A fun statistic

Graham_Devon

All in the past though.

Just taking a figure from above. 13.3x a 300k house (today)...in 45 years, the house would be £3,990,000.

Good luck finding anyone to buy it. And good luck finding anyone to rent it off you and still make you a profit.

A lot had to happen for houses to jump by the amounts they did. And the cost to society in general was enormous.

westernpromise

My first house cost £25.5k in 1986. Base rate was 11% so the interest-only plus endowment cost was just under £300 a month. I was on £8,300 a year.

Today the house would cost about £150k, on which at current rates a repayment mortgage would cost £711 a month.

You'd need to be on less than £20k a year for the current mortgage cost to be proportionately more of your salary. In fact, as low earners pay so much less tax today, you'd need to be on a lot less than that.

6 times the price but still cheaper. And no stamp duty...

Graham_Devon

westernpromise wrote: »

My first house cost £25.5k in 1986. Base rate was 11% so the interest-only plus endowment cost was just under £300 a month. I was on £8,300 a year.

Today the house would cost about £150k, on which at current rates a repayment mortgage would cost £711 a month.

You'd need to be on less than £20k a year for the current mortgage cost to be proportionately more of your salary. In fact, as low earners pay so much less tax today, you'd need to be on a lot less than that.

6 times the price but still cheaper. And no stamp duty...

Big difference here though. (even if your 1986 sums don't really stack up as it appears you had no deposit in 1986, which would appear strange considering the lending rules at that time).

You were at the edge of affordability at just over 3x your income in 1986.

Today, it's unlikely you'd even get a mortgage for 135k (allowing for 10% deposit on the 150k house) on 20k a year.

So just looking at it in mortgage payment terms alone misses the point entirely.

On 20k, with NO other outgoings, the moneyadviceservice suggests...

You might be offered between £56,000 and £84,000

So sorry, you might want to revisit your "it's cheaper" assumptions and lok at reality.

ukcarper

Graham_Devon wrote: »

All in the past though.

Just taking a figure from above. 13.3x a 300k house (today)...in 45 years, the house would be £3,990,000.

Good luck finding anyone to buy it. And good luck finding anyone to rent it off you and still make you a profit.

A lot had to happen for houses to jump by the amounts they did. And the cost to society in general was enormous.

To give in some perspective that house in 1972 was 5.5x my earnings and if I was doing the same job now it would be 9x.

In 1971 they were £5.3k and by 1973 £11k.

westernpromise

ukcarper wrote: »

To give in some perspective that house in 1972 was 5.5x my earnings and if I was doing the same job now it would be 9x.

In 1971 they were £5.3k and by 1973 £11k.

Factor in women working, the more favourable tax treatment of their earnings and the prevailing levels of interest rates and there's nothing in it.

Graham_Devon

westernpromise wrote: »

Factor in women working, the more favourable tax treatment of their earnings and the prevailing levels of interest rates and there's nothing in it.

Indeed.

But you didn't factor that in to your calculation when you assumed housing was actually "cheaper" to buy today.

You've effectively written a post on how you simply don't understand reality. This isn't me having a pop (which I appriciate does come across that way), it's simply a response to this seemingly endless "well I did it, so can others and it's this easy and this is how" quotes, which have no bearing on real life and ultimately fall down the very minute someone applies reality to the calculations.

ukcarper

Graham_Devon wrote: »

Indeed.

But you didn't factor that in to your calculation when you assumed housing was actually "cheaper" to buy today.

You've effectively written a post on how you simply don't understand reality. This isn't me having a pop (which I appriciate does come across that way), it's simply a response to this seemingly endless "well I did it, so can others and it's this easy and this is how" quotes, which have no bearing on real life and ultimately fall down the very minute someone applies reality to the calculations.

Weston is right in one respect if you can get the morgage it's no worse than in the 70s. But as you say it's getting the mortgage that is the problem you would need a joint income of over £70k to buy a £330k house whereas I was able to do it with the equivelent of £55k.

wotsthat

The main point for me is it highlights just how much property taxes have increased. It's absolutely mental and yet people just want to argue about whether Western's mum & dad paid 3.5 x or 5x for their old house.

Analysis by the Organisation for Economic Co-operation and Development (OECD) shows property taxes accounted for 12.7pc of the total tax burden in 2014, the latest year for which data are available. This is up 0.3 percentage points compared with 2013 and is more than a percentage point higher than in 2011.

It means levies on property as a share of total taxation are higher in the UK than anywhere else in the developed world. At 5.6pc, the average among the OECD’s 35 members is less than half the UK figure.

http://www.telegraph.co.uk/business/2016/12/12/uk-has-highest-property-taxes-developed-world/

I'm looking at moving from the Midlands to the South-West. Just a like for like swap (plus a bit because the South-West is more expensive) and I'll have to pay stamp duty tax of £3.5k for the privilege of moving a few hundred miles.

As the Count of Nowhere would say (is he still about?) - INSANE

mwpt

While you are correct wotshat, isn't a lot of this because the bands haven't adjusted while prices have gone INSANE? This is an excellent way for government stealth taxes.

But I'm still interested in the below

mwpt wrote: »

You'd have to be very wealthy indeed to buy a £1.5m place today. There are a lot of wealthy people around, people who have made money from the property boom for example, so for them £1.5m might not seem like much.

Were you parents very wealthy in 1970?

I'm still interested in the answer to this. WP seems to be making the statement that it is just as easy to buy today as in the past. But this very example seems to prove otherwise, or he's picked a really weird example.

I gather that WP works in a bank and from the sounds of it has done for quite a number of years. He has conservative views, so I'd put in over 45. Just guess at 50 years old.

That means he was born in 1966. In those days, married couples had children younger, so I'd suggest his parents were in their mid to late 20s when he was born. Let us say 27. They bought the house in 1971 which means they were 32.

A 32 year old couple buying a £1.5m house today? Sorry, I'd classify that as very wealthy indeed and not doable to > 99% of people.

(Yes, that did all sound a bit creepy, sorry)

theEnd

Graham_Devon wrote: »

All in the past though.

Just taking a figure from above. 13.3x a 300k house (today)...in 45 years, the house would be £3,990,000.

Good luck finding anyone to buy it. And good luck finding anyone to rent it off you and still make you a profit.

A lot had to happen for houses to jump by the amounts they did. And the cost to society in general was enormous.

That's just the stamp duty!!

The actual house has gone from £7k in the early 70s to around £1.5M.
A similar increase in the next 45 years and it would be £321M for a 4-bed terrace!!