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Housing barely appreciates above inflation. About 4% on average, yearly. It would be better if we didn't interfere in the market, or there are going to be some

Housing barely appreciates above inflation. About 4% on average, yearly. It would be better if we didn't interfere in the market, or there are going to be some nasty consequences.

bemusedthrow75 3y ago
I can't read the FT article to see whether it is based on domestic stories here UK or whether they are addressing this from a US perspective. But what you're saying is historically far from true in the UK, at least. Over the last seventy years, UK house prices have increased by on average 300% in real terms. This isn't barely outpacing inflation, surely.
- fennecfoxy 3y ago
  Don't worry dude, you're right: https://pearsonblog.campaignserver.co.uk/wp-content/uploads/3.-Nominal-and-real-UK-house-prices.png https://pearsonblog.campaignserver.co.uk/wp-content/uploads/... (https://pearsonblog.campaignserver.co.uk/tag/house-price-inflation/ https://pearsonblog.campaignserver.co.uk/tag/house-price-inf...). Kiwi moved to the UK and housing market is just insane here, not even just London. Not only have house prices outpaces inflation (lack of new being built, housing being used as "investments" etc) but also stagnant wages. The only reason I'll ever be able to afford a smallish house here is being on a tech salary; take average London wage here...and without generational wealth transfer they _cannot_ buy a house. Even with generational wealth transfer, our London salary friend will have to buy a house _outside_ london and commute (or wfh). It's not a "hot market" it's just the haves have a vested interest in keeping the prices high for the have-nots. Just look at how landlords reacted to tenants getting some basic rights (that we've had in NZ for ages) "the sky is falling". And all of this is for terraced houses at best, sharing a wall with neighbours, not detached at all, maybe you get a backyard maybe not. All made out of brick and built in the 40s-60s for the most part - and falling apart because of this. Never have I seen so much scaffolding since I moved to the UK. There are still a few great things about living in the UK, but the housing market (amongst other things, wage gap, classism, corruption, population political apathy) is an absolute disgrace.
- sokoloff 3y ago
  You're saying they're wrong that housing barely appreciates above inflation, around 4%, citing as an example a relative's sale of a house held for 50 years for 7.5x the real price. Care to take a guess what 4% compounded for 50 years is? It's +611% or a total of 7.1x the original price. Your relative experienced 4.11% annual real gains, pretty close to 4%. Over the last 70 years, a 300% gain in real terms is an annual increase of just 2%. That is barely outpacing inflation in my book.
  - bemusedthrow75 3y ago
    > Over the last 70 years, a 300% gain in real terms is an annual increase of 2%. That is barely outpacing inflation in my book. Your barely ain't my barely, that is for sure. Compared to any other form of retail investment an average UK consumer could make instead (assuming they still also need to pay for accommodation), 2% over inflation consistently over that period is very significant. 4% over inflation is surely massive. (Particularly since the last 15 years of consumer savings yields have barely matched inflation, as I understand it; no matter, since the average consumer has not been able to save meaningfully since 2008 anyway). As a store of consumer wealth in the UK, there is nothing even remotely close to housing. There is an HN worldview distortion where buying a house is something really almost everyone here can hope for, and having the kind of resources and risk capacity to access opportunities with greater than 4% interest is not unusual.
    - sokoloff 3y ago
      > Your barely ain't my barely, that is for sure. We may have at least one thing to agree on then. In that same 70 year time period, the S&P 500 total return was 1234x against a USD inflation figure of 11.5x, for a real return of 107.3x or a real return CAGR of 6.9% versus the 2% CAGR that housing appreciated. Surely, a UK investor can invest in the S&P 500 today. Go do the same math for the FSTE 100; I suspect it will also crush housing, just as the SP500 does in the US. > There is an HN worldview distortion where buying a house is something really almost everyone here can hope for In the US, ~2/3 of households own their homes, almost identical to the UK figures.
phmqk76 3y ago
And yet housing has outpaced wages exponentially for decades - that's the appropriate comparison, not the stock market or inflation with a broader index.

