Just a thought

Pobby

Selling a house in Reading in 1978 went for a touch under £11,000. Not a flat, a 3 bedroom semi, front and back garden in a quiet road.

I have read that the average salary was £5,440.25 per annum. I was on a little bit more and I think my wife was on slightly less. Both mid to late 20 year olds.

Just recently, one has sold for £250,000. I see that the average salary is around £25,000. Now assuming, if I had been a single person on the average at that time would equate rather nicely to 2 times my salary. Rather affordable.

Now at the average salary, I am going to be looking at 10 times my salary. Note the house was my first buy in 1975 for £10,000. Total household income about £3,000 per year.

Any thoughts other than the lack of housing, which agreed adds to the problem but not , as I understand as the main cause.

Graham_Devon

You can borrow much more than back then a lot easier.

The whole stigma around borrowing has changed too. Now it's actively encouraged that you not only borrow, but you borrow as much as you possibly can.

Hell, you can even borrow for a mortgage against benefit income now.

PasturesNew

In 1979 I got my first full-time job, PA/Secretary, salary £3k. So even somebody in their first job, doing an office job, could see your £11k as achievable.

Where I lived though, a 2 bed 1960s flat was about £18k at the time. That same flat today is £135k (I just looked it up and it last sold in June 2012 for that much). The last identical flat, on the same road, sold more recently for £164k.

They do have central heating now - and double glazing. Back then it was single glazing and an old fashioned wall-mounted electric fire in the living room and nothing else.

shortchanged_2

I wonder what the interest rates were back then?

ukcarper

http://www.ons.gov.uk/ons/rel/household-income/the-effects-of-taxes-and-benefits-on-household-income/50-years-of-the-effects-of-taxes-and-benefits-analysis/sty-taxes-and-benefits-on-household-income.html

Give you some idea of houshold income over the years

Household income 1978 £4603 2012 £31,477

Average house price outer south east end of 1978 £17,500 q2 2015 £244,119

CLAPTON

Pobby wrote: »

Selling a house in Reading in 1978 went for a touch under £11,000. Not a flat, a 3 bedroom semi, front and back garden in a quiet road.

I have read that the average salary was £5,440.25 per annum. I was on a little bit more and I think my wife was on slightly less. Both mid to late 20 year olds.

Just recently, one has sold for £250,000. I see that the average salary is around £25,000. Now assuming, if I had been a single person on the average at that time would equate rather nicely to 2 times my salary. Rather affordable.

Now at the average salary, I am going to be looking at 10 times my salary. Note the house was my first buy in 1975 for £10,000. Total household income about £3,000 per year.

Any thoughts other than the lack of housing, which agreed adds to the problem but not , as I understand as the main cause.

lack of housing is the sole and only cause of a shortage of housing

the reasons why we have a shortage are manifold however.

marathonic

shortchanged wrote: »

I wonder what the interest rates were back then?

http://www.thehanley.co.uk/standard-variable-interest-rate-history_297.html

They show their rates since April 1987 so you'll get a rough idea of what people may have paid from the 9th year of their mortgage onwards.

The majority of their mortgage would still have been outstanding at that point because, at those rates, the capital paydown is significantly lower than that at todays rates.

In the earlier part of the 80's, they were a good bit higher than the starting rate of 12% shown above.

At a rate of 15%, a 2*salary mortgage would take 30% of your salary to repay the interest alone.

Banks tend to lend an absolute maximum of 5 times salary at the moment.

For someone earning £30,000 and getting a 5 year fixed rate mortgage of £150,000 at 90% LTV (3.5%) with a 25 year term, the annual repayments equate to £9,000.

As you can see, although a current buyer has a salary multiple of 5 instead of 2, 30% of their salary pays the whole mortgage, not just the interest as was the case in the early 80's.

Also worth noting is that income tax in 1978 was at a basic rate of 33% and a top rate of 83%. :eek:

Thrugelmir

Graham_Devon wrote: »

You can borrow much more than back then a lot easier.

You mean a lot less. Building societies used to offer 2.75 times +1 or 2.5 times joint. Also a couple of years savings was a prerequisite. As mortgages were effectively rationed.

marathonic

ukcarper wrote: »

http://www.ons.gov.uk/ons/rel/household-income/the-effects-of-taxes-and-benefits-on-household-income/50-years-of-the-effects-of-taxes-and-benefits-analysis/sty-taxes-and-benefits-on-household-income.html

Give you some idea of houshold income over the years

Household income 1978 £4603 2012 £31,477

Average house price outer south east end of 1978 £17,500 q2 2015 £244,119

So a 15% mortgage rate in 1978 on a 90% LTV mortgage of £15,750 would have resulted in interest-only repayments representing 51% of household income :eek:

In contrast, a 3.5% 5-year fixed mortgage rate today on a 90% LTV mortgage of £219,707 would result in repayments representing 42% of household income on a repayment basis :T

borkid

Thrugelmir wrote: »

You mean a lot less. Building societies used to offer 2.75 times +1 or 2.5 times joint. Also a couple of years savings was a prerequisite. As mortgages were effectively rationed.

When I and my husband were looking for a mortgage back in 1976 we had a difficult time finding a building society who would consider my earnings. We did eventually in another area. We were both graduates working professional positions.

When my friend and her husband applied for a mortgage they were asked when they intended to have a children. They lied and said they didn't,only then were they offered a mortgage.

Although prices seem to be cheaper in the past there was more discrimination against women.

Pobby

Yes agree about discrimination regarding women. However I do remember that the monthly repayment mortgage on the first house was £60 a month. Again compare that to an income of say £400 a month. With my wife working earning about half of that, actually a good bit more, do the percentage calculations.