This week I want to look into whether there is actually any truth in the statement that house prices double every ten years, and look at an example “in practise” in the video below. Whilst this video may not have the exact answer, it does help to give us a clue of UK trends.
Back in 1998, some twenty years ago almost to the day, I looked at the details of a property through an estate agent that was on the market for £100,000.
Fast forward to the present day and it’s interesting to see how the price has changed. Although the exact same property isn’t up for sale right now, an identical property only 50 yards away is on the market for £400,000. This house backs onto the £100,000 property that I considered all those years back.
So, let’s have a think about this. Over the 20-year period, the price of this property increased from £100,000 to £400,000. It might be considered that in the first 10 years, the price rose from £100,000 to £200,000, and then in the second 10 years, from £200,000 to £400,000.
Looking at it this way, these properties in this particular street have doubled in price every 10 years.
This is only one example and so I want to consider to what extent is this true of all properties in the UK. Do all properties double in price every ten years?
Of course, the answer is no.
As an example, looking at the statistics on Nationwide, I can see that back in 1952, the average price of a property in the UK was around £1,500. This can be compared to the most recent data from 2017, in which the average price of a UK property was £211,000.
Now, if properties were to have doubled across the board on average across the whole of the UK every 10 years, then we would need to see a growth rate of 7.2% – this growth rate would lead to a doubling in price every 10 years.
If we go back to the figures above that were published by Nationwide, then a rise from £1,500 in 1952 to £211,000 in 2017 is actually a growth rate of 7.5%.
This isn’t a surprise – property is not consistent but cyclical. There are going to be times when prices go up much faster than others, and there are going to be times when prices go down, so no, property prices don’t always double every actual 10-year period.
However, if you look at it over a longer period of time, say 50 years, then it could be said that property prices double ON AVERAGE every 10 years.
Next week, I’ll be looking at this in a lot more detail and will be talking about why there’s so much confusion around what makes house prices increase. I’ll also be discussing one thing which nobody ever takes into account – and which is a huge driver of house prices. Watch this space for details!
Here’s to successful property investing.
Peter Jones B.Sc FRICS
Chartered Surveyor, author and property investor
By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details please go to: www.ThePropertyTeacher.co.uk/the-successful-property-investors-strategy-workshop .