Housing barely appreciates above inflation. About 4% on average, yearly. It would be better if we didn't interfere in the market, or there are going to be some nasty consequences.

bemusedthrow75 3y ago

I can't read the FT article to see whether it is based on domestic stories here UK or whether they are addressing this from a US perspective. But what you're saying is historically far from true in the UK, at least. Over the last seventy years, UK house prices have increased by on average 300% in real terms. This isn't barely outpacing inflation, surely.

fennecfoxy 3y ago
Don't worry dude, you're right: https://pearsonblog.campaignserver.co.uk/wp-content/uploads/3.-Nominal-and-real-UK-house-prices.png https://pearsonblog.campaignserver.co.uk/wp-content/uploads/... (https://pearsonblog.campaignserver.co.uk/tag/house-price-inflation/ https://pearsonblog.campaignserver.co.uk/tag/house-price-inf...). Kiwi moved to the UK and housing market is just insane here, not even just London. Not only have house prices outpaces inflation (lack of new being built, housing being used as "investments" etc) but also stagnant wages. The only reason I'll ever be able to afford a smallish house here is being on a tech salary; take average London wage here...and without generational wealth transfer they _cannot_ buy a house. Even with generational wealth transfer, our London salary friend will have to buy a house _outside_ london and commute (or wfh). It's not a "hot market" it's just the haves have a vested interest in keeping the prices high for the have-nots. Just look at how landlords reacted to tenants getting some basic rights (that we've had in NZ for ages) "the sky is falling". And all of this is for terraced houses at best, sharing a wall with neighbours, not detached at all, maybe you get a backyard maybe not. All made out of brick and built in the 40s-60s for the most part - and falling apart because of this. Never have I seen so much scaffolding since I moved to the UK. There are still a few great things about living in the UK, but the housing market (amongst other things, wage gap, classism, corruption, population political apathy) is an absolute disgrace.
sokoloff 3y ago
You're saying they're wrong that housing barely appreciates above inflation, around 4%, citing as an example a relative's sale of a house held for 50 years for 7.5x the real price. Care to take a guess what 4% compounded for 50 years is? It's +611% or a total of 7.1x the original price. Your relative experienced 4.11% annual real gains, pretty close to 4%. Over the last 70 years, a 300% gain in real terms is an annual increase of just 2%. That is barely outpacing inflation in my book.
- bemusedthrow75 3y ago
  > Over the last 70 years, a 300% gain in real terms is an annual increase of 2%. That is barely outpacing inflation in my book. Your barely ain't my barely, that is for sure. Compared to any other form of retail investment an average UK consumer could make instead (assuming they still also need to pay for accommodation), 2% over inflation consistently over that period is very significant. 4% over inflation is surely massive. (Particularly since the last 15 years of consumer savings yields have barely matched inflation, as I understand it; no matter, since the average consumer has not been able to save meaningfully since 2008 anyway). As a store of consumer wealth in the UK, there is nothing even remotely close to housing. There is an HN worldview distortion where buying a house is something really almost everyone here can hope for, and having the kind of resources and risk capacity to access opportunities with greater than 4% interest is not unusual.
  - sokoloff 3y ago
    > Your barely ain't my barely, that is for sure. We may have at least one thing to agree on then. In that same 70 year time period, the S&P 500 total return was 1234x against a USD inflation figure of 11.5x, for a real return of 107.3x or a real return CAGR of 6.9% versus the 2% CAGR that housing appreciated. Surely, a UK investor can invest in the S&P 500 today. Go do the same math for the FSTE 100; I suspect it will also crush housing, just as the SP500 does in the US. > There is an HN worldview distortion where buying a house is something really almost everyone here can hope for In the US, ~2/3 of households own their homes, almost identical to the UK figures.

phmqk76 3y ago

And yet housing has outpaced wages exponentially for decades - that's the appropriate comparison, not the stock market or inflation with a broader index.