The idea of mass home ownership is a relatively recent thing. Even by the 1920’s, over 80% of people still rented from private landlords.
But city spaces have evolved. A London house that cost only a few hundred pounds in the 1930’s would now set you back almost a million. This brief history of property values will help you understand what explains this steep rise in prices.
The beginnings of private ownership
In 1930, there was a drive to build more housing, especially in the suburbs. There was also a rise in low-interest mortgages, meaning that many more people began buying homes. According to Nicholas Crafts, “85% of new houses sold for less than £750 (£45,000 in today’s money). Terraced houses in the London area could be bought for £395 in the mid-1930s.”
Over the next couple of decades, house prices rose by very little. By 1953, the average price of a house was still £1,8888.
House prices rose steadily through the 1960’s, alongside the cost of wages. In 1965, the average cost of a house was £3353 and the average wage stood at £960 a year.
The steep seventies
In the 1970’s, there was a ‘housing bubble’ in which the cost of buying a home soared from £4,480 in 1970 to £19,830 in 1979. The reason for this sharp increase was that the demand for houses vastly outweighed the supply. More and more people aspired to buy homes and with an increase in speculation and low interest mortgages, new buyers simply flooded the market.
The “Right to Buy”
In 1980, Margaret Thatcher reached out to the working classes by passing a law to allow tenants to buy council-owned housing. The “right to buy” was an aspirational slogan and those who could afford it flocked to buy their homes, creating another ‘housing bubble.’
Unfortunately, new council housing was built at a lower rate than it was sold off, contributing to a shortage of affordable and social housing. House prices rose by 16% in 1987 and a further 25% in 1988. By 1989, the average cost of a house was £61,514.
But this couldn’t last. Unemployment rates rose and many people had their homes repossessed. In the 1990s, housing prices dropped due to lack of demand and by 1995, a house cost, on average, £51,245. Prices slowly began to rise again, at the end of the decade.
The soaring noughties
Between 2000 and 2007, the average price of a home doubled, from £100,000 in 2000 to just under £225,000 in 2007. The economy was doing well and the cost of borrowing was low, just like in the seventies. But people’s wages did not increase alongside the cost of housing. This trend has continued and as such, it’s now more expensive than ever to buy a home.
We can’t help but remember the good old days, when housing was far more affordable.
The price of a home in Britain – then and now
70 years of British house prices – from £750 to £200,000+
It’s hard to believe how much house prices have rocketed over the years.
Just before WWII, most new houses sold for less than £750. We’ve found reports of a North London semi-detached being bought for £850, that’s around £50,000 in today’s money.
You’d be lucky to find a shed for that in London now! The average house in the UK today will set you back a whopping £211,000.
The British obsession with owning our home came to the fore in the latter half of the last century. From the early 1950s to early 1970s, home ownership jumped from around 30% to over 50%, and it’s now close to 65%.
So when did house prices rise to such high levels, and have our wages ever been enough to get us on the ladder? We take a look back at how we lived over the last 70 years.
1950s average house price – £1,891
In the 1950s, the average cost of a house was just under £2000 and the average worker took home around £10 a week. So buying a house was no mean feat even then.
If you could afford to buy a house in the 1950s, it was likely to be a new one. Half a million homes had been destroyed by German bombing, so when the war came to an end, houses had to be built, and fast. The result was pre-fab houses and brand new estates on the outskirts of our cities.
The first pre-fabs went up in June 1945, just a few weeks after the war had ended. Built in just 40 man-hours (often by prisoners of war), they came with hot water, heating and newly fitted kitchens and bathrooms. They became fondly known as the “people’s palaces” and, although they were meant as a temporary solution, some are still standing today.
The new houses of the 1950s must have seemed like the height of luxury compared to the bombed terraces and slum conditions many families had been living in.
This was the time when Brits everywhere were introduced to the joys of going to the toilet inside – and having proper toilet paper when they got there!
The 1950s also introduced us to life-changing inventions such as the electric fire, washing machine and every mother’s favourite – the fish finger.
1960s average house price – £2,530
In the 1960s, house prices continued to rise along with the average income, which now stood at £960 per year.
There was also a new solution to the post war housing shortage: the tower block. At the time, these giant concrete ‘streets in the sky’ were magical and mod-con-crammed, making them another welcome alternative to the terraced homes that once lay beneath.
But mod-cons weren’t just reserved for those in the high rises. For the first time, virtually all houses in Britain had electricity, and most of us had a refrigerator, cooker, and a TV.
Television really came into its own in the sixties. At the start of the decade, three quarters of the British population had a TV and by the end of it most households had one. Even better, by the end of the decade, some of us were watching it in full colour.
1970s average house price – £4975
The 70s was a rocky decade. Widespread unrest and hardship on the one hand and a boom in home ownership on the other. This is when the mortgage market took off and house prices flew. At the start of the decade the average house price was £4,975. By the end, that figure had quadrupled to £19,925.
The average earnings climbed too, but this was when the gap between wage and house prices began growing wider and wider.
Inside our houses, the changes were no less dramatic. Coloured suites hit our bathrooms, and pattern was the name of the game. A mind-bendingly patterned wallpaper combined with a mind-bendingly patterned carpet was no crime, in fact it was positively encouraged.
With new styles came new inventions. In 1974, the first microwave was sold and 4 years later the VHS video recorder meant we never had to miss our favourite TV programme again.
A craze for home exercising took hold. We twisted and toned, exercised in sauna suits and pedalled frantically in our bathrooms.
1980s average house price – £39,500
Come the 1980s, everything changed again. Margaret Thatcher gave people the right to buy their council houses and house prices shot up like never before. House prices rose 16% in 1987 and a further 25% in 1988 – the highest rise ever recorded. By 1990 the average home cost £60,000 – twice as much as just 5 years earlier.
Rather than building new houses, the ‘80s was all about converting what was there. Huge redevelopments began in docks across the country, including the London Docklands and Liverpool’s Albert Docks.
Inside our homes a new form of entertainment took over – the home computer. 80s kids everywhere will remember the delights of the Amstrad, Commodore and the ZX Spectrum.
Today’s average house price – £211,000
The markets may have fluctuated over the last 40 years, but the rising house price trend that began in the 70s still continues today.
According to land registry the average house price in May 2016 was an eye watering £211,000, over seven times the average salary of £27,600. Oh, what we would do for an £850 house with a £4 mortgage today!
The most expensive places to live in the UK
• Weybridge, Surrey. £877,189.
• Harpenden, Hertfordshire. £853,796.
• Hartfield, East Sussex. £853,078.
• Ascot, Windsor & Maidenhead. £848,125.
The most expensive streets in the UK
• Montrose Gardens, Leatherhead, Surrey. £5,923,253.
• Phillippines Shaw, Sevenoaks, Kent. £4,112,413.
• Robins Nest Hill, Hertford, Hertfordshire. £3,782,579.
(Article source: Various)