BUY
Property prices have been outpacing other investments for over 100 years, according to Matthew Dabell, Director of aspire estate agents.
In February of this year, the housing charity, Shelter, produced research that compared the changing cost of homes and shopping over the past four decades. The results were astounding. In 1971, the average property price was just £5,632. Nowadays, the average property price is £245,319. This is an incredible increase, far in excess of the corresponding growth in salaries and grocery prices.
To illustrate the point - if a four-pint carton of milk had risen in price at the same rate as housing, it would now cost £10.45. Property prices have risen to more than nine times the median full-time salary of £26,200. Perhaps unsurprisingly, this dramatic increase has been particularly marked in London. We took a look at our local neighbourhood, Fulham, and it proved to be a fascinating area for a case study.
Around 120 years ago a local builder, Mr J.Nichols, heavily invested in the development of Fulham. Properties in Coniger Road on the Peterborough Estate were built in 1889 by Mr Nichols, and sold for the handsome sum of £300 each. These properties are often now selling for over £2.5 million! In the same year that the Coniger Road properties were built, our previous office close to South Park in Fulham was a grocery store. When we refurbished it in the 1980’s, we discovered the original cash price list. In 1889, pure coffee sold for 1/6d per .lb, or 7.5 new pence. Now this same quantity sells at the local grocers for c. £10 for a something of top quality.
If coffee had risen at the same rate as property prices, it would now cost £500 per lb.! Or, if we look at it the other way round, if property rose at the same rate as coffee, investors would be looking at houses on Coniger Road for approximately £40,000, clearly a ridiculous figure in the current property market.
Even if we take a look on a much smaller timescale, Fulham is a booming area. The southwest London suburb, defined as the area between the District Line and the Thames, has enjoyed a very strong bounce-back since the recession, with average growth of 27.5% from the peak of the market. Over the past year, property prices have increased, on average, by 13% and in many cases significantly more. It is a burgeoning locale also benefiting from the spill over from prime central London and continued growth can be expected. Prices are still, at an average of, less than £1000 per sq ft, so it certainly has plenty of scope for growth as it catches up with the £1,700 and £2,400 per sq ft average prices in South Kensington and Knightsbridge.
Whilst at first glance Fulham properties might look like poor value for money when placed next to coffee, a closer inspection suggests the opposite. Firstly, they are incredibly good value compared to their neighbours just down the King’s Road in Chelsea. And secondly, if there is any moral we can draw from this story it is that property has been, and will continue to be, the most attractive option for investors. If you have £2.5 million or any amount over £350k to invest, buy a property in Fulham – not £200,000 lbs. of coffee. You won’t regret it!
