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My House Was Bought For £6250 By The Last Owner


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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.

More of a measure of the creeping tax system though.

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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).

Like I said, he's 81. So the money we paid for it is is roughly the same in terms of average salart to price ratio?

The land it's built on cost £200 in 1925 - bargain.

I'm being a donkey. More like x12 the annual average salary... Ouch

Edited by pie-eater
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Like I said, he's 81. So the money we paid for it is is roughly the same in terms of average salart to price ratio?

The land it's built on cost £200 in 1925 - bargain.

Land is the HPI bit - whether you build a house on the land or a factory. Land price is why very few new factories are built and many are sold off/shut and ripped down to housing land - the use of the land for productive capacity has been detroyed - meanwhile Mervyn Kunt & Co target wage inflation as a bad thing as it is the be all and end all - their myopia in off the scale.

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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.

That an approximate annual inflation rate of 8.4%, over 48 years. Calculation

At the same rate, in another 48 years, your house would have a value of ~£19.5 million. Calculation

A 10% deposit of £1.95 million, with a 4 x annual salary mortgage would mean you need to earn ~£4million a year to be able to afford you house.

Lets assume this should be affordable for someone on quadruple the national average salary, this would put the national average annual salary at £1million.

Edit: Interestingly, based on my very back of a fag packet assumptions, that would require an average salary inflation rate of around 7.7% per year, so less than the HPI rate. :)

Edited by the.ciscokid
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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.

+1

I was going to use an inflation calculator to work it out too.

Just shows the ridiculous levels that house prices have risen above inflation. And yet some people still believe it will continue! :lol:

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+1

I was going to use an inflation calculator to work it out too.

Just shows the ridiculous levels that house prices have risen above inflation. And yet some people still believe it will continue! :lol:

...they have ways and means, to try and make it continue...... but there is a saturation level and we have reached it in many parts of the country.

One of my neighbours father bought their semi in London for £500, they still live in it and the son will continue to in the future.......no plans to sell.....people I know have lived in their houses for over 50 years and their neighbours have never changed, quite a common occurrence from my experience. ;)

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...they have ways and means, to try and make it continue...... but there is a saturation level and we have reached it in many parts of the country.

One of my neighbours father bought their semi in London for £500, they still live in it and the son will continue to in the future.......no plans to sell.....people I know have lived in their houses for over 50 years and their neighbours have never changed, quite a common occurrence from my experience. ;)

Maybe this is the true meaning of the Norman Tebbitt "On your Bike" quote? Get people to move out of existing paid for houses into the wider economy in order to pay market rents & mortgages?

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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.

UK was running at full pelt rationing had just been stopped - there were more jobs than people available (they brought in peoples from Caribbeans!)

You could resign and walk into a new job the next day in that period

Plentiful oil and cheapish energy (nuclear coming on.)

Proper (affordable) housing for most with most important, Rent Controls and assured, biased tennancy laws towards long term tennants!

What do we have now

deregulation on minimum house/plot of land size 1972,(by Ted Heath/Cons)

Wrecked tennancy laws (by Thatcher/Cons) + Big Bang deregulation of City that led to biggest sting in History on the UK/World's peoples!

Dismantling of NHS/ All out attack on Welfare state by Cameron /Cons etc etc

Edited by erranta
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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.

There are many paths to poverty. What you advocate is one of them.

http://www.trulia.com/foreclosure/3033330212--Linwood-St-Detroit-MI-48208

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There are many paths to poverty. What you advocate is one of them.

http://www.trulia.com/foreclosure/3033330212--Linwood-St-Detroit-MI-48208

"Entropy and the Laws of Economics" is one of my favourite books (although I struggle to understand some of the maths).

Its basic thesis is that all economic systems fall apart eventually even though they appear to be very stable in some short time slices.

As Detroit went, many other places will go.

"What is good for GM is good for America" was the refrain 50 years ago. "What is good for BHP / Santos / Woodside is good for Australia" is the current refrain. They could both end up in the same place.

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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.

Yes

Plus no wage inflation while other essentials like travel, food and energy are increasing all the time. There will be less money in peoples pockets to pay for housing inflation.

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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:

Somewhere between 1965 to present day houses started to be bought using two wages instead of one. Doubling the amount that could be borrowed . That is not going to happen again the house in 1965 bought with one wage is now bought with two , it is not going to be bought with 4 wages unless couples double up living two couples to a house.

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Somewhere between 1965 to present day houses started to be bought using two wages instead of one. Doubling the amount that could be borrowed . That is not going to happen again the house in 1965 bought with one wage is now bought with two , it is not going to be bought with 4 wages unless couples double up living two couples to a house.

Indeed.

This house was bought with cash, but we would be looking at 3x joint income to borrow, and they were prepared to lend nigh on half million pounds for a joint income application. Crazy

Our joint income wouldn't pay the amount qouted for the max amount they'd lend us without starving.

Edited by pie-eater
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"What is good for GM is good for America" was the refrain 50 years ago. "What is good for BHP / Santos / Woodside is good for Australia" is the current refrain. They could both end up in the same place.

Yeah but, isn't the difference BHP / Santos / Woodside has proven tangible resources in the ground that the world is going to need for the next few thousand years for the essentials of everyday life, as opposed to GM who manufacture, in competition with others, cars and trucks? So yeah, "What is good for BHP / Santos / Woodside is good for Australia"

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Indeed.

