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My House Was Bought For £6250 By The Last Owner

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That was in 1963, though. Oddly, the 1963 survey valued the house at £5750, so they paid well over its value.

We paid £350k for it in Dec 2010. When it was new in 1932 it sold for £820.

Just got the old paperwork from the solicitors.

Land that the house was built on cost £200 in 1925.

Carshalton, Surrey.

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Just goes to show that it doesn't matter if you pay over the odds for a property in the long term.

The mind boggles as to how much it will be worth in fifty years time.

£1.38 million...

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Very true.

My plumber (he's 81 and lived around here all his life) reckons £6k in 1963 would be like a million pounds, if not more in today's money.

He's old, but has more of his marbles than I do at 37.

Affordability is what he says on the subject of buying a house. I bored him re his knowledge of prices......

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It is estimated that £14 in 2010 had the purchasing power of £1 in 1963. If the property was valued at £5750 in 1963 the property should be valued at £92000 in 2010 with all things being equal :o

http://safalra.com/other/historical-uk-inflation-price-conversion/

What on earth went wrong

In 1963 a pound would buy almost $3

$2.83

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In 1965 my parents bought a house for £5500. Toaday it is "worth" about £850,000. The interest rate was 5.5%.

Our friends and neighbours bought theirs for £7,500 and fixed for 20 years at 2% in 1963. It was last sold in 1986 for £650,00. Today worth £2,500,000

There is no logic.

There is luck at what rate you pay and when you buy. There is luck where you buy. There is luck in what you buy.

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It doesn't mean it's going to continue. Bardon's inflation dream. FTBs taking out million pound mortgages for some terrace dive. Some of us think it's peaked now. The country is creaking under trillions of pounds of debt. Has the HPI continued in Japan or, what about many areas of the US which are still crashing right back. Some areas heading back to what must be 1950s prices or better.

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I make it £3.5 million based on the long term average growth rate of 7%pa.

So if you got it on an IO mortgage you would have £3.15 million equity and your monthly interest payment would be equivalent to the cost of a Chinese takeaway

When you say 7% as a "long term average", what period are you taking as "long term"?

Is that not just a symptom of the fiat nature of money, and has coming off the gold standard affected this rate in the short term (say the last 30 - 50 years) and that the unnatural house price increases are merely a aymptom showing that we are facing financial armageddon?

How and when are wages going to be able to keep up with this house price growth in order for it to be sustainably kept at this level?

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I honestly can't see flats etc going for £1m+ in the future... wages haven't kept up and I don't think growth is perpetual. If anything I think we will see a form of de-industrialisation.

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I make it £3.5 million based on the long term average growth rate of 7%pa.

So if you got it on an IO mortgage you would have £3.15 million equity and your monthly interest payment would be equivalent to the cost of a Chinese takeaway

If it was worth £6,250 in 1963 and we assume that your long term growth rate of 7% is about correct, should it not be worth £6,250 * (1.07) ^ 48 = £ 160,806 today rather than its actual price of £ 350,000?

Are you actually agreeing that UK houses are due for a 50% fall in price?

Edited by LuckyOne

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If it was worth £6,250 in 1963 and we assume that your long term growth rate of 7% is about correct, should it not be worth £6,250 * (1.07) ^ 48 = £ 160,806 today rather than its actual price of £ 350,000?

Are you actually agreeing that UK houses are due for a 50% fall in price?

Why not concentrate all your efforts on making the money to buy the home of your dreams rather than waste your time waiting for prices to drop to the price you can afford? When that happens a multitude of similar finacially pplaced people will want to buy pushing the prices back up

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Just goes to show that it doesn't matter if you pay over the odds for a property in the long term.

The mind boggles as to how much it will be worth in fifty years time.

One thing is for sure the price you paid for it will be considered in a similar way to the paltry price the previous owners paid for it.

So by 2050 this house costs just short of £5m. Outstanding.

Using the same logic, wage rises of 2% for the same period take a salary of £50k to £108k.

Interest only mortgage on £350k mortgage is £1500 per month (5% rate, 25 years) that leaves roughly £1k for our £50k salaryman to live on. Tight but not unachievable - housing taking up 60% of take home pay (rough 40% deducted from gross).

