Why were house prices cheaper in the 1970s than they are in the C21st?

ukcarper

LilacPixie wrote: »

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Anyone any ideas of the deposit requirments in the 70's or was it totally at the discretion of the lender? I know my parents paid 21k for their home with a 5% deposit that was given to them as a wedding present from my dads uncle. They were the first in the family to own and apparently everyone thought they were a bit mad.

When I bought it was dependent on property you needed a 10% deposit for post war houses and a 20% deposit for pre war. That didn’t make it any easier to buy because pre war property was usually cheaper but you had to save almost twice as much to be able to get a mortgage on one.

LilacPixie

ukcarper wrote: »

When I bought it was dependent on property you needed a 10% deposit for post war houses and a 20% deposit for pre war. That didn’t make it any easier to buy because pre war property was usually cheaper but you had to save almost twice as much to be able to get a mortgage on one.

Theirs is post WW2 although not by much, early 50's I would think and in Scotland. Nothing amazing just a 2 bed stone built semi. they have extended over the years as had pretty much everyone so finding like for like is difficult but a 3 bed non extended one is on market for 150k at the moment.

I would imagine many buyers were 1 income families maybe with kids that saving £2100 or £4200 as a deposit for a home of a similar price to my parents could not of been easy just as the 10-20% deposit requirments today are not easy either.

I have no idea what my fathers wage would of been then and how it stacked up against averages of that time.

ukcarper

LilacPixie wrote: »

Theirs is post WW2 although not by much, early 50's I would think and in Scotland. Nothing amazing just a 2 bed stone built semi. they have extended over the years as had pretty much everyone so finding like for like is difficult but a 3 bed non extended one is on market for 150k at the moment.

I would imagine many buyers were 1 income families maybe with kids that saving £2100 or £4200 as a deposit for a home of a similar price to my parents could not of been easy just as the 10-20% deposit requirments today are not easy either.

I have no idea what my fathers wage would of been then and how it stacked up against averages of that time.

My first house was a standard 70s built 3-bed semi cost £8000 same houses now about £200,000
I was earning £1500 about average at the time. Contrary to what a lot of young people on here seem to think I realise it is harder to buy now and if I was in the same position now as I was then I would not be able to buy it. But I would be able to buy a smaller house so would not be priced out completely.

LilacPixie

ukcarper wrote: »

My first house was a standard 70s built 3-bed semi cost £8000 same houses now about £200,000
I was earning £1500 about average at the time. Contrary to what a lot of young people on here seem to think I realise it is harder to buy now and if I was in the same position now as I was then I would not be able to buy it. But I would be able to buy a smaller house so would not be priced out completely.

My parents bought late 77/early 78. I guess my dad earned about 7k presuming less than 3X income.

I wonder if its area specific? house prices here have risen pretty steadily possibly because the population of this city falls. I guess I am a young person :eek: I feel old. when I bought my place a similar house to my parents would of been right at the very very maximum of my mortgage AIP at the time and I would of had less than 3% deposit. I had no interest in a house in suburbia so I bought a flat within walking distance of the pubs I frequented for less than 50% the cost of a house in suburbia.

Now I want the house in suburbia but its my own paranoia about loss of income that is stopping it rather than prices. There is also the small issue of selling this to unlock equity for a deposit but that a whole other story :rotfl:

One thing for sure I bought my home alone on my wage in 2003 with a less than 3x income multiple, I could still buy my home alone on my wage in 2010 with a less than 3 times income multiple. I could not buy a home in suburbia alone with a less than 3x income multiple, it would be over 5x.

In contrast home is suburbia, presuming 10% deposit with an under 2.5x joint income.

I owned my home at a much younger age than my parents did. I will have the typical suburban home at a younger age than my parents did but our mortgage would be based on a joint income not a single.

I find the variances between areas of the UK fascinating.

Generali

Mortgages were rationed so many couldn't buy despite being able to afford the repayments

It seems to me there is an inconsistency. If lax lending and innovative products (interest only and BTL for example) lead to super soaraway house prices, why would restrictive lending practices, tightly controlled money markets and restrictions on innovation lead to anything other than depressed prices?

For people that think that the days of security of tenure and mass social housing were some halcyon era should remember that the quality of rented housing was generally very poor. Social housing was usually under-maintained and it was against the law for you to do any maintenance yourself.

[Deleted User]

people still didn`t have the high expectations that they do now and many were content to rent or live in a council house. We bought a 4 bed detached for £4500 and that was twice my dh`s salary. 5% deposit applied. There were plenty of houses available and population was lower ie immigrants didn`t generally go for the typical housing estate house

Davesnave

LilacPixie wrote: »

Anyone any ideas of the deposit requirments in the 70's or was it totally at the discretion of the lender?

!0% deposit in that BS was the requirement, but they sometimes ran out of funds.

I saved more than 10% of what I needed over 2 years with the Leeds BS, but when I went to them for a mortgage they said,'Can you come back in 6 months?'

I walked up the High St, calling at building societies & asking if they had funds available. Someone tipped me the wink that the Leicester had just opened a branch and were eager for business, so I went in, and within an hour, my mortgage was sorted.:)

Waterlily24

I worked for a large Building Society between 1963 and 1975 and this is what I remember.

Generally they liked you to have an investment account with them but not always. You didn't have to save regularly.

The deposit was 10 %.

You could borrow 2.5 - 3 times the mans salary/wages. I've got a feeling that if there were two wages they would use the mans wages before tax and if there was only one after tax.

The monthly repayment could be no more than the weekly wage.

The Manager or Assistant Manager used to interview all potential mortgagors.

Most mortgages were repayment, I would say about 90%.

In those days endowment (if you could afford them) worked very well. Usually people would get their mortgage paid off and have a very large sum (profits on policy) refunded to them. Quite often as much as the policy.

There were some capped mortgages, I remember some capped at 4% until redemption. They were taken out before the 1960s though.

We also got an allotted amount each month to lend, this varied a great deal. Depended mostly on the investments that were coming in.

kabayiri

To understand why a house was cheaper in the 70s, you first have to understand we are not comparing like with like.

In the 70s a house was ...err...well a house.

Now it is so much more, loaded with added value.

A house is :-
- a forum bragging tool. Hours of endless fun and mockery for all the family. (Certificate 12a)
- a MEW'ing device
- your passport to property !!!!!! interactive telly. If you buy in the rich home lands, well, in a few years time you're gonna be on telly, as Krustie and Phwyll show you how to trade it in for a pad near the beach and something smaller to commute into the office
- after dinner discussion material, to go with that brazilian mocha chocca special and mints
- an anti-tyrant-landlord-avoidance-device
- your pension (or part of it)
- one of a set you own (only applies in Aberdonia)
- ...
- ....
- oh, and a place to live in (mustn't forget that incidental item)

Thrugelmir

Generali wrote: »

It seems to me there is an inconsistency. If lax lending and innovative products (interest only and BTL for example) lead to super soaraway house prices, why would restrictive lending practices, tightly controlled money markets and restrictions on innovation lead to anything other than depressed prices?

Why depressed? Over time they will become "normal" for the next generation of homebuyers. Many will still to aspire to buy. So will change spending habits to achieve their goal. As previous generations did.