Schroeder on UK home as Long Term Investment
Schroeder published a remarkable piece on 175 year of history of UK residential real estate as an asset class.
The period spans very different policies, from conservative Victorian, to progressive, beveridgian and then Thatcherite era.
Image Credit: Wikicommons, the Langham Hotel 1860, first hotel with passenger lifts, bathrooms and water closets in guest rooms.
The following facts emerge:
- affordability was lower in 19th century,
- average income became higher, houses became smaller
- housing price multiple went from 12 in 1845 to 4 in 1911
- the majority of UK was renters, with 30% of homeownership until the 50s, and a rise to 60% due to tax incentive for homebuyers
- rental yield decreased, with P/E ratio going from 4 to 11 from 1999 to 2020 in London
- non-margin leverage and tax advantages made buying a home a far better investment in London from 1995 to 2020 despite prices slightly underperforming the stock market,
Performance from 95 was due rates lowering and to tax advantages that were voted by Tories in the 60s to help the median elector to become a homeowner and reinforce their constituency.
Their article can be found here: Schroeder on UK home as investment
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