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?
You have nothing to lose except a few minutes of your time and everything to gain.
So… let’s get started.
Disclaimer: Any opinions or recommendations expressed here do not purport to Financial Advice but rather should be considered General Advice and does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate to you and whether you should act upon it. Should Financial Advice be sought, we suggest you seek such advice from an appropriately qualified advisor. Any growth rates, yields, rental income, tax rates, interest rates, depreciation rates, inflation rates Dividends per Share (DPS) and Earning Per Share (EPS) etc shown are estimates only and should not be used as a guide to future performance. Past performance is not necessarily a guide to future performance and should not be relied upon for this purpose. Authorised Representative of PGW Financial Services Pty Ltd – AFSL 384713 ABN 15 123 835 441.