Daily Mail - what you could have bought in the 1950s

meanmachine_2

Yes, I know it's no use looking back, but this tells me that we're in the mother of all speculative bubbles:

Lord Rees Mogg, on his trainee journo salary, back in the 50s, was able to buy a terraced HOUSE in, wait for it, Pimlico, on 6.5 times his salary.

A big mortgage, but then housing was scarce at the time (post war). And anyway, mortgages rates were only 4.5%. Ring any bells?

So the advice would be, stretch yourself, because in a few decades, you'll be laughing.

Except... to buy the same property, you'd need to be, not the trainee, but the editor in chief on more than £100K!!!

And if the editor can't buy in Pimlico, or anywhere else equivalent, how can anyone else?!!

Crazy.

Let's compare - trainee salary is probably, what, £17K, if you're lucky. Multiply that by 6.5 times which equals £110K. You'd be lucky to afford a garage in Pimlico, or anywhere else.

What makes me laugh is that property was more scarce in the 1950s than today. So why the huge prices? Is it really that there's a property shortage, or is it too much cheap, easy borrowing?

wibble68_2

meanmachine wrote:

Yes, I know it's no use looking back, but this tells me that we're in the mother of all speculative bubbles

Historical statistics don't seem to be what EA's and banks want to hear.

Each time a long term statistic is posted you often get an EA talking about what's happened in the last ten years and that there is no current trigger to make house prices fall.

Well as a short term view they are correct.

As a long term view house prices will always rise above and fall below an average trend.

Now if the EA's and banks are to be believed, then the long term trend from now on will be far steeper than in the last 50 years.

I believe this won't happen.

The most likely outcome is prices falling slowly to a more dramatic fall.

FTB's jump in at your own peril.

margaretclare

meanmachine wrote:

Let's compare - trainee salary is probably, what, £17K, if you're lucky. Multiply that by 6.5 times which equals £110K. You'd be lucky to afford a garage in Pimlico, or anywhere else.

What makes me laugh is that property was more scarce in the 1950s than today. So why the huge prices? Is it really that there's a property shortage, or is it too much cheap, easy borrowing?

Yes, there was a desperate housing shortage in the 1950s. I got married (for the first time) in 1957 and we were laughed at when we went along to his local council to put our names on the council list. We were living with his parents in a small bungalow in Dartford in what I thought were pretty awful conditions. I was told 'only if we had several children and still sharing a 2-bedroom bungalow with parents, even then nothing was guaranteed'.

My present husband bought his first house at Greenford, Middlesex in 1964 when he was earning just £20 a week (a good wage then). I think he said the mortgage was for £1000.

Margaret Clare

meanmachine_2

That's interesting - so his first mortgage was the equivalent to one year's salary.

Even if it was a high salary for the time, say £40K, don't think you could buy much for that these days.

Anyway, I thought it was a fascinating anecdote from old Moggy, simply because rates were the same then as they are now, and that you could borrow so many times one's salary.

On the other hand, you could argue that transport links have made areas further out as "desirable" as Pimlico, but as far as I understand, trains have got slower not faster in the last 50 years.

Ian_W

Interesting. Didn't see the article, will try and get it online later, but I doubt that William Rees-Mogg, educated Charterhouse and Balliol was somehow your average "trainee" journalist starting on The Financial Times. Probably already banked at Couts & Co, now if it had been Micheal Parky on t' Yorkshire Post - that would have surprised me!!

My parents were not quite so well connected but were forward thinking [probably where I get from!!] and bought in the mid 50's, not quite a Pimlico postcode though. They certainly didn't have access to 6x salary, in fact couldn't get a mortgage from a BS [probably cos they hadn't had an account long enough], didn't have a Bank Account [most people didn't then, professional classes only] but for some reason Local Council's offered them. Can't remember any details of costs but I do know they paid fortnightly in cash, it was a big committment and a lot of people thought them daft because very few "working" people owned property.

