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drbubb

"Gold Bars" (400 oz bars) can be used to Value Property, etc

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Gold looks a better bet than UK property – here’s why

Today we return to a subject that has been a favourite of mine over the years: UK house prices – but with a twist.

We don’t consider them in the debased, devalued currency that is the pound. Rather, we measure them in the eternal currency that is gold.

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180522-MM03.png

Comparing those two charts – house prices in sterling and house prices in gold – the story is quite different. When you look at the journey UK house prices have been on measured in gold, you also get a clearer idea of just how much sterling has been debased, particularly since 2008.

Measured in gold, from 2005, house prices fell for six years, so that by 2012, at 150oz for the average UK home, they were briefly back to where they were in 1987. It’s astonishing. Even today, at 220oz for the average UK home, we are only at mid-1990s prices.

here’s Greater London in gold.

Greater London house prices in ounces of gold

Where London has differed from the rest of the UK (perhaps with the exception of the likes of Oxford, Cambridge, Bristol and Brighton) is in the breathtaking rally it has enjoyed since 2012, whether in sterling or gold. The average London house went from 150oz to almost 450oz. From low to high it nearly tripled.

The market got massively overheated by about 2015-16 and has since pulled back. We now have atrophy at the top of the market, thanks to George Osborne’s higher stamp duty, and central London, agents report, appears to have pulled back by 10% or 15%. In gold terms, we are back at 350oz.

Unlike the rest of the UK, we are nowhere near the ("cheap") early 1990s levels of around 200oz.

Where London goes next depends, to my mind at least, on the current chancellor. Stamp duty is punitively high: it’s 10% above £925,000 and 13% above £1.5m – even more for second homes. It’s killed the top of the market.

But despite lower transactions levels, revenue to the Treasury is also high, so that will be a deterrent to any chancellor wishing to reduce it. If stamp duty stays high, London property heads lower. If it doesn’t, then the outlook is brighter.

> Dominic Frisby: https://moneyweek.com/uk-house-prices-gold-a-better-bet-than-uk-property/

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HOUSING Valuations:

Gold: US$>GBP etc.............. $1,335 = L-885 : @1.51 ::   $1,327 = L-948 : @1.40 ::

Category / Value -----------------  Dec'10 : In Oz : in GBs ::     Mar'18 : In Oz : in GBs  :: %change
UK House (H&N Index)... : L162,131 = 183.2 : 0.458 :: L219,748*= 231.8 : 0.580 :: + 26.6%
London - (Rightmove)..... : L408,248 = 461.2 : 1.153 :: L631,651  = 666.3 : 1.666 :: + 44.5%
US House (CSX20 x1,300) = 147.49 @ 09'10 x1,300 :: = 210.48 @ 03'18  x1,300 ::
US House Price -------------- : $191,737 = 143.6 : 0.359 :: $273,624 = 206.2 : 0.515 :: + 43.5%
HongKong (MMI x 10,000):     88.29 @10'10 :@ 7.78 ::   177.61 @ 03'18 :@ 7.85 ::
HongKong Luxury Flat.. : HK$8.83M = 850.0 : 2.125 :: HK$17.8M = 1705 : 4.262 : +100.6%
Makati-- (MakPr x 100m) :   102.29 @12'10  @ 43.8 ::   180.40 @ 03'18  @ 52.1 ::
Makati Property in USD  :   $ 233.5K = 174.9 : 0.437 ::  $ 346.3k = 260.9 : 0.652 :: + 49.2%
======
* > 227,871-Halifax, 211,625-Nationwide

The 100%+ jump in HK property values (measured in Gold) was remarkable!

 

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