Monday, 23 July 2012

London property overpriced

A decent 2 bedroom flat in London would set you back £250,000, with price fluctuations depending on area, infact you may have to go up to £350,000 for a 2 bedroom flat. But hell, lets use the lower end of the price bracket for arguments sake.

To demonstrate how overpriced this is, lets compare it to gold, not worthless fiat.

A 1kg bar of gold costs £33,000 , rounded down.

This means, in theory, I should be able to trade 7 and half bars of 1kg gold for a 2 bedroom flat. Now just pause and think about this for a moment. Can you envisage yourself handing over 7 and a half massive pure gold bars in exchange for a measly 2 bedroom flat that doesnt even have a great deal floor-space?

Maybe im crazy, but it seems that 7 and a half gold bars should buy you substantially more than a 2 bedroom flat like that. 7.5kg of pure gold is a HUGE amount of gold, much more than most people will ever see in their lifetime, let alone own and be able to trade for a house. Can you imagine what would happen if housing did not sell for £££ but rather could only be bought for with gold.

Every guy in the land hoping to start a family would have to turn up to their estate agents carrying bags of gold bars to get a house. But just one second, WHERE THE FUCK IS ALL THAT GOLD GOING TO COME FROM?! The UK gold reserve is only 310 tonnes, or 310,000 1kg gold bars. Divide that by what 2 bedroom flats are worth and you get 41333.

So even if we raided the UK gold reserve, only 41,333 men would be able to afford 2 bedroom flats. According to the census, the UK population is 62 million, lets half that, and we get about 31 million men in UK. But only 41,333 guys in that 31 million can afford to buy property??? We can only count 2 bedroom+ flats because that is the minimum needed to start a family, you cant start a family in 1 bedroom flat.

Anyway, something is wrong. Either gold is way way underpriced, and/or London property is hyper-inflated. Actually I think its BOTH.


4 comments:

  1. Sounds just like Dublin then! Even with the total collapse of the property market where prices have decreased 50-70% over the last four years, property is still hideously expensive.

    We have fake/fiat money to thank for this.

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  2. that's why so many people left the old world for the new -- the dream of owning property.... in St. Louis (or Houston or Tulsa, etc) you can afford quite a good-sized house with that money. not in NY or California, of course.

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