Average house price rises per annum - long time

[Phooey]

Does anyone know the long-term average (%) increase in house prices since the start of any reliable data? I had a figure in my head of just under 5%/pa since (I think) 1970-ish but can't find where I got this from now, and I imagine that figure will be higher since the recent above average years. I appreciate the figures might be skewed by London etc so if possible I'm interested to find out roughly what England (outer London) data is. A Google search isn't giving me anything. Cheers

[bogie]

Inflation adjusted figures below, average 2.5% per year



lots of reports/data on nationwide site

https://www.nationwidehousepriceindex.co.uk/report...

[Phooey]

bogie said:

Inflation adjusted figures below, average 2.5% per year



lots of reports/data on nationwide site

https://www.nationwidehousepriceindex.co.uk/report...

Interesting, thanks bogie. 2.5% - That is a much lower figure than I thought.

Just calculated the figure for my current property - owned 19yrs to the day! (05/03/2003) and it is +6%/pa at current market value. My previous property (1998) would be +5%. East Midlands.

[Wilmslowboy]

Phooey said:

Interesting, thanks bogie. 2.5% - That is a much lower figure than I thought.

Just calculated the figure for my current property - owned 19yrs to the day! (05/03/2003) and it is +6%/pa at current market value. My previous property (1998) would be +5%. East Midlands.

Inflation has been an average of 2.9% (according to the BOE) over the past 19 years - so +6% would be a real price increase of 8.9%, meaning the house would now be worth 5 times what it was in 2003.

Perhaps 6% (excluding inflation) and therefore 3.1% - not too far from the figure 2.5% quoted above.

[bogie]

thats the inflation adjusted "real" house price ...so 2.5% growth on top of inflation. official UK inflation figures here https://www.bankofengland.co.uk/monetary-policy/in...

Inflation adjusted you can see the previous market peak in 2008 and "real" avg house prices are not yet back there.

[Simpo Two]

My house has done rather better than the graph. Paid £77K for it new in 1988, value now c.£320K. I think that's 9.3%pa average. Mind you it's been stuck in the £300-320K region for as long as I can recall.

But like any investment, performance will depend on where it is.

[Sheepshanks]

Simpo Two said:

My house has done rather better than the graph. Paid £77K for it new in 1988, value now c.£320K. I think that's 9.3%pa average. Mind you it's been stuck in the £300-320K region for as long as I can recall.

But like any investment, performance will depend on where it is.

The graph is inflation adjusted. I bought my house - 3 bed detached in decent Cheshire village- in Dec 86 for £33K which was spot-on the UK average house price at the time. Inflation adjusted that's ~£120K (as per the graph).

If you paid an actual £77K that was a hefty amount in 1988 (2x the average house price at the time) and inflation adjusted takes it to the £300K region. You seem to have bought at the peak of a very sharp, and brief, spike in prices.


Also, if it's your only house, it's not really (arguably not at all) an investment.

Edited by Sheepshanks on Saturday 5th March 21:07

[ChocolateFrog]

Must be a fair bit under 5% in South Yorkshire.

Prices didn't move at all between 07 and 2019.

Although they've gone a bit mental these last 18 months.

[bogie]

ChocolateFrog said:

Must be a fair bit under 5% in South Yorkshire.

Prices didn't move at all between 07 and 2019.

Although they've gone a bit mental these last 18 months.

Same in NE midlands ....I bought at the last peak in 2008 and only recently do the valuations on my house arrive in line with inflation. Of course the estate agent says "your house has gone up £200k" so you feel good about selling it, but in real terms its not gone up at all ...

[Phooey]

Ah ok, I didn't take note the figures were inflation adjusted - thanks for pointing out - did think it was rather low compared to the figure I had in my head. Although inflation matters, at this point I'm more interested in the non-inflation figures.

Does anyone know what a global tracker has returned over the same period?

[bogie]

Stock market returns globally here by country, i dont know the names of any Global trackers that have been around 50 years, but if you know one it should be easy to check its performance.

https://www.mindfullyinvesting.com/historical-retu...

Over the long term stocks have outperformed average UK property market increase.....

But of course someone else was lucky and lived in a boom area and have made a few hundred percent on their house over 20 years ....just as someone else invested in the tech industry 20 years ago and has made hundreds of percent gain.

[996c2]

bogie said:

Stock market returns globally here by country, i dont know the names of any Global trackers that have been around 50 years, but if you know one it should be easy to check its performance.

https://www.mindfullyinvesting.com/historical-retu...

Over the long term stocks have outperformed average UK property market increase.....

But of course someone else was lucky and lived in a boom area and have made a few hundred percent on their house over 20 years ....just as someone else invested in the tech industry 20 years ago and has made hundreds of percent gain.

You also have to take leveraging into account. The bank will be happy to lend you hundreds of thousands to buy your own home or invest in BTLs but not to invest in stocks and shares!

The house price index shows the capital gain but don't forget the rent (or rent free accommodation if it's your own home) that adds up to a significant amount over time.

