The 1960s house

meanmachine_2

I keep hearing from people on here that I should quit whinging, as it's always been a struggle to buy a house.

According to that bible of the bigoted middle classes, The Daily Mail, in 1960, the average wage was £700.

The average home was £2200.

So a home was three times someone's wage.

Today, the ave wage is £23K and the ave home is...£165K.

That's 7.2 times the average wage.

Am I missing something, or is it now almost exactly TWICE as expensive to buy a home than it was 45 years ago?

I think int rates were still v low (around 5%) and didn't homeoweners get tax relief?

John_M_Business

Sure. But at that time:
1. There was more uncertainty in the economy
2. Most homes were supported by a single income
3. Financing of homes was less flexible
4. People were less keen or likely to take on debt

These may not fully account for the change, but definitely give cause to understand why we're never going to return to what was the historic 'norm'.

nelly_2

Theres nowt wrong with whingeing mate.

Apparently I look like Janice battersby out of corry and I just knocked over a full pot noodle on my desk. I gonna whinge for days about both of them.

Seriously though house prices are a joke, just not good value for money at all.

Its like buying a plasma tv for 3 grand when they only sell for 1 grand now.

Keep waiting its the only way.

lush_walrus

I agree with John_M_Business. The two eras just aren't comparable in my eyes. There have been huge economic changes since the 60s and house ownership was at a stage where it was starting to take off. Talk to any grandparent and they will tell you how anxious they were about buying property prior to approximately this time. Trends before then, unless you really were from the rich middle class landowners was to rent to avoid worries over maintainance etc. It was only years after the war when there was mass investment into high density housing that buying became an option for most people.

The most important change since the 60s is that the majority of women now work throughout their life bar a couple of months towards the end of pregnancy and a few months after.

This has effectively doubled the vast majority of peoples spending power, including the amount that can be afforded by house buyers.

Of course if you are single then it has made your situation worse, but that has been overcome by many by joint ownerships with friends or family.

So working on the premise that people are joining forces, women are working and the figures you have extracted from the Daily Mail the prices with regards to affordability are actually lower now and easier to achieve than in the 60s!

Woby_Tide

[font=Arial, Helvetica, sans-serif]Some more analysis on the past 40 years of prices[/font]

http://www.mortgageintroducer.com/Features/290105/40_years_of_house_prices.htm
[font=Arial, Helvetica, sans-serif][/font]
[font=Arial, Helvetica, sans-serif]Over the past 40 years, on the demand side, we have had prices fuelled by a steadily rising proportion of people wanting to buy a property and by increased household formation (as a consequence of rising divorce and population rates). On the supply side, lower-than-needed building of new homes has added to house price inflation. [/font]
[font=Arial, Helvetica, sans-serif]Demand for extra homes in England is estimated at around 210,000 properties a year but the average output of housebuilders and social housing providers has been 154,000 extra homes a year over the past five years. Planning laws, shortages of available building land, preservation of the green belt, etc has resulted in a year-on-year cumulative shortfall in new house starts of around 56,000 per annum. [/font]

[font=Arial, Helvetica, sans-serif]Despite a number of policy initiatives, the supply-side deficit is not going to go away. It may even get worse given failures in official statistics to accurately map population growth particularly in the South East. England alone is heading for a property shortage of more than a million homes by 2022 unless the current rate of housebuilding is dramatically increased.[/font]

meanmachine_2

Interesting stat in that article - while Blair has been in power, house prices have risen by 9% per annum.

I always wondered how and why Labour were continually voted back into power.

It also makes me wonder how they're going to afford all these non-jobs in therpublic sector now that house inflation has hit zero.

No more boom and bust they said...

wibble68_2

John_M_Business wrote:

These may not fully account for the change, but definitely give cause to understand why we're never going to return to what was the historic 'norm'.

I can accept that things change over the course of time but are you
actually suggesting that the wage/house price ratio will never go below the 6 - 7 times ratio we are seeing now?

lush_walrus

wibble68 wrote:

I can accept that things change over the course of time but are you
actually suggesting that the wage/house price ratio will never go below the 6 - 7 times ratio we are seeing now?

I'll put my head on the block and say that they won't! I'm sure they will flutuate slightly, but I doubt they will go back to the times before we all happily accepted working like dogs!

bunking_off

lush_walrus wrote:

The most important change since the 60s is that the majority of women now work throughout their life bar a couple of months towards the end of pregnancy and a few months after.

We can debate what "the" most important factor is, but I have a slightly different angle. In the 50/60s, people got married far younger than they do today. The divorce rate was also considerably lower. The "nuclear" family was indeed the average.

Contrast that with today. Many people don't marry until their 30s (if at all!). The divorce rate is considerably higher - I won't quote a statistic as it'd only be made up. The consequence is that far more properties are required - though arguably smaller ones - because rather than having a family living in a house, you now commonly either have two single twenty-somethings needing a property each, or a divorced couple needing a property each.

Simple supply & demand economics dictates that if supply is constant and demand has increased by 50% (or whatever), prices will have risen - that's long term structural change, not a blip. Hence the days of house prices at 3x earnings are long gone. The building sites we see everywhere dictate that supply must also be rising, but I don't think by enough to offset the changes to society. Arguably people increasingly staying with their parents for longer and longer dampens down demand, but it doesn't remove it altogether - how many people do you know who've lived with their parents until marriage? Can't say I know anyone like that myself.

FaTB

John_M_Business wrote:

Sure. But at that time:
1. There was more uncertainty in the economy
2. Most homes were supported by a single income
3. Financing of homes was less flexible
4. People were less keen or likely to take on debt

These may not fully account for the change, but definitely give cause to understand why we're never going to return to what was the historic 'norm'.

1 / And the economy is rock solid today i suppose !! Open your eyes we are
heading for a massive recession at this very moment its just that The
Sun hasn't announced it to Joe Public yet.

2/ Yes because they were affordable then !!

3/ Look at the mess de-regulated lending has got us into, its helped to fuel
the biggest property bubble in history !!

4/ If people still only bought things when they have the money wouldn't
we be better off as a country ? Or am I being "old fashioned" ?
Is it better that we all live in massive debt ?

Woby_Tide

bunking_off wrote:

- how many people do you know who've lived with their parents until marriage? Can't say I know anyone like that myself.

*looks around*

trust me, hang around this House Buying board long enough and you'll meet some who still live with their parents after marriage and kids(rent free:eek: ).......;)


poor parents...._pale_