Historic House Prices Measured in Gold

House prices measured in gold vary significantly depending on time and place. This article on the subject illustrates this perfectly, and contains some charts worth studying.

The focus is on house prices in New Zealand, UK and US. These prices will typically be elevated relative to places with less affluence because the median price of a house must reflect the ability of the median worker to pay. However, it's probably fair to compare the median house price in NZ to the median price of a flat in Porto, because Porto is a town and NZ is a country.

Looking at the first chart, which has NZ house prices going back 60 years to 1962, we note the following:

• The lowest price was in 1980 at about 1,5 kg
• The average price during the period was about 5 kg
• The highest price was in 2004 at almost 10 kg.

This can be compared to a historic chart of UK house prices going back to 1950:

• The lowest price was in 1980 at about 2 kg
• The average price during the period was about 5 kg
• The highest price was in 2003 at 20 kg

US house prices going back to 1960:

• The lowest price was in 1980 at about 3 kg
• The average price during the period was about 12 kg
• The highest price was in 2004 at 20 kg

The prices in NZ are based on median houses, while prices in the UK and US are based on average houses. This explains the elevated prices in the UK and US relative to NZ because the NZ prices filter out the most expensive houses. However, the correlation is nevertheless striking.

We see that the typical house becomes expensive when it commands a price higher than 5 kg of gold. This is true for the US as well where super-mansions push the average price higher than in other places. Take out the mansions, and we get prices more in line with the UK and NZ.

We can add to the above that a small place should be priced somewhere between 1 kg and 6 kg, with 3 kg a reasonable average.

On a final note, we see from price charts going more than hundred years back in time that the average price of a house was remarkably stable at around 3 kg. The classical gold standard didn't only prevent wild fluctuations in the stock market, it prevented such fluctuations in the house market as well. It also made houses more affordable on average than what we've seen since 1913.

New York house

By Raysonho @ Open Grid Scheduler / Grid Engine - Own work, CC0, Link