A fun statistic

PasturesNew

20 years ago, my parents sold a house and bought another in a completely different area. The sales/purchase prices weren't that much different.

The house they sold would now go on the market for about £500k.
The house they bought would now go on the market for about £200k.

Mr.Generous

We bought our first house in 1988 for £35k, my salary was £11,500 I'm just taking a guess here but probably about the equivalent of £26k today?

That house now is probably a tad over £100k, maybe £110 tops.

My mortgage on £30k borrowed was £300 per month then went up to about £330. Interest rates were high but so was inflation.

The great thing about inflation (yes there is one) is that it erodes the true value of debt very quickly. We still got 2 pay rises a year at that time to keep up with inflation - it stopped shortly after - anyone remember those days?

You got a 6% or 8% pay rise, so after just 3 years ... does some maths ...

£11,500 lets say 7% per annum

Year 1 = £12305
Year 2 = £13166
Year 3 = £14087
Year 4 = £15074

So in just four years your 30k debt has gone from being nearly three times your salary to just over twice. Yes things cost more, but your paid more. The proportion of debt has been reduced. Inflation erodes savings and debts. We were lucky, lets be honest. Final salary pensions, affordable homes and no mobile phone so you could be unavailable when you needed to be!!

GreatApe

mwpt wrote: »

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



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)

Plenty of rich Russians Arabs Chinese Brazilian Americans buy their kids million pound plus homes. I'm sure there has also always been domestic generational wealth within the UK.

Not to mention the countless numbers of new money from software to music to film to sports-stars. There aren't that many million pound plus homes I would guess just half a million such properties I'm sure there are half a million family who can easily afford the sums.

GreatApe

mwpt wrote: »

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.

In most the country it is probably true. Housing is so cheap a mortgage costs less than renting a social house.

In London it is not true and that is because there has been a huge swing in the prosperity of London. All the growth industries were in London while all the declining industries were elsewhere.

So in 1995 maybe a couple of teachers could afford a three floor Victorian terrace in hackney for £120k. Now the clearing price is set by people with a lot more money. People like the deepmind inventors who started a company and sold it for £400m two years later. Or the sports or media or film stars on millions. The kind of jobs and prosperity that did not exist in 1995.

westernpromise

wotsthat wrote: »

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.



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

If I did that price-for-price swap I'd spend £20k on the transaction and £100k (500% of that) on the SDLT.

It seems clear the state doesn't want me to move, so I won't be doing so.