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House Prices Increase 1010% in 40 Years


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House prices have increased by 1010% since 1980

https://propertyindustryeye.com/house-prices-have-increased-by-1010-since-1980/#comments

House prices have increased by 1010% since 1980, and that’s 24 times the rate at which annual salaries have increased, according to personal finance comparison website finder.com.

Finder’s historical price tracker has analysed the average price of a range of common items since 1980 to see which ones experienced the biggest increases and how these compare to annual income and inflation.

Since 1980 inflation has risen by 255% while annual salaries have jumped by just 43% meaning that inflation has increased 6 times the rate that annual income has, implying Brits are not receiving enough compensation to cope with the ever increasing cost of living.

However, house prices aren’t just beating salaries, they have also risen far above inflation by sitting at almost 4 times the rate of inflation. As house prices have become more unaffordable against salaries this may explain why Brits are turning to renting more frequently than before.

Similarly, both the cost of 1st class stamps and petrol have increased above inflation over this time period by rising 483% and 353% since 1980 respectively. While, the cost of a pint of milk and loaf of bread sit below inflation, jumping only 159% and 191% respectively.

graph.jpg

 

How did the items fare in 2019?

The only item analysed that rose more than inflation (1.74%) in 2019 was stamps, which increased by 4%, almost 2.6 times ahead of the inflation rate.

All other items sat below inflation in 2019, including house prices that increased by only 0.99%, which is 1.75 times below inflation. This is a rare occurrence with house prices increasing above inflation for 26 years of the 40 analysed.

While all the other items increased in price during 2019, both the cost of petrol and a loaf of bread decreased in price by 1.4% and 3.8% respectively. However, this trend isn’t expected to remain the same for bread this year. The worst wheat harvest in 40 years means the cost of a loaf of bread is predicted to increase 12.5%, which is far above predicted inflation for 2020 of 1.4%.

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Poster in the comments seems unaware of joint mortgages...

BME

The difference is that over the last 40 years interest rates have come down dramatically. On average around 9 to 10% (even up to 14) , down 1 or 2% . I remember in the early 90’s as a young family my mortgage was almost £1000 a month whereas my Son’s mortgage all these years later in a similar house is around £900. What has not changed much is the multiple they will let you borrow. 3 times in the 80’s to possibly 4 or 5 times now. Therefore if house prices have gone up over 1000 percent and salaries by only 43% then it is no wonder young people can’t afford mortgages as the múltiples just never add up to enough. The reality is they are then paying more in rent than a mortgage would have probably cost them, had they only been allowed to borrow the money.  I also think in the 80’s and 90’s we must have allocated a lot more of our disposable income to mortgages rather than holidays, technology and going out etc. We must have as he earns a lot more than we did and yet my mortgage was more! 

Edited by rantnrave
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I find their figures for average salary unlikely.  Average salary in the UK in 1980 was around £6000, and in 2019 is £36,611 (ONS)

My experience: purchased house in 1983, cost 3.5 times salary, same house now is 8 times salary for the same role I had in 1983. Same house has increased  950%

 

 

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9 minutes ago, rantnrave said:

I also think in the 80’s and 90’s we must have allocated a lot more of our disposable income to mortgages rather than holidays, technology and going out etc. We must have as he earns a lot more than we did and yet my mortgage was more

Not this sh!t again!!

These people don't half enjoy rewriting the past. My childhood and adolescent years spanned the 80's, family was working class, father was an aircraft engineer, mother worked part time in DHSS. They bought a standard between the wars 3-bed semi in mid-70's which we extended to 4-bed over the garage. I distinctly remember a foreign holiday most years, usually the med, one trip to Florida in the mid-80's. I remember having a decent size turkey on the table at Xmas, we weren't out sweeping chimneys so that mum and dad could service the mortgage.

In contrast I'm now in the top 1% of earners, have a six figure deposit yet am struggling to buy a similar 4-bed semi in a half decent area of London as someone thinks they're now worth £800k.

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1 hour ago, Smiley George said:

Not this sh!t again!!

These people don't half enjoy rewriting the past. My childhood and adolescent years spanned the 80's, family was working class, father was an aircraft engineer, mother worked part time in DHSS. They bought a standard between the wars 3-bed semi in mid-70's which we extended to 4-bed over the garage. I distinctly remember a foreign holiday most years, usually the med, one trip to Florida in the mid-80's. I remember having a decent size turkey on the table at Xmas, we weren't out sweeping chimneys so that mum and dad could service the mortgage.

In contrast I'm now in the top 1% of earners, have a six figure deposit yet am struggling to buy a similar 4-bed semi in a half decent area of London as someone thinks they're now worth £800k.

