Over a recent game of Uno, a friend commented on their competitive streak when playing Monopoly (triggered by me cheating against an 11 year old). Monopoly as a game doesn't really appeal to me as my competitive streak lasts all of 15 minutes, or until the bowl of game snacks runs out and it doesn't really help that there isn't a readily identifiable end point. However, it did remind me of some research I did out of curiousity a few weeks ago.
I had wondered whether or not the prices on the Monopoly board in anyway reflected the prices of properties in London in 1935 when the game was first published and whether the differences in value between properties was representative of real house prices at the time.
Clearly, without the benefit of particulars from real estate agents of the period it's difficult to know whether they were representative.
Step 1: What are properties worth nowadays
What I have done is investigate the average sale price of properties on Monopoly Streets in recent years. Unfortunately the British publishers of the game didn't give due regard to someone investigating these questions 77 years down the line. Some of the problems I have faced in undertaking this task have included the fact that a number of properties do not have residential properties on them (Trafalgar Square, Leicester Square etc), or are very short streets (Vine Street is all of 30 metres long) meaning there is low turnover of properties and thus available data. For others like The Angel, Islington, which aren't even streets, I've used Upper Street as a proxy (seeing as Pentonville Road is already included).
Of the 22 monopoly properties, I have managed to research indicative prices for 14 of them using Land Registry data. In addition I've also used estimates from Zoopla which predict values based on other local properties and historic sales figures. This is however somewhat of a data parlour game rather than rigorous research and analysis.
Monopoly inflation
So,using the original price per the cards, and the recent sale proceeds I calulated the effective rate of annual inflation for the properties is 10.2-12.0% based on the average value of sales and 11.1-14.0% based on Zoopla's estimates (assuming the Monopoly prices are realistic!).
Now, the question is, is whether or not this is a realistic level of house price inflation - if it's not, then the Monopoly prices are clearly not representative.
Measuring house price inflation is very difficult - there are all sorts of issues, such as the mix of property, the number of sales and the types of properties coming to market. I've looked for an index which goes back as far as possible.
Nationwide's index goes back to 1952, and estimates that the average house price in 1952 was £1,981, with the average for older houses calculated at £1,524 and 'new houses' as £2,107. From 1952 to 2013, the effective annual inflation rate was 7.58% for all properties and 7.98% for older properties, which is 2-6 percentage points less than our Monopoly inflation index, which means unless there was a large amount of inflation from 1935-1953, it looks like the prices in Monopoly are too low.
However, the Nationwide figures, are, national, and don't consider local variation. Halifax's index doesn't go as far back (only 1983) but does calculate regional inflation, with London inflation 17% higher than the UK as a whole. Applying this uplift to the Nationwide figures still however only lifts the inflation rate to 9.3%.
Playing around a bit more, if we use our inflation rates based on modern prices against Monopoly card prices to inflate the prices until 1952, and then uplift using Nationwide's index from 1952 to 2013, the modelled values are markedly lower than actuals. So all in all it seems that even in 1935 £200-300 for a property was actually a bargain.
But, what is interesting is the relative pricing of the squares in 1935 compared to the relative pricing in 2013. If you look at the chart below, you can see there is actually a reasonable correlation between the monopoly prices (x axis) and the actual prices (y axis). The two outliers are Bond Street (£320/£700k) and Fleet Street (£220/£392k), both of which I expect are affected by the small number of residential properties changing hands. So even if the prices weren't accurate in 1935, they appear to be relatively accurate for today's property market.
