House Prices vs earnings

Graham_Devon

ukcarper wrote: »

I was alive and working in the 70s I needed a car for work and drove to a supermarket to get my shopping. As far as I can see the only things I need now compare to then are mobile phone and a PC with Internet connection no more that £30 a month and a one off payment of £300. Compared to a £60 a week shop costing over £120 a week if food had increased in line with wages.

　

Small things pass us by, but they all add up.

Take it you haven't bought a freeview box to enable you to continue watching TV?

My dad's friend is a keen amateur photographer. He was talking about how much more expensive it is now, not cheaper to carry out photography. See, it's not just the hardware, it's now the software too. He stated people always ignore this expense, but it's a direct expense of editing your photos. Technology doesn't always make things cheaper, it can often add to the amount of stuff we need to carry out the same thing (hence my freeview example).

Car repairs are less frequent now, but so much more expensive due to technology.

Take it you don't go the dentists and pay the costs there that wouldn't have been there in the 70's?

I'd suggest RPI will pretty much always follow the same pattern as on the graph. Look at Generali's link to another inflation index, which measures the costs of goods we buy month in month out though. As I said, it's around 8%. THAT line would have followed wages up. That would have made your point difficult, if not impossible to make.

Don't think we'll ever agree on this. There have been programmes that defy what you say...we even discussed those programmes. What you say appears to rely solely on the couple of years of massive inflation, where prices were going up litterally right in front of your eyes. You appear to ignore the rest of the years in the 70's though.

Thrugelmir

Graham_Devon wrote: »

.

Car repairs are less frequent now, but so much more expensive due to technology.

Car ownership was different back then. Mileage was far lower. If your car did 30 mpg was considered good. Gear boxes and engines often only did 60,000 miles.

Direct comparisons are very difficult.

grizzly1911

Went to visit a Uni with one of my kids last week.

Look in the libraries, lecture theatres, laboratories and see the amount of hardware installed, 1000s of PCs, god knows how many servers, 50" flat screens in the labs, light projectors in most rooms, dedicated lecture theatres with AV systems. Allthose lecturers with laptops, tablets etc not to mention the support teams needed to keep it all running.

Same goes in the NHS, Schools, government departments, local authorities.

We go on about the young of today being consumer electronic addicts just look at what is spent in IT related fields by the government.

Few of these costs either capital, renewal and revenue would have existed in the 70s and no I don't think all of them have allowed us to become more efficient , some have, many are just add ons.

Tancred

Wookster wrote: »

That definitely tells a story!

The story it tells me is that I was an idiot not to buy somewhere in 1992-94.

Tancred

Thrugelmir wrote: »

Car ownership was different back then. Mileage was far lower. If your car did 30 mpg was considered good. Gear boxes and engines often only did 60,000 miles.

Direct comparisons are very difficult.

True - and most families only had one car, if at all. Nowadays two cars seem to be the norm. People commute long distances by car these days, and modern cars/engines are built to last 200,000 miles with relatively little maintenance. I remember my father in the 70s always tinkering in the garage and changing one thing or the other in the car - I just service it once a year and it runs like clockwork.

ukcarper

Graham_Devon wrote: »

Small things pass us by, but they all add up.

Take it you haven't bought a freeview box to enable you to continue watching TV?

My dad's friend is a keen amateur photographer. He was talking about how much more expensive it is now, not cheaper to carry out photography. See, it's not just the hardware, it's now the software too. He stated people always ignore this expense, but it's a direct expense of editing your photos. Technology doesn't always make things cheaper, it can often add to the amount of stuff we need to carry out the same thing (hence my freeview example).

Car repairs are less frequent now, but so much more expensive due to technology.

Take it you don't go the dentists and pay the costs there that wouldn't have been there in the 70's?

I'd suggest RPI will pretty much always follow the same pattern as on the graph. Look at Generali's link to another inflation index, which measures the costs of goods we buy month in month out though. As I said, it's around 8%. THAT line would have followed wages up. That would have made your point difficult, if not impossible to make.

Don't think we'll ever agree on this. There have been programmes that defy what you say...we even discussed those programmes. What you say appears to rely solely on the couple of years of massive inflation, where prices were going up litterally right in front of your eyes. You appear to ignore the rest of the years in the 70's though.

I'm also keen on photograpy and I can't see how anybody could think it was more expensive now unless you are one of the minority still using film.

All modern TVs have Freeview and are much cheaper than they were in the 70s in 1980 I paid £250 for a basic 20in TV.

NHS dental charges introduced in the 1950s

I have one big advantage over you I was there and know how expensive things were.

grizzly1911

Tancred wrote: »

True - and most families only had one car, if at all. Nowadays two cars seem to be the norm. People commute long distances by car these days, and modern cars/engines are built to last 200,000 miles with relatively little maintenance. I remember my father in the 70s always tinkering in the garage and changing one thing or the other in the car - I just service it once a year and it runs like clockwork.

Clutches 35000 miles, short engines 50/60000miles. Rust riddled bodywork and floor pans within 7 years.

My first car wouldn't even do the 3 miles to work in the morning , in the damp of winter, without me lifting the bonnet part way, taking the distributor cap off and giving it a wipe round.

chucknorris

Wookster wrote: »

That definitely tells a story!

It certainly does, it only takes a one look at the graph to see what the story is, which is lower interest rates. The base rate was over 13% in 1991 but dropped to under 7% in 1992. The graph doesn't correlate exactly to those dates because if you remember the housing market was in trouble at that time.

It is all about affordability, if you assume a modest 1% mark up on the mortgage rate over the base rate then the cost of borrowing (interest only, so more if repayment vehicle in place) say 100k from 14% to only 8% drops from over £1,160/month to under £670/month

PaulF81

grizzly1911 wrote: »

Clutches 35000 miles, short engines 50/60000miles. Rust riddled bodywork and floor pans within 7 years.

My first car wouldn't even do the 3 miles to work in the morning , in the damp of winter, without me lifting the bonnet part way, taking the distributor cap off and giving it a wipe round.

British manufacturing and unionism at its best no doubt.

wotsthat

Graham_Devon wrote: »

It's all far too difficult to compare. Things have changed too much.

It's really easy to compare - the graph shows that the average person has got progressively better off as wages outpaced the cost of living since 1970. Also since 1995 HPI has outpaced both RPI and average wages.

Graham_Devon wrote: »

People who didn't run a car in the 70's were not at the same disadvantage to those who don't run a car today for instance. RPI measures the change in the cost of living. It doesn't measure the amount of goods required to keep up with todays standard of living. The cost of the internet for example, won't have made any difference to RPI as it only measures the rate of change in that cost, but it wasn't even a cost in the 70's.

RPI is constructed based on a basket of goods and weighted according to it's proportion of the average family budget of the day.

You can use it to compare the basket of goods that people in 1947 were buying with the basket now. The basket is updated every year to reflect what people are really buying.

Good news! You don't need to overly worry about how people's spending patterns have changed - it's been done for you.