Up 14,000%, houses costing just £1,891 in coronation year
In the year of the coronation, an average house in the UK cost just £1,891, according to Nationwide: Today it’s £260,771, a whopping 13,972% rise
Unlike the Queen, most of us live in semi-detached or terraced houses, not in palaces. But property of all types has put in a majestic performance, outpacing other assets – including stocks – in the 70 years of his reign.
In 1952, the average British house cost just £1,891, according to the Nationwide Building Society. Today it is £260,771, a huge increase of 13,972%, or 7.3% per year.
The Mail on Sunday asked investment platform AJ Bell to find out how other asset classes have fared over the past seven decades and how they have fared against inflation, again a topic burning.
Fit for a Queen: Properties of all types have performed majestically, outpacing other assets – including stocks – during the Queen’s 70-year reign
The Dow Jones index of major US stocks was the best performing stock market. This index, which tracks 30 major US companies, recorded an impressive 7% annualized gain in capital terms. Japan’s Nikkei index also performed well, rising the equivalent of 6.5% annually.
The FT-30, the UK’s oldest continuous stock price index, returned an average of 4.4% a year over the period. This gain would have been eaten away by inflation, which averaged 5.1% per year, according to the retail price index. However, these stock performance figures exclude dividend payments which, if reinvested, would have helped the FT-30 score significantly higher.
Surprisingly, risk-free cash at the Bank of England base rate for 70 years would have been a good bet, yielding an annualized return of 6.1%, outperforming gold at 5.8%.
“Cash looks relatively good due to double-digit interest rates in the 1970s and 1980s as the UK tried to fight inflation,” said Russ Mould, director of investment research at AJ Bell. . “By contrast, anyone who put money into the UK stock market in 1966 only got it back in real terms in 1982.”
Mr Mold added: “The strong run-up in property prices shows that ‘real’ assets can provide inflation protection, as neither central banks nor governments can create land or buildings from nothing, when they can print money.But even the housing market has occasionally suffered sharp corrections – the downturn that left many homebuyers with negative equity for most of the 1990s in was one. And you can’t take the bricks to the supermarket or pay your bills with them, no matter how big your capital gain.
The average house price is still 4.3 times higher in real terms than it was in 1952. Adjusting for inflation, the average 1952 house was worth £61,000. At the time, only 32% of households owned their homes, compared to 65% today.
When comparing the performance of various stock indices over such a long period, it should be remembered that their composition is constantly changing. When the Queen ascended the throne, industrialists such as shipbuilder Swan Hunter and automobile manufacturer Morris Motors dominated.
No banks or oil companies were included. The FT-30 did not capture the larger companies. Its constituents were selected by Financial Times reporters to represent companies important to the British economy at the time.
Other members of the FT 30 included long-forgotten names such as Lancashire Cotton – set up by the Bank of England to rescue the struggling spinning industry – and paint maker Pinchin Johnson. Both were later purchased by textile giant Courtaulds, another constituent of the FT-30 in 1952, and another name that has now disappeared from the industry.
In 2018, engineering group GKN was controversially acquired by takeover group Melrose, leaving Tate & Lyle as the only member of the 1952 blue chip index that has maintained a continuous stock market listing under the same name. .
The 163-year-old company has also changed significantly. Its sugar business, including the Lyle’s Golden Syrup brand, was sold in 2010 and the group now focuses on reformulating processed foods to make them healthier.