This house was bought with cash, but we would be looking at 3x joint income to borrow, and they were prepared to lend nigh on half million pounds for a joint income application. Crazy

Our joint income wouldn't pay the amount qouted for the max amount they'd lend us without staving.

2004 Barclays offered me a 10x salary mortgage . The idiots had added my salary to a maturing share save scheme that was paid into my account by my company and accepted it as salary by adding these two together and x by 4 is the only way I can assume they came up with this amount . When I asked the bank to check and confirm the amount on offer it still came back the same.

I could not have afforded the montly payments on IO mortgage from my take home pay.

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Yeah but, isn't the difference BHP / Santos / Woodside has proven tangible resources in the ground that the world is going to need for the next few thousand years for the essentials of everyday life, as opposed to GM who manufacture, in competition with others, cars and trucks? So yeah, "What is good for BHP / Santos / Woodside is good for Australia"

"Proven and tangible" remain to be seen. "Estimated" is the best that they can do so far.

The relationship between "essentials" and "substitutes" is not definitive either.

Hubris has proven to be the downfall of many over time. Australians seem to be even more susceptible to the sins of pride than most.

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"Entropy and the Laws of Economics" is one of my favourite books (although I struggle to understand some of the maths).

Its basic thesis is that all economic systems fall apart eventually even though they appear to be very stable in some short time slices.

As Detroit went, many other places will go.

"What is good for GM is good for America" was the refrain 50 years ago. "What is good for BHP / Santos / Woodside is good for Australia" is the current refrain. They could both end up in the same place.

Bardon's unsophisticated and unthinking approach is generously named 'blind faith'.

Legions of Bardons have filled the ranks of bankrupts through time. Their main weakness: not having the mental capacity to understand let alone foresee extremes in economic conditions.

Oh the irony of him spending so much time taunting people on hpc.

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"Proven and tangible" remain to be seen. "Estimated" is the best that they can do so far.

The relationship between "essentials" and "substitutes" is not definitive either.

Hubris has proven to be the downfall of many over time. Australians seem to be even more susceptible to the sins of pride than most.

Proven and tangible is/are proven and tangible, and that doesn't include undiscovered finds.

All of Australia's resources would contribute to the worlds essentials, ie food, water, clothing, shelter, in some way.

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Bardon

10 years of high leverage that you seem to accept as a norm led to bank runs and nearly the vlosure of the banking system.

The remedy printing money when there is no way wages can keep up will create equally ruinous results, just to a different set of people - namely 90 odd % of the population.

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For the sake of the argument lest say after the war

Dont worry about wages they rise as well they dont have to rise at the same rate as houses due to leverage.

But they are not rising !!

in many cases, they are staying the same or falling or dissapearing altogether.

For the last 15 years due to inflation lies and wages linked to these false inflation figures they have not kept pace with costs. This gap was replaced by cheap credit.

We now have a double whammy for many average people they can get no more credit and have to pay back the credit they took in place of wage rises over the last 15 years.

Leaves less money left over to pay higher housing costs and in many cases not enough to pay the housing costs they already have . The wolf is being kept form the door by

(1) historically low interest rates

(2) banks not repossessing ( they call it the walking dead )

Even with these two methods trying to prop up the falling market we have the highest personnel insolvancy rates in our history.

Pop over to MSE and have a look at the bankruptacy threads . Yes many on there have made some stupid mistakes and took easy credit , but also I notice a lot of young people and those just starting familys. Is this due to the young of the last 10-15 years not really being able to set up home either rented or bought on their wages and have now found themselves drowing in debt as they used it as another route to try and follow the house buying ladder.

Edited by miko
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Give it some time and space and they will, they always do.

So to make up the gap that has appeared wages will have to start rising by more than inflation.

Step 1 we get told the real infaltion figures not the false ones we have had for years .

Step 2 wages start to rise

Step 3 wages rise in line with this figure

Step 4 wages rise above this figure

Step 5 taxes on wages like NI stop rising .

When do you think this five step process is going to happen when we have 8 million non working adults in this country ?

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Cant you see that the debt must rise and it still is. If the money system were to change then yes there would be structural reforms but until the system changes property will remain the basis of all wealth.

The money system is bust, it has run its course and has been pushedd over the edge via the actions of the last decade combined with the overt policy of pushing globalism. Those steering it are the same idiots that ran it over the cliff, if they keep up with the double pronged assault on livelihoods either by total default at the consumer level or riot it will be laid to bed. A total retreat from glabalism might save the system - but they won't do it, so the system will fold.

Edited by OnlyMe
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So to make up the gap that has appeared wages will have to start rising by more than inflation.

Step 1 we get told the real infaltion figures not the false ones we have had for years .

Step 2 wages start to rise

Step 3 wages rise in line with this figure

Step 4 wages rise above this figure

Step 5 taxes on wages like NI stop rising .

When do you think this five step process is going to happen when we have 8 million non working adults in this country ?

It won't happen because more jobs will be pushed offshore - the economy cannot carry the debt induced fixed costs let alone rising wages.

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So, are we summising that the last owner bought my house and did it on a wage that the same as mine, with no input from his wife? I earn more than the average and my wife earns even more. We can't afford to have a nipper for about 5 years after buying this house.

I know the last owner (died in 04) was a city banker, and his wife was piano teacher. Lovely woman, who left a £3k piano and nice furniture for us.

They had 3 girls, who all did well in life (GPx2 & Nun).

I can afford to renovate, but can't afford a child.

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  • 433 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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