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Ozzie Houses versus Ozzie Shares - MASSIVE WIN FOR HOUSES; Consistently over 10, 15, 20, 25 years
Topic Started: 20 May 2012, 02:50 PM (3,330 Views)
Strindberg
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This thread is prompted by a mistaken myth posted as fact by zaph here:

Quote:
 
A house is risky, A share is risky. You could buy a share in a dud company as easily as buy a house that is a dud.

Very long term, the market wide return on each is about the same. If you alter times from 10/15/20/25 years then one will have superior returns to the other and flip flop over those time frames.


Appropriate data is the ASX all ords and the ABS 8 cap city index (new and old series) for March in 1987, 1992, 1997, 2002 and 2012. This will give us the 10, 15, 20 and 25 year returns.

Plugging the numbers in (data given in the note below) we get:

House price index growth

25 years = 443% or 7.0% pa
20 years = 229% or 6.1% pa
15 years = 196% or 7.5% pa
10 years = 89% or 6.6% pa


ASX All Ords growth

25 years = 161% or 3.9% pa
20 years = 170% or 5.1% pa
15 years = 77% or 3.9% pa
10 years = 27% or 2.4% pa


The difference in performance over 25, 20 15 and 10 years is huge.
House prices have massively outperformed the ASX all ords over all 4 periods.

These figures suggest $100k in housing in 1987 would now be $534k and $100k in the All ords in 1987 would now be $261k - LESS THAN HALF THAT FROM HOUSING.

No cherry picking. Periods were chosen by zaph.

Dividends and rent could also be included. I'd expect that to make little difference to the message.

Of course, this says nothing about the future.

Same calculation could be done with shares and houses in other countries. UK would be interesting. The FTSE 100 is lower now than when I left the UK in 1999. UK house prices have risen 140% since then.

NOTE - Data used in the above.
ASX all ords (March):
1987 - 1649.9
1992 - 1591.5
1997 - 2424.2
2002 - 3388.7
2012 - 4300

ABS 8 cap city HPI Old series (March)
1987 - 62.9
1992 - 104.2
1997 - 115.3
2002 - 180.6

ABS 8 cap city HPI New series (March)
2002 - 74.3
2012 - 140.6

Edited by Strindberg, 20 May 2012, 02:52 PM.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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newjez
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But you can make money when the share market goes down as well as up.

Try doing that with houses.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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audas
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US shares have recovered and then some, while houses are down 40%.
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Strindberg
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newjez
20 May 2012, 02:55 PM
But you can make money when the share market goes down as well as up.

Try doing that with houses.
I knew there'd be attempts to derail this (for some) uncomfortable message.
I was addressing zaph's point, which was:
Quote:
 
the market wide return on each is about the same

I doubt zaph was referring to returns on puts and calls and other derivatives.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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newjez
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Strindberg
20 May 2012, 03:05 PM
I knew there'd be attempts to derail this (for some) uncomfortable message.
I was addressing zaph's point, which was:


I doubt zaph was referring to returns on puts and calls and other derivatives.
No you can't just dismiss it. What you need to do is work out the gain realised by going long and short. But this is a very hard thing to do. But if you can't do that - then there is no comparison.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Strindberg
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newjez
20 May 2012, 03:10 PM
No you can't just dismiss it. What you need to do is work out the gain realised by going long and short. But this is a very hard thing to do. But if you can't do that - then there is no comparison.
That's farcical - or you're trolling.
I don't need to do anything. I refuted zaph's false claim.
It is utter poppycock to claim as you do that "there is no comparison" without calculating going long and short. You are implying that I can't compare the return on NAB and CBA without working "out the gain realised by going long and short". That is total BOLLOCKS. Normal intelligent people, not being cretins, know what is meant when someone compares returns on assets.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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newjez
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Strindberg
20 May 2012, 03:24 PM
That's farcical - or you're trolling.
I don't need to do anything. I refuted zaph's false claim.
It is utter poppycock to claim as you do that "there is no comparison" without calculating going long and short. You are implying that I can't compare the return on NAB and CBA without working "out the gain realised by going long and short". That is total BOLLOCKS. Normal intelligent people, not being cretins, know what is meant when someone compares returns on assets.
I think you're getting close to the point. What you and Zaph for that matter have done is make a silly comparison. You can't really compare the two. You can say - as you have, that if you bought both and held, then one would be better than the other. Buy people rarely buy shares and hold them for 30 years. So the comparison doesn't make sense.

So - I'm happy to say you've won your nonsense arguement. Happy now?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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miw
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audas
20 May 2012, 02:55 PM
US shares have recovered and then some, while houses are down 40%.
The S&P500 peaked on September 5th 2000 at 1520. It has never got back to that level and it closed Friday at 1295. In the meantime it has been down around 817 in Feb 2003 and 752 in November 2008.

The US Case Shiller Index in September 2000 was 109.35. It peaked at 206.5 in July 2006
In Feb 2012 it was at 134.2

So it's not really true that US shares have recovered. Since the secular bull trend broke in 2000, it has been a long-term bear market. Volatility has allowed people to make money on the short-term bull markets in between. But buy and hope investors have been treated to two 50% drawdowns in the meantime. (And in my gut feel are about to get another one.)

US housing is 35% off its peak, but still up 20% since 2000.

If you take 50-year periods where both markets go through at least two cycles, the total return on the S&P does beat housing total return, but probably not by enough to compensate for the vastly higher volatility. On the other hand, shares are vastly more liquid.

A properly-balanced portfolio has to hold both. I don't think it makes a lot of sense to try to pit them against each other, since a portfolio that holds both outperforms either by a good stretch in terms of balance between volatility, liquidity and return.

The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Frank Castle
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Business As Usual

newjez
20 May 2012, 02:55 PM
But you can make money when the share market goes down as well as up.

Try doing that with houses.
Easy
Split a block off of the existing property and you have increased the value considerably.
Build a house on the "Free" block and you have increased its value considerably again
Ignore posts by The Whole Truth · View Post · End Ignoring
The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
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jester77
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Sounds like houses are doing great and shares aren't. I'm assuming you will be lobbying governments to remove tax concessions and fiscal grants for houses and replacing those with further concessions and fiscal stimulus for shares.

Can't wait for the first shares owners boost.
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