As a trustee of a 350 year old British charity, mostly invested in residential property and wanting to review its long term investment strategy, Neil Monnery had to gather data about the performance of property investments in the long run, whether in the UK or elsewhere. In “Safe as Houses?” he presents the picture which emerges from this data and compares it with what people think about house prices in the UK today.

Readers familiar with our website will be acquainted with the secular indices he presents, since they are the same we discussed in « Comparing Four Secular Home Price Indices ( Comparaison de quatre indices séculaires du prix des logements (format Word - 800.5 ko)) » (June 2008) : the Herengracht index (since 1628), the indices for Paris and France (since the 13th century), the Norwegian index (since 1819) and the US index (since 1890), with the addition of a recently published Australian index (since 1880). Nevertheless, his approach is less methodology-oriented than ours, and thus maybe more entertaining.
As far as the UK is concerned, Neil Monnery manages to go farther back in time than most works on this subject [1] . He also presents shorter indices for Germany, Japan, Ireland and Spain as well as a few other countries.

A few more methodological caveats might not have been uninteresting : the methodology used to filter out quality effects may impact the growth rate of a home price index by 1% per year, and none of those used by past or current indices is perfect. The link between home prices and income per household might have been more extensively commented. Conversely, since the elasticity of home prices with respect to the number of dwellings seems to be mostly in the -1 to -2, maybe -3, range, maybe the impact of construction on home prices might have been worth fewer mentions.

Nevertheless, the important point is that this easy-to-read book shows that in the long run house price indices grow just slightly faster than consumer prices. The very high house price growth rates many countries have been experiencing for the last decade or so are not at all representative of longer trends.
Based on that observation, Neil Monnery then engages with humor in lively “property-fiction” scenarios for 2025 in the UK.

This provides food for thought, not only for UK residents, who are the main target of this book, but also for anybody anywhere in the world who is interested in trying to foresee house prices and to devise investment strategies.
In the specific case of French readers from the areas which experienced an huge influx of British property buyers from 1997 to the mid 2000’s, financed mostly by home sales and easy mortgages in the UK, maybe this book will help them reflect on what the future holds.

The epilogue asks in a few pages sensible, common sense questions.

* “Safe as Houses? : a Historical Analysis of Property Prices”, Neil Monnery, September 2011, London Publishing Partnership, http://www.safeashousesbook.info/.

Return to English page.

Retour au dossier sur le marché immobilier.