Gold and Property
Owning your own home has always a key tenet of the great Australian dream. However, as many people are aware, housing prices have skyrocketed over the last two decades, with daily reports of housing reaching new all-time highs, and rising concerns about housing affordability.
Record low interest rates also make it harder for first home buyers to build a deposit as there is little interest income being added to the cash saved, resulting in housing prices appreciating far faster than people can build that deposit for their first home purchase.
But what if you saved for your house in something other than cash?
First home buyers who saved in gold would have done far better than those saving in cash, owing to the decades of price appreciation gold has seen over that time period. The chart below shows how many ounces of gold would buy the average home in Australian cities.
While there has been some fluctuation, Australian house prices have remained around 300 to 400 ounces of gold. The superior power of saving in gold over the longer term, as expressed through the cost of saving for property in cash versus saving in gold, is demonstrated clearly in this chart.