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Dave Beans

Sunbury-On-Thames - Where House Prices Have Risen 7,000% In 50 Years

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http://www.bbc.co.uk/news/business-24660825

In April 1964, 300 people queued up for four days and nights in a muddy field not far from Heathrow airport. They camped in anything they could find: canvas tents, Ford Anglias and even deckchairs. They kept their spirits up by playing cards, or cooking bacon and eggs on portable stoves.

Eventually the first 187 in the queue were rewarded. In return for a £50 deposit, they secured the promise of a new house on the site, in Sunbury-on-Thames. It was an era when the country as a whole made a psychological down-payment on the idea of home ownership, an aspiration that has inspired and troubled us ever since. But did previous generations have it any easier?

Did they have to struggle to afford a home in the way that so many do now?

Around a dozen of those who queued up in 1964 are still living in the houses they bought that day. Among them are John and Margaret Webb, who took it in turns to queue on that muddy field. They agreed to pay £4,600 for their new home, and moved in as soon as it was finished.

"We loved it," says Margaret. "I remember coming in. I sat down here. I couldn't believe it. It was ours!"

Bernard and Maureen Clayton were also enthused by their house, which cost them £4,300, and has now been their home for nearly 50 years.

"We saw it being built, brick by brick," says Bernard.

But affording the repayments was not easy, even then.

"It was difficult," says Bernard, who worked as a photocopier service engineer. His wife worked as a PA.

"If I had 10 bob left over at the end of the week, I thought we'd done well," he says.

But careful budgeting made it perfectly manageable. "We could afford it. We didn't starve, or anything silly like that."

At the time John Webb was earning £20 a week in the army.

"When getting the deposit, we had to twist the bank manager's arm," he says. "He was a benevolent chap, who wore a wing collar. Eventually he agreed to put it down as 'furniture and fittings'."

Second generation

Neil Butson, whose parents queued up in 1964 for a house, was born and brought up here. He loved the place so much that he decided to move back as an adult. But by the time he made a purchase, in 1991, the price of houses had soared to £88,000. At the time mortgage rates were as high as 15%, making his monthly repayments £1,300 a month.

"It was a struggle," admits Mr Butson. "I allowed myself to go out once a week. I didn't have a holiday for two years. But I think in the long run it's paid off."

However, at the time, homeowners could claim tax relief on mortgage payments, which made ownership slightly more affordable. Mortgage Interest Relief At Source (MIRAS) was finally abolished in 2000 by Labour, who argued that it was a perk for the middle classes.

New arrivals

So how much have the latest arrivals on the estate had to pay for their houses?

Jo Foy and her husband Tim, a police officer, arrived in February 2013. They paid £325,000 for the house, and their mortgage is £1,500 a month. That price represents a rise since 1964 of roughly 7,000%.

By contrast, inflation as measured by the Retail Prices Index (RPI) has risen by 1,617% over the same period. Or put another way, if house prices had only risen by general inflation, Jo and Tim would have been able to buy a house here for just over £73,000. As it is, they struggle to afford the repayments, which amount to more than 40% of their joint income.

"Half of what comes in goes out in mortgage payments. It's a massive chunk," says Jo.

"We are taking a couple of hundred pounds a month out of savings," she says.

Anne Hicks, a health visitor, is one of the latest arrivals, having moved in in September. She paid £335,000.

The only way she can afford to live here is on an interest-only mortgage, so may never own the house outright.

"To support three children, that's the only way," she says. "A repayment mortgage would be too much."

On the other hand recent buyers have had the benefit of much cheaper loans. As this estate approaches its 50th birthday, one thing is clear: nothing seems to dull the dream of homeownership, however tough the struggle.

If only generation X & Y would stop buying those three ipads a month, then perhaps they could afford a mortgage...

Edited by Dave Beans

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That's just down the road from me. I wonder what part of Sunbury it was...probably 'The Avenue'

I would also note there are two other big empty muddy fields as you head out of Sunbury on the M3 into London...funny how nothing was ever built there.

