Well Hugh Hefner has put the Playboy mansion up for sale – $200M will buy you 6-acres, 29 rooms, a zoo, koi pond, citrus orchard, tennis and basketball courts, a swimming pool – with a waterfall and well Hugh, as he wants to stay with a lifetime tenancy and his own bedroom.
However, what else you may find interesting about the Playboy story is that this mansion was the first house in Los Angeles to ever sell for over a million dollars. In 1971 Playboy Enterprises paid a record sale price ; a whopping $1.05M.
So when I saw this comparison chart it made me think of Hugh and how the price of a cup of coffee has increased.
This chart comes from an article “What rises faster, house prices or a cup of coffee?” by Danielle Cahill
It demonstrates the relative price increases of wages against petrol, a cup of coffee, a Big Mac, bottled water, hot chips at the MCG, a packet of Cigarettes and house prices from 2005 to 2015.
What this shows is totally un-astounding – that house prices grew relatively faster than EVERYTHING except a packet cigarettes. Faster than a Big Mac, a coffee and of course faster than wages. This is exactly what should happen. As we become more productive we become more profitable and an increase in profitability logically leads to higher asset prices.
Henry George told us that “All the productivity gains will be taken by the price of land”. It is built into our economic DNA and this chart clearly demonstrates this economic reality in action. As Phil Anderson said “Whilst this economic truth remains we MUST have a Boom followed by an inevitable Bust!”
The Moral of the Story?
When you understand the Economic Cycle and the Calnan Flack Economic Cycle Action Plan you will understand that now is your opportunity to TAKE ACTION and purchase quality assets early in the cycle.
LET’S GET STARTED
If you want to avoid the mistakes of not understanding the dangers of investing without an understanding of the Economic Cycle, then why not have a chat to us about how we can help?
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