100% this.

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Because of the hike in prices.....the deposit required is now out of most workers hands.....no interest earned on savings, and prices that rose faster than both earnings and savings per year..... impossible to catch up.

That is what the already stressed and anxious young people have to put up with today and TPTB.....engineered it to be like that....the ignored and forgotten generation.;)

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2 hours ago, Smiley George said:

Not this sh!t again!!

Exactly - nothing ever stays the same.

9 minutes ago, winkie said:

the already stressed and anxious young people have to put up with today

Anxious and stressed? They get stressed because someone calls them a name on social media!

 

 

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43 minutes ago, winkie said:

Because of the hike in prices.....the deposit required is now out of most workers hands.....no interest earned on savings, and prices that rose faster than both earnings and savings per year..... impossible to catch up.

That is what the already stressed and anxious young people have to put up with today and TPTB.....engineered it to be like that....the ignored and forgotten generation.;)

deposits are easy to find though? just get a 6 figure job. 

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3 hours ago, Smiley George said:

in a half decent area of London as someone thinks they're now worth £800k

£120k in Blackpool.

What has changed massively is the  differential between the north and London.  Back in 1980 I bet it was about 20% now it's 600%.

Really need to get a grip on "foreign investment" and immigration in the capital.

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@Smiley George, @dugsbody

Sounds like we had similar childhoods and face similar problems, the life expectations we had growing up and leaving school where modest and looked reasonable. The truth is laid bare by this article, our generation who have worked just as hard as the generation before have been exceptionally poorly remunerated for that effort in relative terms.

Mortgages/renting are not optional expenses. Unlike beer, which I can choose to forego, besides I can't handle the hangovers anymore anyway 🤣

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1 hour ago, richmondtw said:

Exactly - nothing ever stays the same.

Anxious and stressed? They get stressed because someone calls them a name on social media!

Agree some have been wrapped up in cotton wool, sensitive souls......could be because they have not had much real social interaction with their peers....far too much socialising on technology.....not a good omen.;)

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24 minutes ago, Switch625 said:

@Smiley George, @dugsbody

Sounds like we had similar childhoods and face similar problems, the life expectations we had growing up and leaving school where modest and looked reasonable. The truth is laid bare by this article, our generation who have worked just as hard as the generation before have been exceptionally poorly remunerated for that effort in relative terms.

Mortgages/renting are not optional expenses. Unlike beer, which I can choose to forego, besides I can't handle the hangovers anymore anyway 🤣

Agreed.

And I don't think it's wrong given where I am in life to expect much, much more. in summary having spent 15 years in the armed forces, then contracted for a few years, then started and built a business back in 2009 that now employees 50 people and turns over £6m+, is it wrong that I should want a larger house, with a garden in the area we've been renting for the last 9 years? 

It looks like to secure what we want we're going to have to turn the kids lives on their heads again (we've moved 3 times already since eldest was born), as we look further out of London, new schools new friends to make and so on. It's them that I feel sorry for, especially off the back of Covid - it really does make my heart sink when I contemplate the move.

I wonder what it would look like if you flipped things on their head and I traveled back in time to the 80's, with my equivalent wage and deposit - what could we afford back then. Probably a 6-bed mansion in Chelsea - we now can't afford a 4-bed semi in the suburbs.

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1 minute ago, Smiley George said:

Agreed.

And I don't think it's wrong given where I am in life to expect much, much more. in summary having spent 15 years in the armed forces, then contracted for a few years, then started and built a business back in 2009 that now employees 50 people and turns over £6m+, is it wrong that I should want a larger house, with a garden in the area we've been renting for the last 9 years? 

It looks like to secure what we want we're going to have to turn the kids lives on their heads again (we've moved 3 times already since eldest was born), as we look further out of London, new schools new friends to make and so on. It's them that I feel sorry for, especially off the back of Covid - it really does make my heart sink when I contemplate the move.

I wonder what it would look like if you flipped things on their head and I traveled back in time to the 80's, with my equivalent wage and deposit - what could we afford back then. Probably a 6-bed mansion in Chelsea - we now can't afford a 4-bed semi in the suburbs.

you must feel sad after all that effort when a 75 year old retired postman has a million pound house and his only hardship was to not get bitten by the crazy dog every morning ;) 

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5 hours ago, rantnrave said:

House prices have increased by 1010% since 1980

https://propertyindustryeye.com/house-prices-have-increased-by-1010-since-1980/#comments

House prices have increased by 1010% since 1980, and that’s 24 times the rate at which annual salaries have increased, according to personal finance comparison website finder.com.

