UK residential property: A better investment than gold?

UK residential property is a better investment than gold, according to new research.

The precious metal has long been a popular asset among investors seeking an alternative to traditional products during times of uncertainty. Indeed, gold prices have increased 1.3 per cent today, following the result of a Dutch EU referendum on a trade deal with Ukraine. Voters rejected the deal, which is being regarded as some as a litmus test of sentiment towards Europe ahead of the UK’s Brexit referendum in June.

With uncertainty climbing as a result, demand for gold as a safe haven has risen, driving up spot gold values in mid-morning European trade, reports the Wall Street Journal.

However, on a long-term basis, new research suggests that gold could actually be a worse investment than mainstream real estate. A study by estate agency Jackson-Stops & Staff to mark the Queen’s 90th birthday shows that average UK house prices have risen from a modest £619 to £291,504 over the course of her life.

This represents a 471-fold increase over 90 years. Between 1926 and the outbreak of the Second World War (1939), average UK house prices rose by only £40, to £659, a rise of 6.5 per cent. By 1953, however, the year of the Queen’s Coronation, prices had risen more than threefold to £2,006. By 1966, the year England won the world cup, house prices had reached £3,840. A decade later, in 1976, when the UK sweltered in an exceptionally hot summer, average house prices were also very hot having risen 331 percent over the preceding 10 years to £12,704.

By 2006, UK average house prices had risen to £192,648, a 276 per cent increase over the previous 10 years. The most recent ONS House Price Index reported an average UK house price of £291,504, up a solid 51 per cent on 2006.

If the £619 invested in an averagely priced UK property in 1926 was invested in gold, it would have risen to £127,051 (gold was £4.25 an ounce in 1926, and is at time of writing £876 per ounce).

It it were invested in UK equities, meanwhile, it would have risen to £72,952 by the beginning of 2016.