House prices

[Lyn L]

OK I'll be sensible for a change.
Dad bought his small terrace house in an alley off Saunders St , Gillingham in 1968 for £1,400 and it sold in 1992 for £28,000 but in the boom 80s had been up to £48,000, my inheritance ended up being 1p less than my siblings 'cos I was the youngest. And that's not when we bought the tent.

[Paul]

I know someone who bought a big house in Telegraph Hill, London for 220,000 15 years ago, mortgage and cash.
Their mortgage finished last year.
They sold it this year bought a smaller house just down the road and was left with over 300,000 Profit. 

[peterchall]

I know there are several ways of calculating prices etc, but using the Retail Price Index (RPI), and average earnings, for my house purchases (Reply#1), gives these figures, so far as I can make out:

Between 1953 and 1970, the RPI rose 1.8 times, average earnings rose 2.9 times, and the value of my house rose 1.7 times. Because that was a cash sale and probably a bit less than I could have got otherwise, I’m guessing that house prices generally kept pace with the RPI. Thus a person could climb the housing ladder even without climbing the earnings ladder.

Between 1970 and 2007, the RPI rose about 11 times, average earnings about 20 times, and the value of my house rose about 35 times.

My contention is that it would have been better if the 1953-1970 conditions had continued, even though our houses would been worth less.

And, no, I’m not going to do the same calculations for tents

[sturoberts1975]

author=seafordpete link=topic=7110.msg57192#msg57192 date=1279785578]
Peterchall, I agree but probably a greed thing -you own a house it increases in value, buy a car for 20k and in 10 years you have to pay to get rid of it.
You are right about the mortgage earnings ratio. In 1968 Chatham Reliance advanced us twice my pay and 6 months of the wifes,

Things have changed a fair bit, in 2001 I was offered 5 times both my mine and my wifes' annual salary for a mortgage, in the mid 1990's we were offered 3.5 x mine or 3x mine+1x hers, personally I would not lend myself tuppence, I am too unreliable!

[peterchall]

That’s my argument. Prices will adjust to fit the amount of money available, so if lenders had restricted mortgages house prices would have been lower; better for buyers and no worse for sellers.

It’s much the same with traffic, which will rise to fit the road space available, so the benefit of a new road is short lived before it is clogged up again. Or am I a regressive old fuddy-duddy?

PS: I got my prices and earnings figures from here: http://www.measuringworth.com/ppoweruk/

[smiler]

  :)i bought 1 of the cottages just above the bell pub on frindsbury rd for £400 in jan 1966 sold it to a retiring london postman for £1225 in 1970 who claimed to be retiring to live in the country now worth over £100,000

[peterchall]

For comparison, the average wage in 1966 was about £850/yr and in 1970 it was about £1150. Today it is about £24000.

Interestingly, if we regard 'Standard of Living' (SL) as Average Income/Average Prices, this has increased steadily since 1918 (the earliest date I looked at). Even in the depression of the 1920s, when incomes were falling, it rose (for those who had jobs) because prices fell faster. In 2008 the SL was 4.95 times higher than in 1918 (ie you could buy 4.95 times a much goods and services with your income). Even over the 30 years from 1978 to 2008, the SL rose 1.6 times.

Yet the rise in house prices has been completely out of line with this, but who has benefitted? 

[busyglen]

In 1969 we bought our first house for £1,100.  We sold it in 1979 for £7,950, and purchased our bungalow for £13,250 and are still living here 30 years later.  A few years ago, it was worth £200,00, but then prices dropped and now it's around £169 - £180,00.  We have no intention of moving, but it's interesting to see how the prices have fluctuated, and what we would get for our money these days.

[colin haggart]

When my mum and dad bought a brand new three bedroom bungalow in Nelson Ave. Minster, Sheppey in 1971, it cost, £5,700.  Alot of money back then.