Houses are affordable!

rtho782

capital0ne wrote: »

In 1957 the average wage was £7 10s - equates to £390 per year
The average house cost £2,000 - 5 times salary

Fast forward to now

The average wage is about £20,000 per year (starting point for a civil servant in their early 20's)
A quick search on Rightmove and you can find two bed terraced houses or similar for under £100,000 (not in London of course)

So where's the problem?

Your figures are idiotic.

Your house price in 1957 is about right, but your average income is low.

http://hansard.millbanksystems.com/written_answers/1963/mar/21/manual-workers-average-weekly-earnings

This has it about £12 a week for men/women working full time, this makes the annual salary £624, and the ratio therefore only 3.2x annual salaries.

Then, your "today" figures. Average salaries are about £26,500, so more than you have it as, but you're comparing "average" houses in 1957 not "the cheapest house I can find nationwide on rightmove", so the house price is £211,672 as per nationwide house price data (which also goes back to 1957).

This makes it 7.98x average wages.

You could probably have found an old dump of a house for £500 somewhere in the UK in 1957.

sulphate

Cakeguts wrote: »

Yes but you haven't done what a 1950s couple would have done. They wouldn't have had a car between them so would have used public transport to get to work. They would have lived in a shared house as a couple until they got the money for a house or flat.

I am old fashioned. I could easily afford £30 per month for a phone but I can get one for a lot less so I would consider the difference between your phone and mine in cost as a total and complete waste of money. £30 per month is a lot for a phone. So from my point of view you are wasting circa £200 per year on nothing. That is over £1000 for 5 year and it is for nothing. You might as well just flush the money down the loo.

You have a car each. Cars are very expensive even old cars cost more to run than going by bus or walking. The cost of one takeaway is expensive compared to doing your own cooking.

People get drawn into the " in only costs this much a month" and they don't add up all the only costs to find the true sum of all these things they don't actually need.

What people think of as necessary now are what people in the 1950s considered luxuries that they couldn't afford. People didn't have two cars. Most families didn't have one car. Second hand furniture was normal.

You're comparing 2 things that are not comparable. The situation in the 1950s was very different to how it is now (note I didn't say better/easier -- just different). Many 1950s couples didn't need 2 wages to buy an average sized house. It is necessary for some couples/families to have a car each now so each person can get to work. It's not about "if you can afford it" or "luxuries" -- we have to be able to afford it to carry on living and working. My husband travels to various different locations during the day so needs a car, in fact having access to a reliable vehicle is written into his contract. We live in a village and I work in another village 7 miles away, there is no public transport between the villages and the roads are awkward and unsafe to cycle on, and even if there was a better route I still would have to drive because I have to do a nursery drop off/pick up and if I cycled I wouldn't get to work in time. There is no way round it. I've spent hours of my life trying to work out if we could get by having just one car but it's not doable.

As for mobile phone contracts - well that's my choice. Everyone has different lifestyle choices. We don't have pets because of the expense but I wouldn't label someone else's dog as "money down the loo". Different strokes for different folks. My point was that £1800 isn't a huge amount compared to the amount you need for a house deposit and associated costs.

The cost of houses doesn't just affect those who don't own a house yet but also families looking to move up the ladder to free up a house for a would-be FTB-er. The cost of moving up the ladder is huge. Those already servicing a mortgage will find it difficult to save up the money required for moving costs alone. Those who have had pay rises/promotions since getting onto the ladder will find it easier, but plenty of people will have had pay cuts/freezes in that time. Take stamp duty for example - we paid £5500 when we moved. A couple/family would have to save in the region of £450 a month for a year to afford that. All of these things reduce the likelihood of families being able to move on from their first homes and therefore increases demand, and price for first time buyers.

I mentioned that our current house cost £310k, we don't live in the city of Cambridge but the average price of a house in the city is close to £500k according to rightmove and the average wage in the area is £30k... so tell me how that makes a house affordable??

Waterlily24

£7.10s 0d sounds a lot to me. I started work in 1963 and was earning £3.10s 0d, it went up to £4. 0s. 0d after my 3 month probationary period. I had a good job working for a well known building society and worked in the outer London area (Bromley). My best friend worked in a bank and got the same as me. We are women though.

Callie22

capital0ne wrote: »

Travel was expensive even back in the good old days of BR - but that's another story

I think I put down a 10% deposit which was about 35-40% of my salary - but I'd been saving for many years with a building society which is what counted in those days, loyalty.

I'd imagine that was something that made it a little easier then. My grandad bought his first house when he was in his early twenties, with five kids, a relatively low wage and a small deposit - this would be in the very early sixties. There's no way that he'd be able to do that now with the 'computer says no' rules that govern mortgages, but back in the day when you were known by your bank manager and spoke to them directly, I'd imagine that made things somewhat easier in terms of actually getting a mortgage. I know that when the OH and I were looking to buy a couple of years ago our loyalty to our bank counted for absolutely nothing.

Cakeguts

lincroft1710 wrote: »

In 1976 my first house cost £8,250 exactly 3 times my salary of £2,750 p.a. Today that house would be around £180,000 about 6 times what my salary would have been if I was still working and would reflect a promotion.

What was the income tax rate and what was the mortgage interest rate? I think you will find that it will cost about the same. Interest rates were much higher so the actual amount paid then in terms of salary spent was probably about the same. Low interest rates mean that people can borrow more but the cost compared to their salaries is probably about the same.

When I bought my first house interest rates were around 11%.

Thrugelmir

IAmWales wrote: »

This idea that younger people are not financially savvy is not true, of course there will be people living outside their means, but the ones with excessive debt tend to be 35+.

Unfortunately it's the younger generations that are up to their eyeballs in insecured debt in relation to their incomes. That's not to say that high debt levels aren't an issue across the population as a whole.

Cakeguts

glasgowdan wrote: »

Short sighted older generation viewpoints galore!

Young people now are NOT going to see a huge rise in the value of their house.

Young people now are NOT going to get a healthy pension.

Therefore they are significantly worse off than people like the OP realise.

Huge rises in the value of houses is caused by general inflation. Inflation is low at the moment but in the early 1970s it was high. So everything cost more not just houses. People's incomes were eroded by the increased costs of food and anything else they needed to buy.

Mr_Costcutter

glasgowdan wrote: »

Short sighted older generation viewpoints galore!

Young people now are NOT going to see a huge rise in the value of their house.

Young people now are NOT going to get a healthy pension.
.

That's a pretty impressive crystal ball you have there.

Many of us who are in our sixties or seventies +, do actually have a real connection with the world and what is going on in it. We have children/grandchildren who are at the stage of buying/renting their own homes and our opinions are based upon that and not just what we read in The Mail.

Cakeguts

I would be interested to know how many people over the age of 60 have a mobile phone costing more than £10 and how many of them buy new cars either on finance or for cash.

sulphate

Cakeguts wrote: »

I would be interested to know how many people over the age of 60 have a mobile phone costing more than £10 and how many of them buy new cars either on finance or for cash.

Purely anecdotal but... my mum is in her early 70s and pays around £40 a month for her phone. My in laws are in their late 50s/early 60s and both have cars on finance for around £250 each a month. In fact they encouraged us to buy a “decent” car on finance and couldn’t understand why we didn’t want the extra monthly expense.

One of my colleagues is in her early 50s and pays £1000 a month for a leased car.

I can’t think of anyone my age who has a car on finance.