Finder’s historical price tracker has analysed the average price of a range of common items since 1980 to see which ones experienced the biggest increases and how these compare to annual income and inflation.

Since 1980 inflation has risen by 255% while annual salaries have jumped by just 43% meaning that inflation has increased 6 times the rate that annual income has, implying Brits are not receiving enough compensation to cope with the ever increasing cost of living.

However, house prices aren’t just beating salaries, they have also risen far above inflation by sitting at almost 4 times the rate of inflation. As house prices have become more unaffordable against salaries this may explain why Brits are turning to renting more frequently than before.

Similarly, both the cost of 1st class stamps and petrol have increased above inflation over this time period by rising 483% and 353% since 1980 respectively. While, the cost of a pint of milk and loaf of bread sit below inflation, jumping only 159% and 191% respectively.

graph.jpg

 

How did the items fare in 2019?

The only item analysed that rose more than inflation (1.74%) in 2019 was stamps, which increased by 4%, almost 2.6 times ahead of the inflation rate.

All other items sat below inflation in 2019, including house prices that increased by only 0.99%, which is 1.75 times below inflation. This is a rare occurrence with house prices increasing above inflation for 26 years of the 40 analysed.

While all the other items increased in price during 2019, both the cost of petrol and a loaf of bread decreased in price by 1.4% and 3.8% respectively. However, this trend isn’t expected to remain the same for bread this year. The worst wheat harvest in 40 years means the cost of a loaf of bread is predicted to increase 12.5%, which is far above predicted inflation for 2020 of 1.4%.

Salaries have not increased by just 43% since 1980. That is obviously nonsense. 

Makes me question the rest of it as well

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1 hour ago, captainb said:

obviously nonsense

Can you support that or is that just your interpretation of things?

Accepted that some people will have been well above that figure, but for the average person, from my perspective the figures look entirely reasonable during that period and it sucks.

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2 minutes ago, Switch625 said:

Can you support that or is that just your interpretation of things?

Accepted that some people will have been well above that figure, but for the average person, from my perspective the figures look entirely reasonable during that period and it sucks.

Average salary in 1980 was £6k for full time work. Today its £35k.

43% increase on £6k is under £9k. Thats clearly a nonsense increase over the time period for the average worker

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2 hours ago, Smiley George said:

started and built a business back in 2009 that now employees 50 people and turns over £6m+

Nice :), well done that man.

I work in health care at a senior level and am by any stretch very well remunerated and the amount of debt that I would have to take on to get the equivalent house my father bought at an equivalent age is eye-watering.

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1 hour ago, captainb said:

Average salary in 1980 was £6k for full time work. Today its £35k.

43% increase on £6k is under £9k. Thats clearly a nonsense increase over the time period for the average worker

Using an inflation calculator  https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator

Average wage of £6,000 in 1980 would equate to £25,922 in 2019

Average house price £39,500 in 1980 would equate to £170,657 in 2019

Of course there is a lot of abuse of the word 'average', but agree the figures don't add up. We can certainly say that wages have unsurprisingly not kept pace with house prices, although perhaps not at the figures quoted.

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1 hour ago, captainb said:

Average salary in 1980 was £6k for full time work. Today its £35k.

43% increase on £6k is under £9k. Thats clearly a nonsense increase over the time period for the average worker

+1

This is some of worst journalism I've ever seen on the subject.  They don't even quote the source of that obviously incorrect 43%.

If an average house was 3x salary in 1980 it would be 72x salary today if their figures really were correct, which of course they aren't.

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22 hours ago, Smiley George said:

I think it's more 'simmering anger' than sadness.

Know the feeling, been there, tried that, now resigned to the truth of the broken system and trying a mixture of improving my financial position and being more zen about where I am. Both seem to be working reasonably well, then again that could just be the same as the man falling out of the building, but at least I am currently enjoying the feeling of flight ;)

Edited by Switch625
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15 minutes ago, Switch625 said:

Using an inflation calculator  https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator

Average wage of £6,000 in 1980 would equate to £25,922 in 2019

Average house price £39,500 in 1980 would equate to £170,657 in 2019

Of course there is a lot of abuse of the word 'average', but agree the figures don't add up. We can certainly say that wages have unsurprisingly not kept pace with house prices, although perhaps not at the figures quoted.

Yes agree with that. Host of issues as to why house prices have increased more than wages often discussed here. 

My point is why should I read or consider the rest of the article if they state something so clearly false. 

 

If i read a political article stating corbyn was a great success, i stop. Its just going to be claptrap 

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  • 415 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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