Historical House Affordability

Homersimpson

I'm interested to know whether houses at present are actually more unafforable than they were years ago. I know that a lot of people say they are but i'm interested in some proof.

So to those who bought years ago 60's, 70's, 80's I would be interested to know what mulipication of your salary was your first house and when did you buy it.

Mine (bought last year) was 3.75 times my salary which is a good salary and is a little bit above the average for a couple which is alegidly around 24k according to press reports.

I've tried asking people I know but they can remeber how much they earning or how much they paid.

Davesnave

I bought in 1977 as a single person. I had a 10% deposit and the house was about 3x my salary, but my salary did a couple of jumps around then, so it worked out a bit less shortly after I bought.

That was just as well because the place had no mod cons whatever and needed everything done: like rewire. plumbing, heating, kitchen bathroom etc.

I know I could have bought something more expensive, so maybe I was being offered somewhat more than 3x salary. However, the house I chose was a bargain, because the seller wasn't benefiting from the sale and wanted it gone in 3 days flat. Sealed bids at noon and all that....

The house was £9251 and it may well have been the odd £ that clinched it!

(Now people will say this proves how easy it all was then, so I will just add that I sold my car and much of my furniture to get this 'bargain,' which still needed £££ spent on it.)

lostinrates

Davesnave wrote: »

I bought in 1977 as a single person. I had a 10% deposit and the house was about 3x my salary, but my salary did a couple of jumps around then, so it worked out a bit less shortly after I bought.

That was just as well because the place had no mod cons whatever and needed everything done: like rewire. plumbing, heating, kitchen bathroom etc.

I know I could have bought something more expensive, so maybe I was being offered somewhat more than 3x salary. However, the house I chose was a bargain, because the seller wasn't benefiting from the sale and wanted it gone in 3 days flat. Sealed bids at noon and all that....

The house was £9251 and it may well have been the odd £ that clinched it!

(Now people will say this proves how easy it all was then, so I will just add that I sold my car and much of my furniture to get this 'bargain,' which still needed £££ spent on it.)

no, similarly hard I think, but we'd jump at a fixer upper, and they are so much harder to find now, that's my perception over the last decade or so in family's corner of SW anyway.

jim83

Nationwide provide this data:



Though I find the earnings estimates slightly suspect (apparently it gets earnings data from the ONS, but this indicates that average salary is £31k - the ONS data I can find says it's currently £24k)

Pobby

We bought in the mid 70`s as prices had started to fall from a boom. I had a second job and all that cash was saved for a deposit. It was harder in terms of raising a mortgage. You had to save with building society, prove your earnings and have an employees reference. Slightly different to recent years.

IRs were in double digits as inflation was high. On the good side there was big wage inflation that rapidly wafted the debt away.

As the IR was so great, little pain was experienced if the rate went up by a couple percent. The mortgage was around 30% of our pay but as I said, that became a lot smaller over a few years.

phil_b_2

When will people stop using the average-wage/house-price ratio as a means of assessing affordability! There are unmpteen other factors, interest rates been a major one.

StevieJ

jim83 wrote: »

Nationwide provide this data:



Though I find the earnings estimates slightly suspect (apparently it gets earnings data from the ONS, but this indicates that average salary is £31k - the ONS data I can find says it's currently £24k)

1989 is interesting on your chart as interest rates also hit 15%+ for a year, as Fergie would no doubt have called it 'Squeaky Bum time' :eek:

HAMISH_MCTAVISH

Homersimpson wrote: »

I'm interested to know whether houses at present are actually more unafforable than they were years ago. I know that a lot of people say they are but i'm interested in some proof.

So to those who bought years ago 60's, 70's, 80's I would be interested to know what mulipication of your salary was your first house and when did you buy it.
.

In 1967, members of my family earned and paid the following......

GPO phone engineer (same as a BT phone engineer today) £1000 a year.

Teacher £720 a year.

3 bed semi-detached house £3900

Note, an "average" house was 3.9 times an above average wage at the time for the area, closer to 5 times a teachers wage, and mortgage interest rates were in double digits.

By 1977, the neighbouring semi detached was £11,000, mortgage rates were 15%, and they bought it and knocked the whole thing into one house.

Compare those figures to today.......

At same point in career, BT engineer would earn around 30K. Teacher around 25K. Same size 3 bed house in same town would sell for around 175K. But with mortgage rates at 5%, not 15%.

It's nonsense to say affordability is much worse today than it was then, in much, if not most, of the country.

Quiet_Life

Bought first house in 1977, cost £11,000, 10% deposit required, mortgage of 2.5 times husband salary given. Had to be a saver with the mortgage provider; wages and security of job checked with employer. Didn't have a car, central heating or family holidays for many years. interest rates jumped to 15%. I think it was a bit easier than it is today because we grew up in an era of very little easy credit so you had to save before you could buy your second hand car etc.

Generali

It's worth remembering that over time in the UK, wages have increased relative to prices so a larger proportion of income is freed for aspirational spending including bidding up house prices and discretionary spending.

Graham_Devon

HAMISH_MCTAVISH wrote: »

At same point in career, BT engineer would earn around 30K. Teacher around 25K. Same size 3 bed house in same town would sell for around 175K. But with mortgage rates at 5%, not 15%.

Mortgage rates didn't reach 15%, the base rate did.

I did some research on this before and posted up several links to show the mortgage rat was averaging 12% when base rates were 15%.

Same as today. Base rates are 0.5%, but the average mortgage is at what, 5%?

Its disingenuous to use the base rate to make the argument here.