Houses are affordable!

ukcarper

lincroft1710 wrote: »

My story about my purchase was completely accurate!

For the majority of the UK on an average wage, who didn't live in London or immediate vicinity, houses were very affordable in the mid 1970s. I would emphasise that to buy the same house today would cost about 6 times my expected salary, whereas then it was less than 3 times.

In real terms house prices fell between 1973 and 1976 pretty much the lowest they have been since 73 so 1976 was a good time to buy. As I’ve said when you bought makes a big difference and if you had bought a couple of years earlier in would have been much higher in relation to your earnings. So although your story might be accurate it is not typical.

Earnings increased by 75% between 1973 and 1976 while house prices increase about 20%.

lincroft1710

ukcarper wrote: »

In real terms house prices fell between 1973 and 1976 pretty much the lowest they have been since 73 so 1976 was a good time to buy. As I’ve said when you bought makes a big difference and if you had bought a couple of years earlier in would have been much higher in relation to your earnings.

Can't comment as cannot remember specifically between 1973 and 1976 either my salary or house prices. In my own case I was promoted in 1976 so my salary would have been considerably less in 1974. I do know that both house prices and earnings increased dramatically between 1970 and 1976.

ukcarper

lincroft1710 wrote: »

Can't comment as cannot remember specifically between 1973 and 1976 either my salary or house prices. In my own case I was promoted in 1976 so my salary would have been considerably less in 1974. I do know that both house prices and earnings increased dramatically between 1970 and 1976.

They did they almost trebled between the beginning of 1970 and end of 1976 most of that being in 71,72 and 73.

lincroft1710

ukcarper wrote: »

They did they almost trebled between the beginning of 1970 and end of 1976 most of that being in 71,72 and 73.

Yes my parents did a stupid thing in 1970, selling my late grandmother's house for £3,200 (a good price considering) instead of waiting until 1971, when they would have achieved over £5K. But hindsight is a wonderful thing.

ukcarper

lincroft1710 wrote: »

Yes my parents did a stupid thing in 1970, selling my late grandmother's house for £3,200 (a good price considering) instead of waiting until 1971, when they would have achieved over £5K. But hindsight is a wonderful thing.

Very true I bought by first house in 1972 it was a new build and when I first looked they were £5350 but they involve a 20 mile commute over not very good roads with heavy traffic so I carried on looking nearer to work. Prices were rising fast and after being gazumped a couple of times on flats nearer work I decided to move out and bought house for £8000 it’s a good job I did because the next phase were out of my price range and they increased to £11k over the next 9 months.

GreatApe

Red-Squirrel wrote: »

Also, do you really think its most? Even if most people did leave a property or the equivalent amount of wealth behind, most people who have children have more than one so its split anyway. That's without remembering that lots of older people do still rent, either privately or socially, and that more and more will be spending their assets and wealth one way or another as time goes on, even if they aren't now in huge numbers.

Well the way it tends to work is that if you have 2 kids they get half a house worth of wealth each. But most people partner up in life and their partner also gets half a house worth of wealth from their side. So overall the young couple get half a house each makes one whole house

And the data shows gifts and inheritance figures are still increasing and the savings rate is still positive so they will increase future. Maybe a long way down the road they might turn slightly negative but we are not close to that (if it ever comes). And it will be offset by the fact that the average uk born woman has fewer than 2 children

I am one of those who will inherit half a modest property assuming that my parents don't need extensive care in later life and that they don't partake of equity release (to be honest I hope they do if they need/want the cash) but my parents are in their fifties, they still have living parents themselves, they are in good health and longevity seems to be in the genes. I'll probably be retired before I inherit that half a modest house up north! Inheritance isn't the solution to housing the young

I am not saying it is a solution I am however pointing out that some 75% of people will inherit housing and I am pointing out the fact that roughly 1 million homes worth of wealth each and ever year are given from the old to the younger. Most youngesters dont need to worry about wealth they will get huge amounts of it from the boomers who cant take it to the grave.

Also you do not know what your future yet holds, you will at some stage partner up and perhaps get married so there are two sides you can possibly inherit from.

I do not have children yet but if I did and they were 25+ years old I would pass any inherited wealth straight to them. Assuming they were reasonable with money obviously not if they were gambling or alcohol addicts etc

GreatApe

lincroft1710 wrote: »

My story about my purchase was completely accurate!

For the majority of the UK on an average wage, who didn't live in London or immediate vicinity, houses were very affordable in the mid 1970s. I would emphasise that to buy the same house today would cost about 6 times my expected salary, whereas then it was less than 3 times.

For the majority of the uk on average wages, who didn't live in London or immediate vicinity, houses were/are affordable in the mid 2010s...

Planet_Switzerland

Cakeguts wrote: »

I have just looked this up. It said that the average wage in the 1970 was £32 a week that comes out at £1164. So unless he had a massive deposit he was earning considerable more than the average wage because 3.5 times that salary comes to just over £4K and the house cost 11k so he would have been having to earn just under 3 times the average wage to get that mortgage.

The average wage now is about 27k so your father would have been earning about 60k in today's money to afford that house. So he would still have been able to afford it. You were saying that he needed to earn about £56k. So on that house nothing has changed.

You have to remember that things like cars, household goods and food have become cheaper in relation to salaries so looking back it may have seemed that he didn't have much money but in relation to other people he did.

It was the late 70s, but even if he did earn multiples of the average salary (which he didn't) the point is most people don't earn £56k let alone people in their early 20s.


I'm not suggesting it was easy, they've told me every property they've bought has been tough financially for the first 5 years but then gets easier.


From a personal perspective though, had I decided to go full time at the supermarket I worked at in the late 90s instead of going to university I could have bought a home locally for 30k, I know because full time colleagues did. When I came out of university those same properties were over 100k, now they're getting on for 200k.


I've no regrets about my lifestyle choice of going to university or moving to London, I'm on the property ladder now so can't complain too much. But it's quite evident that had I gone full time at the supermarket and bought locally I'd be in a much better position housing wise than I am now.

ukcarper

£198k is affordable for a lot of people median full time earnings for men between 22and 29 is about £24k and for a woman it’s about £22k which means they could borrow £184k.

lincroft1710

GreatApe wrote: »

For the majority of the uk on average wages, who didn't live in London or immediate vicinity, houses were/are affordable in the mid 2010s...

As I said in an earlier post, the house in 1976 was worth 3 times my salary, in the 2010s it would be 6 times my expected salary. My expected salary would be above average.