In fact, according to a recent report the price of a home just over 50 years ago was only £2,500 – making it something of a bargain.
The report by Halifax shows that the price of a home has risen by over 65 times in the last half a century, The housing area has in fact grown by almost 9 per cent each year since 1959, which is quite a significantly large figure.
Inflation and WagesHowever, inflation and the cost of living, as well as wages have to be taken into account. When these are considered the increase in price was somewhere in the region of 270 per cent, which works out at a lower rate, but still makes the investment look quite wise.
The other very interesting fact is the rise of wages over the past 50 years. These have increased at a rate of around 2 per cent per year, meaning the average house costs a lot more now than it did back in the late 1950s.
Periods of GrowthSo when did this increase happen? According to the Halifax report, there were three periods of major growth. The first of these was the early 1970s and again in the later part of the decade. Further increases came about in the late 1980s and then again between 1998 and 2007. After each period a lull occurred and prices fell.
The rise in the early 1990s came in at around 2.4 per cent. The 1970s saw a 3 per cent rise. The greatest growth was seen in the eighties and the nineties where growth rose by 4.7 and 5 per cent respectively.
CycleCurrently, the price of homes stands at the same position it was back in 2003, and this is around a fifth down on the position it was in 2007. This is a fine example of the boom and bust cycle at work and shows the effect of the economy on price of homes in recent years. This and the tough banking line with mortgages explains why so many have been less eager to shout ‘buy my house’ in recent years
One of the factors for house prices is the amount of buy to rent properties in the UK. Many economists believe that the rising population of the UK and the large buy to let market has impacted on the number of available homes to buy. This has affected demand and supply and has kept prices high, even after a bust and nearly half a decade of economic woe.
House prices in the UK make for an interesting read and show case the social status of the country as well as the economic conditions. From the pre-oil crisis period, to the rent-to-buy era to the modern day, they offer a very interesting take on the economic and social aspects of the country.
- Cormac Reynolds writes for You Sell Quick who sell properties quickly and for up to 100% of the UK market price.