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That's just down the road from me. I wonder what part of Sunbury it was...probably 'The Avenue'

I would also note there are two other big empty muddy fields as you head out of Sunbury on the M3 into London...funny how nothing was ever built there.

The picture in the article says "Seymour Way"...

Here's the street view...

http://goo.gl/maps/2nZNQ

Edited by Dave Beans

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"It was a struggle," admits Mr Butson. "I allowed myself to go out once a week. I didn't have a holiday for two years. But I think in the long run it's paid off."

Sounds like a struggle. I guess he didn't have an iphone.

Anne Hicks, a health visitor, is one of the latest arrivals, having moved in in September. She paid £335,000.

The only way she can afford to live here is on an interest-only mortgage, so may never own the house outright.

Liar loan, anyone?

Assuming this is a FTB, a ten percent deposit would be a chunky £33.5k with over £300k loan, suggesting an income north of £60k. Really?

EDIT. I went and looked up health visitor salaries on the NHS, here. So, probably less than £40k. Plenty of tax credits etc for the kids though I suppose.

Health visitors are paid on Band 6 of the NHS Agenda for Change Pay Rates . Newly qualified entrants normally start at £25,528 rising to £34,189 with seniority.

Team managers and health visitor specialists can earn up to £40,157 per year on Band 7 of the NHS pay scale.

High cost area supplements are payable for inner London (20% of basic pay), outer London (15%) and fringe areas (5%), subject to minimum and maximum payments.

Extra allowances can sometimes be earned for additional responsibilities and length of service.

Q

Edited by Quicken

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Jo Foy and her husband Tim, a police officer, arrived in February 2013.

As it is, they struggle to afford the repayments, which amount to more than 40% of their joint income.

"Half of what comes in goes out in mortgage payments. It's a massive chunk," says Jo.

40-odd percent of joint net income on the mortgage with base rates at 0.50%? Which lunatic bank signed off on that deal?

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40-odd percent of joint net income on the mortgage with base rates at 0.50%? Which lunatic bank signed off on that deal?

It didn't say net, so it's probably gross...

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Linky linky

"In April 1964, 300 people queued up for four days and nights in a muddy field not far from Heathrow airport.

They camped in anything they could find: canvas tents, Ford Anglias and even deckchairs.

They kept their spirits up by playing cards, or cooking bacon and eggs on portable stoves.

Eventually the first 187 in the queue were rewarded.

In return for a £50 deposit, they secured the promise of a new house on the site, in Sunbury-on-Thames.

It was an era when the country as a whole made a psychological down-payment on the idea of home ownership, an aspiration that has inspired and troubled us ever since.

But did previous generations have it any easier?

Did they have to struggle to afford a home in the way that so many do now?

Around a dozen of those who queued up in 1964 are still living in the houses they bought that day.

Among them are John and Margaret Webb, who took it in turns to queue on that muddy field.

They agreed to pay £4,600 for their new home, and moved in as soon as it was finished.

"We loved it," says Margaret. "I remember coming in. I sat down here. I couldn't believe it. It was ours!"

Bernard and Maureen Clayton were also enthused by their house, which cost them £4,300, and has now been their home for nearly 50 years.

"We saw it being built, brick by brick," says Bernard.

But affording the repayments was not easy, even then.

Rising house prices in Sunbury

1964: £4,300

1991: £88,000

2013: £335,000

"It was difficult," says Bernard, who worked as a photocopier service engineer. His wife worked as a PA.

"If I had 10 bob left over at the end of the week, I thought we'd done well," he says.

But careful budgeting made it perfectly manageable. "We could afford it. We didn't starve, or anything silly like that."

At the time John Webb was earning £20 a week in the army.

"When getting the deposit, we had to twist the bank manager's arm," he says. "He was a benevolent chap, who wore a wing collar. Eventually he agreed to put it down as 'furniture and fittings'."

Second generation Neil Butson, whose parents queued up in 1964 for a house, was born and brought up here.