When I bought in the late 70's it was still quite restrictive - 2 or 2.5x salary plus most, if not all, BS's [all still mutual] required you to have saved with them for a couple of years. I think the deposit was 10% although 100% mortgages had just started to appear - really more for London than outside. No fixed or discounted rates. My first flat was £15k on a fairly average £5k salary, same is now worth about £100k, so 4 times average salary rather than then 3x then.

One of the reasons why I think historical info isn't too reliable a guide to what will happen is that mass home ownership is fairly recent - growing through the 60s, 70s & 80s - so it's only really been mass for just over the length of one 25 yr mortgage. At the same time the lenders have changed their approach in so many ways its totally different now than even 30 yrs ago. So I'm not saying ignore history, just don't be too confident in it as a predictor of the present and future.

Oh, happy days :grouphug: Won't say the obvious, about just goes to show what a good long term investment property has proved [whoops, I did!!:doh: ] it case it upsets meanmachine into a rant!!

EDIT: Pressed the wrong button & posted when only part way thro'. Damn new fangled...... :mad:

Spendless

Ian_W wrote:

Interesting. Didn't see the article, will try and get it online later, but I doubt that William Rees-Mogg, educated Charterhouse and Balliol was somehow your average "trainee" journalist starting on The Financial Times. Probably already banked at Couts & Co, now if it had been Micheal Parky on t' Yorkshire Post - that would have surprised me!!

My parents were not quite so well connected by were forward thinking [probably where I get from!!]

TBH-the same thought occurred to me and I did see the article. My 2 grans have talked about the shortage of houses from the time they were married (mid 1940s), one lived with in-laws for many years, the other moved to Yorkshire from London cos grandad was offered a job, and a house nearby. When they did get places of their own they were council properties. I'm late 30s and amongst my peers most of their parents had a council property. I don't know of anyone who bought their 1st property (not bought their council house IYSWIM) prior to the early 1970s.

But maybe its the circles I move in too-lol

Ian_W

Spendless see my edit note, posted when only part way thro' DOOOH!!

As I said, my parents were very much the exception, most people we knew were in Council Housing [no stigma, nice new estates] or private rented usually slum quality but with exceptions. Mrs W's parents both had good jobs, he a high up in the local water board, she a DHSS inspector, had 2 kids and 2 cars but lived in a Council House until late 60's when they bought a brand new 3 bed semi for £3,950 [comma is in the right place]. So, I say again, mass private ownership is very new.

ManAtHome

Dunno - I'm from 'oop norf and my parents bought a (non-council) terraced house in the mid 50s. They weren't that well off and I don't remeber many others in the street being that flush either - only had 3 cars between about 80 houses.

Spendless

ManAtHome wrote:

Dunno - I'm from 'oop norf and my parents bought a (non-council) terraced house in the mid 50s. They weren't that well off and I don't remeber many others in the street being that flush either - only had 3 cars between about 80 houses.

Do you know of others who were also home-owners at that time or was it just your parents?

Re-reading IanWs edited post and what he says about having to save with BS.Around 1984 I remember a teacher at my school talking about 'how you got a mortgage' and mentioning him and his then fiancee had saved for a couple of years each with a different bs, so they had 2 places to go to, to see if they could get a mortgage.

Ian_W

ManAtHome wrote:I'm from 'oop norf

!!!!!! you're avin a laaff ain'tcha? Darn souf, I'll have - but it's up t'north.
BTW we didn't have a car for 6/7 yrs after they bought, loads in council houses did, if we went away we hired Ford Anglia's mostly - 5 on board, no heater & a trany radio that was my job to keep turing around to get reception. Oh, happy days.

But please yerself if you think I'm telling porkies, cos I know I ain't.

meanmachine_2

Mm maybe Moggy had taken out the 50s equivalent of a self cert. Only available to double-barrelled toffs.

Or maybe coming from rich stock, he was given a guarantor mortgage, just for having the correct school tie.

I wasn't trying to make any political point, just interesting is all.

And yes, from 1950 to 2004, property has been a wise investment. Not as wise as stocks and shares, apparently, but wise nonetheless. I've never denied that.

But if I'd bought in 1989 and it was now 1994....or I'd bought in 2004 and it was now 2008...ah, but I'm only guessing now.