[Derek Chevalier]

Phooey said:

Does anyone know the long-term average (%) increase in house prices since the start of any reliable data? I had a figure in my head of just under 5%/pa since (I think) 1970-ish but can't find where I got this from now, and I imagine that figure will be higher since the recent above average years. I appreciate the figures might be skewed by London etc so if possible I'm interested to find out roughly what England (outer London) data is. A Google search isn't giving me anything. Cheers

This book goes back a long way in time

https://www.amazon.co.uk/Safe-Houses-Historical-An...



Nationwide calculator here - regional data

https://www.nationwide.co.uk/house-price-index/


This is the difference in valuation for a property in the Outer Metropolitan region.

From Q1, 1978

£100,000

To Q4, 2021

£2,377,260

Percentage change in price:

2277.26 %

[Derek Chevalier]

Phooey said:

bogie said:

Inflation adjusted figures below, average 2.5% per year



lots of reports/data on nationwide site

https://www.nationwidehousepriceindex.co.uk/report...

Interesting, thanks bogie. 2.5% - That is a much lower figure than I thought.

Just calculated the figure for my current property - owned 19yrs to the day! (05/03/2003) and it is +6%/pa at current market value. My previous property (1998) would be +5%. East Midlands.

It's arguably a tad high if you accept the housing market is in a huge bubble. Long, long term growth is broadly in line with earnings - circa 1.5% real IIRC.

[Wilmslowboy]

Derek Chevalier said:

This book goes back a long way in time

https://www.amazon.co.uk/Safe-Houses-Historical-An...



Nationwide calculator here - regional data

https://www.nationwide.co.uk/house-price-index/


This is the difference in valuation for a property in the Outer Metropolitan region.

From Q1, 1978

£100,000

To Q4, 2021

£2,377,260

Percentage change in price:

2277.26 %

Inflation adjusted the £100k would be £610k today, so still a massive net gain of £1.7M

[bogie]

996c2 said:

bogie said:

Stock market returns globally here by country, i dont know the names of any Global trackers that have been around 50 years, but if you know one it should be easy to check its performance.

https://www.mindfullyinvesting.com/historical-retu...

Over the long term stocks have outperformed average UK property market increase.....

But of course someone else was lucky and lived in a boom area and have made a few hundred percent on their house over 20 years ....just as someone else invested in the tech industry 20 years ago and has made hundreds of percent gain.

You also have to take leveraging into account. The bank will be happy to lend you hundreds of thousands to buy your own home or invest in BTLs but not to invest in stocks and shares!

The house price index shows the capital gain but don't forget the rent (or rent free accommodation if it's your own home) that adds up to a significant amount over time.

Yes thats true .....as is the interest you usually pay. With an avg mortage rate of 7% over 25 years you pay £500k for a £250k house....so you need it to double in value over that time to break even and a £250k house that has gone up in line with inflation after 25 years its worth about £500k. You need to live in a boom area that outgrows inflation and/or have extended periods of low interest rates to really turn a profit on the property you live in.

Buying your own home may or may not be an "investment" in the truest sense depending on where you live and market timing. However by becoming your own landlord, you have the dream of living rent free one day, the security of not getting kicked out, and maybe the option to downsize or move to a cheaper area.

[Derek Chevalier]

bogie said:

i dont know the names of any Global trackers that have been around 50 years

MSCI World (an index, but a reasonable approximation) 1970-2020 - 11% pa

£1 grew to ~£204.

[Phooey]

bogie said:

Stock market returns globally here by country, i dont know the names of any Global trackers that have been around 50 years, but if you know one it should be easy to check its performance.

https://www.mindfullyinvesting.com/historical-retu...

Over the long term stocks have outperformed average UK property market increase.....

But of course someone else was lucky and lived in a boom area and have made a few hundred percent on their house over 20 years ....just as someone else invested in the tech industry 20 years ago and has made hundreds of percent gain.

Interesting site that, thank you

Derek Chevalier said:

Nationwide calculator here - regional data

https://www.nationwide.co.uk/house-price-index/

Appreciate it says it's a broad guide but quite inaccurate in the 2 examples I inputted into it

Derek Chevalier said:

MSCI World (an index, but a reasonable approximation) 1970-2020 - 11% pa

£1 grew to ~£204.

Wowzers, that is a tad more than I was expecting. Thank you

[The Leaper]

Current house purchased 1991, £220,000

Current value £875,000 (say), so about 5% pa compound

UK inflation 1991-2021: 2.75% pa compound

Conclusion: all looks positive, but after 30+ years here I do not consider it as an investment.

[Phooey]

The Leaper said:

Current house purchased 1991, £220,000

Current value £875,000 (say), so about 5% pa compound

UK inflation 1991-2021: 2.75% pa compound

Conclusion: all looks positive, but after 30+ years here I do not consider it as an investment.

I don't consider ours as an -investment as such - it's not it's primary purpose - but It's not a bad investment if you consider the cost of non-ownership of a property - eg renting