He loved the place so much that he decided to move back as an adult.

But by the time he made a purchase, in 1991, the price of houses had soared to £88,000.

At the time mortgage rates were as high as 15%, making his monthly repayments £1,300 a month.

"It was a struggle," admits Mr Butson. "I allowed myself to go out once a week. I didn't have a holiday for two years. But I think in the long run it's paid off."

However, at the time, homeowners could claim tax relief on mortgage payments, which made ownership slightly more affordable.

Mortgage Interest Relief At Source (MIRAS) was finally abolished in 2000 by Labour, who argued that it was a perk for the middle classes.

So how much have the latest arrivals on the estate had to pay for their houses?

How have house prices outstripped inflation?

RPI since 1964: +1,600%

House prices in Sunbury: +7,000%

Jo Foy and her husband Tim, a police officer, arrived in February 2013.

They paid £325,000 for the house, and their mortgage is £1,500 a month.

That price represents a rise since 1964 of roughly 7,000%.

By contrast, inflation as measured by the Retail Prices Index (RPI) has risen by 1,617% over the same period.

Or put another way, if house prices had only risen by general inflation, Jo and Tim would have been able to buy a house here for just over £73,000.

As it is, they struggle to afford the repayments, which amount to more than 40% of their joint income.

"Half of what comes in goes out in mortgage payments. It's a massive chunk," says Jo.

"We are taking a couple of hundred pounds a month out of savings," she says.

Anne Hicks, a health visitor, is one of the latest arrivals, having moved in in September. She paid £335,000.

The only way she can afford to live here is on an interest-only mortgage, so may never own the house outright.

"To support three children, that's the only way," she says. "A repayment mortgage would be too much."

On the other hand recent buyers have had the benefit of much cheaper loans.

As this estate approaches its 50th birthday, one thing is clear: nothing seems to dull the dream of homeownership, however tough the struggle."

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It didn't say net, so it's probably gross...

"Half of what comes in goes out in mortgage payments. It's a massive chunk," says Jo.

That sounds like net to me.

Anyway, if it was 40-odd percent of gross going on the mortgage that's lunacy squared.

Edited by Dorkins

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Seems like those who say "well - we struggled" need to have things put to them in terms they can understand.

Those who queued up to buy a house for £ 4,600 would have had to pay £18,919 if house price levels were the same as today.

Could they have done that?

Maybe if they think about the house that £18,919 could have bought "in thier day" they might get the picture?

djmgw

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If house prices had only risen by general inflation, Jo and Tim would have been able to buy a house here for just over £73,000

Instead, they paid £335k. This is the bloody elephant in the room!!!

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Anne Hicks, a health visitor, is one of the latest arrivals, having moved in in September. She paid £335,000.

The only way she can afford to live here is on an interest-only mortgage, so may never own the house outright.

Why not just rent a place you stupid mare? No doubt she'll be the first to bleat when it's due for repossession.

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Instead, they paid £335k. This is the bloody elephant in the room!!!

If prices slide they can rely on a chorus of people, home-owners and non-owners too, saying they were misled by parents, thought house prices only go up. Despite massively outbidding others who struggle to see value ever at inflation adjusted price of £73,000.

Oh they "just wanted a home" probably, making their debt to pay that price A-ok.

Jo Foy and her husband Tim, a police officer, arrived in February 2013.

They paid £325,000 for the house, and their mortgage is £1,500 a month.

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That sounds like net to me.

Anyway, if it was 40-odd percent of gross going on the mortgage that's lunacy squared.

Oh, I agree. I suppose I didn't trust the 'half' quote from the borrower. Could easily be 60%, I thought. Either way, yes it's crazy.

Why not just rent a place you stupid mare? No doubt she'll be the first to bleat when it's due for repossession.

Yes. She has explicitly stated "A repayment mortgage would be too much."

What are the chances she has a credible repayment plan in place?

