Wednesday, January 20, 2010

Halifax affordability survey

Buying a home costs four times as much as 50 years ago, says Halifax

Buying a home costs four times as much as it did half a century ago in real terms, according to research by Halifax. Average house prices, allowing for inflation, have increased 273 per cent in the past 50 years, making homes increasingly unaffordable. A typical home could be bought for £2,507 in 1959, the equivalent to £43,713 in today’s money. Home buyers are actually paying significantly more to buy an equivalent property now, needing £162,085. Despite the recent housing slump, prices rose the most during the last decade with a real rise of 62 per cent, Halifax said.

Posted by jack c @ 09:14 AM (2202 views)
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11 thoughts on “Halifax affordability survey

  • Where in the history books do they mention Weimar Britannia, to total wealth destruction of 94p for every pound (according to this article) is an unbelievable rate in 50 short years. If we take the current average house as a yard stick for purchasing power then it gets worse, 98.5p in every pound.

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  • But they increased by nearly 300% over the past decade in Devon.

    I would imagine that the average home in the 1950’s was a much larger property than the flats and rabbit hutches of today.

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  • mark wadsworth says:

    Henry George predicted over a century ago that when the economy grows, a disproportionate share of that growth would just result in an increase in land values, that being a fixed quantity.

    Although the effect is not quite as marked as he claimed, it is definitely true – if house prices have quadrupled and the cost/value of bricks and mortar (expressed in terms of wages) has stayed constant (building houses is very labour intensive) then by simply maths we see that the value of land, relative to wages or as a share of GDP has increased by rather more than four-fold.

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  • No doubt plenty of VI’s will simply use this as further evidence that property is a one-way bet but given the financial crisis we’ve just been through, we really should be seeing this as a WAKE UP call that our society really is screwed up!

    I’m not one of these ‘blame-Thatcher-for-all-the-ills-of-our-society’ Left wingers, especially as it’s Labour that have exacerbated any problems Thatcher may or may not have started, but we do need a completely different take on how we run our society. Far Left or far right, who cares, we just need RADICAL change!

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  • mark wadsworth says:

    NAC, what we need is a shift away from Home-Owner-Ism, which is a key part of both Tory and Labour policies (in fact, a key part of most political parties’ policies, to be fair).

    The “radical change” neither needs to be left nor right – but as long as you are doing the opposite of what the Home-Owner-Ists want, the chances are you are doing something right.

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  • To be fair MW home-owner-ism is what keeps most people in this country. Once you buy a house its difficult for most people to rent again and you don’t move to a new country and buy straight away!

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  • mark wadsworth says:

    MTH, exactly!

    If people were less emotionally attached to their houses and more willing to move, that would keep local councils and the government on their toes so that people don’t vote with their feet (to mix a metaphor). But in turn, young people are now more likely to move abroad because they have been priced out of the whole country by the Home-Owner-Ists.

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  • What the article doesn’t point out is that this diversion from steady growth of property prices to exponential growth happened over the last seven years as a direct result of short sighted UK central bank policy.

    And the costs have been hidden by CPI – a deliberate scheme to obviate any need to dampen property bubbles. This is Mervyn King’s legacy. When the middle aged baby boomers changed the rules to their own advantage, they effectively instigated a kleptocracy – stealing from the young and unborn to satisfy their temporal and selfish middle class thatcherist dreams of sitting about next to their swimming pools sipping cocktails and counting their ‘wealth’.

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  • Yeah, those thieving middle aged home-ownerist baby boomers should be hunted down and made to wear a badge so we can recognise them. We could then put them into prison camps and confiscate their houses so us younger generation could sip cocktails next to their swimming pools.

    Get real.

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  • 9. p. doff – That’s a bit extreme, I would be happy just to be able to buy and live in their 2nd home.

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  • tenyearstogetmymoneyback says:

    Back in the 1980s boom a colleague came up with the theory that as other items got cheaper people
    were willing to pay more for their houses. Using one of the items which is probably in the CPI, back in
    1989 a 25″ Toshiba TV cost £450 (I bought one) Last year its replacement a 32″ Toshiba TV cost £400.

    Take this to its logical conclusion people will be spending most of their income on housing while they
    complain about the price of everything else.

    Something my colleague would never of thought of was the effect of Chinese TVs costing £200 and the fact
    that probably £100 gets recycled into the money markets so people can take out even bigger mortgages.

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