Stock markets do not like inflation, as investors have discovered to their cost this year, which raises the question: is housing sometimes a better bet? Stocks beat housing as a long-term investment but inflation certainly alters the equation, notes Ritholtz Wealth Management’s Ben Carlson. Looking at the performance of both assets in the US over the last nine decades, it was clear stocks do not do nearly as well when inflation is rising or above 3 per cent, compared to when inflation is falling or below 3 per cent. In contrast, housing returns were above average during inflationary periods and below average when inflation was lower. However, investing in home renovations is a different matter. Carlson cites data from US housing research firm Zonda which looked at the cost and resale value of 22 different home projects, ranging from window replacements to minor and major kitchen remodels. In all 22 cases, the monetary value added to the house was less than the cost of the job. In most cases, owners would have recouped just 50 to 70 per cent of what they spent. Of course, improving your home might make you happier — fair enough. However, if you have a few quid lying around and you’re thinking about improving your house to add to its resale value, think again — putting it into stocks is a better long-term bet.