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Category: Glint Special Report

Glint Special Report: Saving in Gold gets new buyers into their homes faster

The struggle to buy your first home is almost a universal experience; as with many things, the first step is usually the hardest. Once you're on the h...

2 September 2021

Sean Cope

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The struggle to buy your first home is almost a universal experience; as with many things, the first step is usually the hardest. Once you’re on the housing ladder then you can enjoy the benefits of home ownership for the rest of your life, however, securing the deposit needed to get on the first rung is notoriously difficult and, for some, almost unattainable.

Some experts believe that we’re in the midst of a housing bubble. In the UK, the average house price jumped 13.2% over the last year to over £260,000, despite the freeze on Stamp Duty (the government tax on house sales) ending. Currently, UK house prices are around 30% higher than the peak before the 2008 financial crisis.

In the US, house prices are rising at the fastest rate in 30 years – up 18.6% in a year according to the S&P Corelogic Case-Shiller national home price index – driven by ultra-low mortgage rates and record levels of borrowing which has hit $4.6tn over the last 12 months.

With prices rocketing, first-time buyers could be forgiven for thinking the situation is hopeless and that home ownership will forever remain out of reach. ‘Generation Rent’ (young adults between 18 and 40) faces an uncertain future of unstable tenancies, spiralling rents and a lack of security which all collude to make it increasingly difficult, sometimes even impossible, to save enough to reach that crucial amount required for a deposit.

Research from the British bank Halifax recently revealed that the average UK deposit sits at £59,000 or around a quarter of the average house price. A staggering amount considering the average annual salary is around £31,000!

In the US, Federal Reserve Economic Data indicates that the average house price is $434,200 – if prospective homebuyers need an average deposit of 12% of the house price (as indicated by the National Association of Realtors) then they’d have to save over $52,000. This equates to 118% of the average income for men in the US, and 177% of the average annual income for women (according to U.S. Census Bureau).

12 years to save for a UK deposit but gold can provide first-time buyers with the tantalising prospect of home ownership 4 years sooner

Our research shows that if UK first-time buyers saved 20% of their salary it would take 12 years to save up the average house deposit. Of course, the issue is that as house prices soar by the time you’ve reached your target for a deposit, that amount is no longer enough to purchase the home you were saving toward.

Rather than accepting this as a depressing fact of life, there are alternative ways to save towards a deposit. Cryptocurrencies have enjoyed a surge in popularity since the Covid-19 pandemic began, particularly amongst Millennials. However, the volatility of cryptos ensures that these assets are not viable long-term stores of value. For example, double-digit overnight drops in value are far from unheard of; savers could see the value of their deposit plummet in the hours before finalising a property purchase. Of increasing concern are the reports of the reluctance of some lenders to approve mortgage applications of borrowers whose deposit has originated from crypto returns – some applications have apparently even been rejected outright.

Gold can unlock access to home ownership for first-time buyers. Rather than having to struggle for 12 years to gather a deposit, saving in gold would have allowed savers to reach their goal for a deposit in just 8 years, a third quicker than through cash savings.

Over the last 20 years, UK house prices have increased by 175% from £96,500 in 2001 to £266,000 today. Over the same period gold prices have risen much more quickly, up 559% from $275 to $1,812 per troy ounce, indicating that savers could have secured a house deposit much sooner by investing and saving in gold.

In the US, house prices have also seen a huge spike over the last 20 years – jumping 109% from $207,800 in 2001 to $434,200 today (according to Federal Reserve Economic Data). Again, while a huge jump, the growth in house prices is outperformed by the rise in the gold price.

Gold offers a solution in the US too. Our research indicates that to afford the average US house deposit of $52,100, male first-time buyers need to save for an average of six years, whilst female first-time buyers are forced to save for up to nine years. Analysis of historic gold prices shows that this deposit could be reached a year earlier, if prospective buyers saved in gold instead of cash.

How does gold compare to investments? Pretty well. In fact, gold has outperformed many other traditional investments, including the FTSE 100. These are the UK’s most profitable companies, yet shares have only increased by 29% in the last 20 years, from 5,537 to 7,151. Although the FTSE 250 has seen huge growth since 2001, up 296%, again gold has fared better over that period. By way of comparison, the performance of the FTSE 350 over the last 20 years is much closer to the FTSE 100 rather than the 250 – jumping 65% during that time.

US stock exchanges have seen much more substantial growth over the last 20 years. However, performance still lags significantly behind the rise in gold prices. Here’s a look at how the largest exchanges have performed since 2001:
• NYSE has jumped 137% from 7,094 to 16,846
• Dow Jones Industrial Average up 220% from 11,048 to 35,312
• Nasdaq soared 304% from 3,787 to 15,309

Clearly, gold has outperformed other assets over the last 20 years. While the value of gold can decline, meaning that its purchasing power can also decline, it has proven its reliability as a long-term store of value and prices are steadily climbing back to the highs of last year. Previously, access to gold was extremely limited but the digitalisation of gold through Glint has unlocked its access, offering all consumers a viable means of saving for the future.

The same trend is clear since the financial crisis too. Although house prices in both the UK and US have increased by more than 50% since 2008, gold prices have soared 147% over the same period. Gold has also dramatically outperformed many other investments over the long-term, including the FTSE 100, which has risen by around 75% since the crisis. In the US, exchanges such as Nasdaq have enjoyed huge growth since the lows of the financial crisis, driven by the meteoric rise of the tech powerhouses including Amazon, Apple, Facebook, Microsoft and Tesla. This growth may have skewed the figures in favour of the US exchanges but the simple fact remains – gold has risen much more quickly than house prices.

Gold could be the answer for those looking for an alternative to the seemingly fruitless task of saving for a deposit. Rather than swimming against the tide, investing in and holding gold could be the answer to make your dream home a reality much sooner than expected.


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