Tickets on sale now for our next conferenceDo Houses Really Go Up in Value?
Letâs set the record straight: real estate doesnât go up in value over time.
Before you discard this as nonsense and label me as crazy, hear me out. This will take 3 minutes.
Everyone talks about how property is the âbest investmentâ because house prices always go up. But the truth is, itâs not the houses that are skyrocketing in value, itâs the money we use to measure them thatâs sinking in value.
The image at the top of this article is a great way of visualising this (Iâm not just saying that because I made it). In 1980, the average house price in the UK was ÂŁ19,273. Fast forward to today, and that same house will cost you around ÂŁ288,000.
Did the house itself improve by 15 times? Did it gain 15 times more bedrooms, grow 15 times larger, or start generating 15 times the rental income? No. The house stayed the same.
Sure, you could argue that the interior was updated or the location became more desirable, but these are minor changes. The real shift was in the value of the pound (ÂŁ).
Why Do Prices Seem to Always Rise?
Hereâs the deal, the pound has been steadily losing its value (purchasing power) over the years due to inflation. The same pound that could buy you a lot in 1980 barely buys you a cup of coffee today.
This isnât some conspiracy or baseless claim, itâs fact.
When people say âhouse prices are rising,â what theyâre really seeing is how the currency theyâre using to value the house is losing value.Â
Read that again.
Itâs not the property getting more valuable, itâs the money getting weaker.
The Hidden Cost of Inflation
Inflation is often referred to as a âhidden tax.â It silently erodes the value of your money while youâre busy living your life. And this isnât just a problem for property prices, it affects everything: food, fuel, and even your savings.
For example, if you saved ÂŁ19,273 in cash in 1980, thinking youâd buy a house later, youâd have been in for a nasty surprise in 2024. That money wouldnât even cover a 10% deposit on the same house today!
What Does This Mean for You?
Understanding this concept can completely change how you think about money.
Itâs not just about working harder or saving more, itâs about understanding how money works and how to protect its value over time.
You work hard to earn your money, so shouldnât learning how to stop it from losing value be just as important as making it in the first place?
My Own Journey...
Iâll be honest, when I first realised this, it hit me hard. Like most people, I thought saving more was the answer.
Do you blame me? My parents gave me a piggy bank, and when it got full, Iâd smash it open with a hammer. I grew up learning how to save, not how to invest.
Was that wrong? Not necessarily, it worked for their generation. But the financial world is always changing. What worked 20, 30, or 40 years ago doesnât work today.
When I finally clocked this, It forced me to take a step back and think differently about money. I started looking into ways to protect and grow my wealth over time, not just in pounds but in assets that hold their value.Â
Thatâs when I began to really understand why people talk about investing, not to âget rich quickâ but to avoid being crushed by inflation.
I wrote this because I know most people find learning about money dull, but it baffles me that so many work so hard to make money and then pay so little attention to keeping it.
The next time someone tells you, âHouse prices always go up,â take a moment to think about whatâs really happening.Â
Itâs not the house changing, itâs the money.
House prices
This is a guest article by @JayW132. The above article should not be construed in any way as investment advice and the opinions expressed do not necessarily reflect the views of The Bitcoin Collective Ltd.Â