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Alternative asset class rankings
For the first time since our original publication in 2018, we revisit our alternative asset class rankings, pitched against UK house prices and their growth.
Since that first comparison in 2018 much has changed. The global COVID-19 pandemic sent stocks and equities into freefall, while many tangible, luxury assets benefitted with double-digit record growth for nearly two years. In 2022, amid a backdrop of fluctuating currencies, a volatile stock market and swiftly rising inflation, the demand for luxury investments has been formidable. In the housing market, many had feared a slump in demand at the start of the pandemic, although we now know that it was anything but that.
Three years on since the start of the pandemic and it is fine wine which has risen the most over the period. At 39% growth over the last three years this is a significant increase, although the asset has only gained 7% in value over the most recent 12 months meaning that a good portion of this growth occurred in the latter half of 2021. The art market meanwhile also experienced significant value rises over the last three years, although the majority of its 34% growth only occurred during 2022, with some sharp declines throughout 2020 and much of 2021.
The COVID-19 pandemic and its associated lockdowns and restrictions seemed to have been a catalyst for movement in and around the UK housing market. Working from home, flexible and hybrid working and simply spending an increased amount of time at home more generally seems to have spurred households to move house. A record number of moves occurred following the pandemic and up to early 2022, resulting in very high house price growth. The annual growth rate reached a peak of 14.4% in August last year, and by the end of 2022 it slowed to 9.8%, and has risen by 27% since the end of 2019.
UK Housing
The wake of the COVID-19 pandemic saw tangible assets become exceptionally popular and this was certainly the case for fine wine. The fine wine market experienced robust demand throughout 2020 and this has yet to let up. Values have risen by nearly 40% since January 2020 and although growth slowed slightly over the most recent 12 months, it still achieved 7% over the period. The main wine indices have now hit new highs, boosted by Burgundy and Champagne sub-indices.
Fine Wine
Similar to the fine wine market, the art market has also experienced a fantastically strong drive over the last three years, with one of the main art indices rising by 34% over the period (All Art Index, AMR). Having said that, all of this growth was in 2021 and 2022. This was because the limitations brought on by the pandemic meant that many galleries and auction houses were closed and had to readjust to new ways of buying and selling. The digital adoption of auctioneering however changed all this and by 2021 digital sales grew the market exponentially and this continued throughout 2022. The art market index has now risen the most of all our seven tracked markets, since 2013 (+120%).
Art
One of the other consequences of the pandemic on the housing market was just how uneven the demand was in different parts of the country. Disaggregated, homes in Wales (34%), the North West (34%), and the East Midlands (32%) rose the most in value over the last three years while in London house prices grew by an average of 13% over the same period. Over the last 12 months, Scotland (6%) and London (7%) showed the slowest rates of value growth while all other regions saw house prices grow between 10% and 12%.
The classic car market was also a net beneficiary from what have been some challenging times both at home and abroad, since 2020. The K500 market shows an increase of 22% since early 2020, and although the index in 2022 appears more subdued with a rise of just 2%, this was off the back of a hefty 20% increase at the end of 2021. 2022 saw a record number of sales with robust demand for unusual and exceptional cars continuing.
Classic Cars
The gold market since the pandemic has seen some strong volatility, increasing in value by 20% since early 2020, although over the last 12 months there has been virtually no change (-0.2%). During the initial period of the pandemic demand was fuelled by strong demand from Exchange Traded Funds (EFTs), despite a weakening demand from jewellery production over the same period. Over the most recent 12 months demand from jewellery production has returned to more normal levels while an increase in demand has come now from central banks and institutions. EFTs meanwhile experienced much weaker investor sentiment, placing downward pressure on overall demand and values over the period.
Gold
The London housing market over the last three years has seen some steady growth, although posting a 13% cumulative increase since the end of 2019 indicates that this market has not experienced the COVID-related boom that some of the smaller tangible assets have seen (or indeed the housing market in the rest of the UK). Throughout 2022 London’s residential market witnessed a 7% value increase, still above the long-term average of 5.9% annually.
Unsurprisingly, it was home sales that placed the most upward pressure on price growth over the last three years in London, with detached homes witnessing 25% growth, semi-detached 22% and terraced homes 19% while the value of flats (apartments) increased by around 8% over the same period.
London Housing
FTSE 100 equities rose just 1% on aggregate over the 12 months in 2022 and an overall change of -1% since the start of the pandemic in early 2020. These apparent slight fluctuations though mask the volatility that equities experienced over the last three years. Equity markets reacted strongly to the economic implications of government restrictions on movement both home and abroad, never more clearly than in March 2020 when initial pandemic-related lockdowns were announced, and the market fell by 22% that month. More recently, the FTSE fell by nearly 3% off the back of the mini-budget announcement in September 2022 before swiftly recovering once a new Prime Minister was in place by late October.
Equities
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Sources: Art Market Research (All Art), HM Land Registry, K500 (K500 Market Average), Liv-ex (Fine Wine 100), London Stock Exchange. Note: data refers to end of 2022
Sources: Art Market Research (All Art), HM Land Registry, K500 (K500 Market Average), Liv-ex (Fine Wine 100), London Stock Exchanges
"Amid a backdrop of fluctuating currencies, a volatile stock market and swiftly rising inflation,
the demand for luxury investments has been formidable"
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Competing asset growth
Competing asset class growth indices