The poor unfortunate in 2050 faces interest only payments of £21k per month but only clears £5.5k leaving a shortfall of £15k to find from somewhere.

Still, I guess that will be sustainable somehow.

Housing only goes up. :rolleyes:

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I make it £3.5 million based on the long term average growth rate of 7%pa.

So if you got it on an IO mortgage you would have £3.15 million equity and your monthly interest payment would be equivalent to the cost of a Chinese takeaway

Ah, extrapolation - a bull's best friend..

Of course, the when people say property prices always increase, what they actually mean is property HAS always increased in value. One word but a big difference.

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Very true.

My plumber (he's 81 and lived around here all his life) reckons £6k in 1963 would be like a million pounds, if not more in today's money.

He's old, but has more of his marbles than I do at 37.

Affordability is what he says on the subject of buying a house. I bored him re his knowledge of prices......

Average UK wage in 1963 was around £1k per annum. So it is nothing like a million now, more like £200K.

So originally we are talking about a quite expensive house at 6x earnings, which if you take even a very generous £30k earnings would value that house at around £180k pro rata.

We are still in the middle of a bubble and housing is still double any sensible level of a functioning economy. This is dysfunctional economy is tearing itself to bits with inflation, debt, job losses, forced exportation of labour and productivity, loss of whole industries in less than a decade, government debt, personal debt, corporate debt, imported cheap labour to skirt around long term housing costs, the whole damn shooting match becuase of just one knuckle-headed asset bubble policy.

Taxes are going up and are taking an increasing proportion of income - even historical norms are going to be broken if inflation and tax outstrip increased earnings the way they are at the moment. Nobody in the world is goign to pay Uk workers more becuae we a worth it (or to try and justify our debt load on housing is worth it).

Edited by OnlyMe

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Why not concentrate all your efforts on making the money to buy the home of your dreams rather than waste your time waiting for prices to drop to the price you can afford? When that happens a multitude of similar finacially pplaced people will want to buy pushing the prices back up

I don't dream about houses. They are a just a place to keep me warm and dry.

I am happy to seek the lowest expected total lifetime cost for shelter. At the moment, my opinion is that renting rather than buying minimises my expected total lifetime cost for shelter. At some point in the future, I expect that the balance will shift.

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According to This is Money Historic Inflation Calculator, £6250 in 1963 is equivalent to £98k today - a bit short of the £350k it's valued at today. This also agrees with daftboy who also used an inflation calculator.

Edited by alaninstockport

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Just goes to show that it doesn't matter if you pay over the odds for a property in the long term.

The mind boggles as to how much it will be worth in fifty years time.

One thing is for sure the price you paid for it will be considered in a similar way to the paltry price the previous owners paid for it.

Why was £6250 paltry? It was 6 times the average wage and over 12 times a basic labourer's wage. Today it may be relatively more expensive, but I would hardly call it "paltry".

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Why not concentrate all your efforts on making the money to buy the home of your dreams rather than waste your time waiting for prices to drop to the price you can afford? When that happens a multitude of similar finacially pplaced people will want to buy pushing the prices back up

True for those who purchase with debt, NOT true for those that have cash waiting to buy outright.

House prices are directly related to available credit.

If the cause of an HPC is a reduction in available credit, then the majority of buyers (those who require mortgages) have a reduced buying allowance.

The cash buyer does not have a reduced allowance.

After an HPC they get a much nicer house (e.g. 100% nicer in a 50% crash).

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According to This is Money Historic Inflation Calculator, £6250 in 1963 is equivalent to £98k today - a bit short of the £350k it's valued at today. This also agrees with daftboy who also used an inflation calculator.

The discrepancy is that the inflation calculator is based on reported inflation - which has cons-stently and increasingly been under reported, so that £98k figure is a littlle too low, hence why I took averages earnings - but even those are now being heavily skewed thanks to wage divergence which menas the bulk of the population who are required to drive prices are nowhere near the average income that is stated.

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Why was £6250 paltry? It was 6 times the average wage and over 12 times a basic labourer's wage. Today it may be relatively more expensive, but I would hardly call it "paltry".

tax law says £8200 in thr 1970s was a LOT of money, by virtue of the P11d system. Only workers with more than £8200 were taxed on benefits in kind. This figure has not moved for nearly half a century. £8200 a year used to be millionare sort of territory.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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