Property

How much have house prices risen during the Queen's lifetime?

Warren Lewis
|
4th April 2016
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According to a new report from Jackson-Stops & Staff, lots.

Her Majesty the Queen will be 90 years old on 21st April this year. Since her birth in 1926, average UK house prices have risen from a modest £619 to £291,504 (based on data from ONS). This represents an incredible 471 fold increase over 90 years – implying a 47,021% rise in average UK house prices.

When HRH Prince Charles reaches 90 in 23 years’ time (Nov 2038), the UK average house price will be £1.3 million - assuming house prices rise at the same rate as in the last 23 years.

On the same basis when HRH Prince William reaches 90 in in 2072 the average UK house price will be £11.3 million

Nick Leeming, Chairman of Jackson-Stops & Staff, comments: “It is not the fact that property has outperformed over the last 90 years that is surprising, but the sheer scale of it. The 471-fold increase would take a 65cm pot plant, which could easily fit under a kitchen table, to a giant tree that is taller than London’s Shard, standing at 306 metres.”
 
The reason for the phenomenal growth is that we are an overcrowded island with a growing, wealthy population who have an ingrained desire for homeownership. This growth in demand then meets a rigid wall of fixed supply that compounds the pressure on house prices to rise. Lack of new build homes continues to be a pivotal issue and until more homes are built more house price rises are inevitable.”

Comparison with other investments
 
There is no doubt that average UK property prices over the Queen’s long 90 years of life have risen significantly, making residential property purchases a top performing investment.
 
If the £619 invested in an averagely priced UK property in 1926 was instead invested in UK equities, it would have risen to £72,952 by the beginning of 2016. A 118-fold increase, equivalent to an 11,685% rise.

If invested in gold, it would have risen to £127,051. A 205-fold increase, equivalent to a 20,425% rise (gold was £4.25 an ounce in 1926, and is at time of writing £876 per ounce).
 
Over the period the UK’s cost of living index rose by 5,413% implying that £619 cash in 1926 would be now worth £34,105 see Graph 3 in the attached report.

The following table shows how the cost of five supermarket shopping trolley items have changed over the past 90 years:

Item

Quantity

1926 price

2016 price

% rise

(old money)

Milk

1pint

1.3p (3d)

42p

3,131%

Bread

Medium white loaf

1.8p (4¼d)

£1.12

6,122%

Butter

250g

5.3p (1s – ¾d)

£1.34

2,428%

Sugar

1kg

3.2p (7¾d)

61p

1,806%

Cheddar cheese

1kg

13p (2s -  7¼d)

£7.28

5,500%

 It is interesting to note that if a 250g pack of butter’s price back in 1926 had risen at the same rate as house prices it would now cost £24.97 and one kilogram of cheddar cheese would cost £61.26!

The next 90 years?

With house prices having risen by 47,021% over the last 90 years, what does the future hold?

Most would agree that another 471 fold increase in house prices is exceedingly unlikely.

His Royal Highness Prince Charles is 67 years old. He will be 90 in 23 years’ time (November 2038). Assuming house prices rise over the next 23 years at the same rate as in the last 23 years (6.7% per annum), UK average house prices will reach £1,284,416 in 2038, 3.5 times more than the present £291,504. On the same basis, when His Royal Highness Prince William, Duke of Cambridge, reaches 90 years old (2017), house prices will be £11.3million and when His Royal Highness Prince George reaches 90 in 2103, a typical UK house will be £86.8million.

In London house prices have risen even faster. Again assuming that in the next 23 years house prices rise at the same rate as in the last 23 years (8.5% per annum), then when Prince Charles reaches 90 in 2038, the average London house price will be £3.5million. On the same basis when William reaches 90 years, London house prices will be £52.4million. When Prince George reaches 90 in 2103, London house prices will average £667million!

Nick Leeming added: “While these projections are seemingly unbelievable, if anyone was told back in 1926 that a new house purchase valued at £619 would be worth nearly £300,000 in 90 years’ time, it would almost certainly have been laughed out of court.”

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