The Mortgage Market Review rules (due in April 2014) state:

Lenders will be fully responsible for assessing whether the customer can afford the loan, and they will have to verify the customer's income. They can still choose to use intermediaries in this process, but lenders will remain responsible.

Lenders will still be allowed to grant interest-only loans, but only where there is a credible strategy for repaying the capital.

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43,000% in 80 years:

BarnehurstKent1933.jpg

Yours for 1.75x – 2x average earnings with 90% – 95% LTV mortgages readily available.

BoE Bank Rate at 2% (equal lowest ever at the time), economy beginning to recover from depression.

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in 1991, the price of houses had soared to £88,000. At the time mortgage rates were as high as 15%, making his monthly repayments £1,300 a month

Well that is clearly wrong.

The only way you can get £1300 a month is by doing it is a 10 year repayment mortgage at a 15% i/r.

According to this the average mortgage rate was 9% in 1991

http://www.hsh.com/natmo91.html

If he was paying 9% on his £80k mortgage and was paying £1300 a month he'd have paid it off in 7 years.

If he took out a mortgage for 25 years at a 9% rate he'd have paid £680 a month.

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Well that is clearly wrong.

The only way you can get £1300 a month is by doing it is a 10 year repayment mortgage at a 15% i/r.

According to this the average mortgage rate was 9% in 1991

http://www.hsh.com/natmo91.html

If he was paying 9% on his £80k mortgage and was paying £1300 a month he'd have paid it off in 7 years.

If he took out a mortgage for 25 years at a 9% rate he'd have paid £680 a month.

Endowment?

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Seems like those who say "well - we struggled" need to have things put to them in terms they can understand.

Those who queued up to buy a house for £ 4,600 would have had to pay £18,919 if house price levels were the same as today.

Could they have done that?

Maybe if they think about the house that £18,919 could have bought "in thier day" they might get the picture?

djmgw

That is the point that is conveniently ignored.

On that basis, the £325k paid this year would be under £80k.

I'd personally much rather buy one at the price and pay a ridiculously high interest rate than I would pay £325k on a 2% mortgage.

The low interest rates do make payments much lower for current buyers but are only a real benefit if ther are guaranteed to stay at that level for the whole term of the mortgage

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43,000% in 80 years:

BarnehurstKent1933.jpg

Yours for 1.75x – 2x average earnings with 90% – 95% LTV mortgages readily available.

BoE Bank Rate at 2% (equal lowest ever at the time), economy beginning to recover from depression.

That is crazy! Assuming that these houses are in the same ballpark price wise as the Sunbury homes, that is an 18x nominal increase from 1933 to 1964. Not quite as big as the 50x nominal increase in the next 50 years, but still quite a lot!

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That is the point that is conveniently ignored.

On that basis, the £325k paid this year would be under £80k.

I'd personally much rather buy one at the price and pay a ridiculously high interest rate than I would pay £325k on a 2% mortgage.

The low interest rates do make payments much lower for current buyers but are only a real benefit if ther are guaranteed to stay at that level for the whole term of the mortgage

If the interest rate is very low, it can only go up, a certain cause of anxiety. On the other hand, a high interest rate, provided you can survive it in the short term, leaves you hope that better times might be ahead.

In relation to the proportion of salary, the mortgage repayments on my first purchase in 1974 was just the same as my son's today. His are extremely likely to become more onerous. I can only backstop him so far if it really goes pear-shaped.

It's all been a massive con-trick to transfer the money and assets of the people into the hands of the landowners.

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That is crazy! Assuming that these houses are in the same ballpark price wise as the Sunbury homes, that is an 18x nominal increase from 1933 to 1964. Not quite as big as the 50x nominal increase in the next 50 years, but still quite a lot!

You have to consider the developing financial market over the last century.

We do bleat about bankers and banking on here, but the housing market is far more flexible than it was in 1933.

In some parts of the world you still have to pay for a house in wads of fivers (or the local equivalent). Much of that price appreciation has come simply because financial products (aka debt) are now readily available to anyone.

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