Gold Outperforms London Mansions – Knight Frank

October 5, 2012 at 16:56


They have helped push up the price of super-prime homes in the capital – those above £10m – by almost 40pc since the March 2009.

A respectable return considering interest rates at historic lows of 0.5pc and “substantial economic, financial and political challenges”.

However, gold in that time has risen 89pc to $1,786 a troy ounce and in gold terms the value of a luxury London home has plunged.

Liam Bailey, head of Residentail Research at Knight Frank, said: “In 2002 it would have taken you 24,000 ounces of gold to buy a super-prime mansion in SW1. A decade on, you would get change from 9,800 ounces.”

Although Mr Bailey, who describes 9,800 ounces of gold as “a cube about the size of a footstool”, points out the gold versus luxury home comparisons depend on the time-horizon you pick.

While gold has outperformed over the past four years, go back to 1976 and you find the precious metal has only risen 802pc compared with 2,685pc for luxury London homes.

Mr Bailey believes gold will probably retain its superior “safe haven” status, but says that at least “If things get really tough you can at least live in your mansion, or let it out, with or without a footstool”.