is

http://www.j-bradford-delong.net/pdf_files..._Volatility.pdf

Figure 3, seems to show an approximately 10 fold increase from 1952 to 1997 ( if I read the figure as log to base 10).

1997 to 2008 (looking at yahoo I get around 5000 to 5800) so another approx 1.2 times

Overall about 12 times increase from 1952.

Of course that is raw share prices (and goodness only know in terms of the earlier data), and doesn't represent real return (because it ignores dividends, but then the house prices ignore rents!).

So at the moment I've got

Houses x 100

Gold x 30

Stock market x 12

My guess is that impressionist paintings have done better. But I can't find the numbers...

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Controversial... but here goes.

Looking at Nationwide, and based on their longest data set.

http://www.nationwide.co.uk/hpi/downloads/..._since_1952.xls

Q4 1952 average was £1,981

Q4 2007 average was £183,959.

That is 97 times. Older houses are up by 120 times.

Gold on the other hand

http://www.measuringworth.com/datasets/gold/result.php

shows that gold in 1952 in dollars, $35, now about $983.

which is just 28 times.

So long term ... housing has it.

Actually my real reason to post wasn't to wind up the gold bugs, it was to emphasise that houses have gone up by almost 100 times. Yes 100 times. I find that amazing. Truly amazing.

The inflation multiplier over that period based on rpi is around 20 times.

http://www.safalra.com/other/cumulative-hi...l-uk-inflation/

So how the heck does housing do it? Or is it just crazy? Looks 5 times overpriced based on inflation, around 3 times overpriced based on gold. I'm keen to see prices fall, but wouldn't want to see my house fall to 20% of its current value!!!! That would hurt.

both are at different stages of their respective cycles. houses have just peaked. gold is till moving upward and the pound turds you are measuring in and still falling.

your comparison is not a fair one.

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Houses beat gold hands down when you also consider your friendly bank manager will traditionally let you buy a house with a 5% deposit.

Plus you get to live in the investment!

Or others will pay you rent so they can live in it.

Note sure the friendly bank manager would have lent with a 5% deposit in 1952. At least not without a funny handshake!

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Houses beat gold hands down when you also consider your friendly bank manager will traditionally let you buy a house with a 5% deposit.

Gearing is so last year though.

Plus you get to live in the investment!

Or others will pay you rent so they can live in it.

The utility argument I agree with.

Mmm. "Utility on margin" Now that's a phrase I'm going to have to work in somewhere...

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Gearing is so last year though.

The utility argument I agree with.

Mmm. "Utility on margin" Now that's a phrase I'm going to have to work in somewhere...

As long as you (or the tenants) keep making the payments on the mortgage, you don't get wiped out if prices dip...

In other words you can ride out the dips despite the high leverage.

Bank managers don't lend money (5% deposit) to buy gold ;)

Reckless speculators can try and emulate this in the derivatives market but they have to keep guessing the market correctly LOTS of times. One slight mistake at high leverage and they can lose everything in hours or days...

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Guest muttley
Houses x 100

Gold x 30

Stock market x 12

If you are suggesting that both property and gold have outperformed shares over the 45 year period to 1997, then you are using incorrect information.

Gold has been increasing at 6.2% on average compounded to current levels, whereas houses have been increasing at a compounded rate of 8.6%.

This relatively small year-on-year differences makes a significant difference when compounded.

The actual figure for the Dow, with dividends reinvested is a compounded rate of about 12%! As you say, they may seem like small differences, but are masive over a period of time.

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If you are suggesting that both property and gold have outperformed shares over the 45 year period to 1997, then you are using incorrect information.

The actual figure for the Dow, with dividends reinvested is a compounded rate of about 12%! As you say, they may seem like small differences, but are masive over a period of time.

Muttley,

Do you have a reference for the 12% reinvested rate? Also, does that include tax paid on dividends?

I hadn't looked at Dow Jones

1952 was at 270 - according to Yahoo finance

today is at 12258

So that is 45 times,

My list is now

Houses x 100

Stock market (US) 45 times

Gold x 30

Stock market (Uk) x 12

Again, the raw stock market prices excludes dividends, just as the raw house price excludes rent payments.

and to quote Peter Snow - "this is just a bit fun".

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Guest muttley
Muttley,

Do you have a reference for the 12% reinvested rate? Also, does that include tax paid on dividends?

In his book "The Little Book That Beats The Market" Joel Greenblatt quotes the Market Average as 12.3% between 1988 and 2004 (page 56). No link, I'm afraid.

I'm pretty sure that Benjamin Graham uses this figure in "The Intelligent Investor"

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Actually my real reason to post wasn't to wind up the gold bugs,

I don't think there are many goldbugs left to wind up !

As of 2008 your figures may be correct (have not looked them up to confirm)

However, if the current trends of gold (up) and houses (down) continues, would be good to see these figures recalculated in say 3 years.

If some current predictions play out...

HPC could see drops of 50%, which would take the average price to £91979

This would equate to 46 times the 1952 price

If you believe Jim Sinclair, gold will hit £1650 in 2011

This would equate to 47 times the 1952 price

I Appreciate both projected figures are speculation

Lloydie - one of the few remaining goldbugs!

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Guest Charlie The Tramp

If I had bought £4k`s worth of Gold in 1970 ( at what price was it then ? :unsure: ) what would my £4k`s Gold be worth today.

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Stocks of course cane every other investment over the long term. Surprised there's anyone here ignorant to that fact, even the goldbugs and black ___day nutters must realise this.

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Controversial... but here goes.

Looking at Nationwide, and based on their longest data set.

http://www.nationwide.co.uk/hpi/downloads/..._since_1952.xls

Q4 1952 average was £1,981

Q4 2007 average was £183,959.

That is 97 times. Older houses are up by 120 times.

Gold on the other hand

http://www.measuringworth.com/datasets/gold/result.php

shows that gold in 1952 in dollars, $35, now about $983.

which is just 28 times.

So long term ... housing has it.

Actually my real reason to post wasn't to wind up the gold bugs, it was to emphasise that houses have gone up by almost 100 times. Yes 100 times. I find that amazing. Truly amazing.

The inflation multiplier over that period based on rpi is around 20 times.

http://www.safalra.com/other/cumulative-hi...l-uk-inflation/

So how the heck does housing do it? Or is it just crazy? Looks 5 times overpriced based on inflation, around 3 times overpriced based on gold. I'm keen to see prices fall, but wouldn't want to see my house fall to 20% of its current value!!!! That would hurt.

The price of crude oil is dropping. Yes, it's dropping when measured against the ultimate form of payment.

The news headlines say it's at record high. In US dollars, pounds, euros, yuan or whatever.

Don't you see what's going on?

I should say that the "real" price of oil is in fact increasing, but the ultimate money was undervalued and is now in the process of correcting - making up for the false undervaluation, whereby the price of crude oil is dropping.

Oil is dropping in price.

Houses are dropping in price.

Monthly salaries are dropping in price.

If you measure the price in terms of the ultimate form of payment (as Greenspan described it when he was chairman of the FED a few years ago).

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  • 297 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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