Written by Classical Liberal
This article looks back over the last 70 years to see how house prices have risen and whether our wages could keep up.
In 1950, the average cost of a new house was £1,891, and the average salary was £10 a week, so buying a property was no mean feat, even then. These new homes came with indoor toilets, revolutionising the way we did our business! In addition, the electric fire, the washing machine and humble fish finger were life-changing inventions of the era.
By 1960, house prices continued to rise along with the average income, which now stood at £960 per year. And, the average cost of a home was now £2,530. By the end of the decade, some of us were watching TV in colour. With these higher prices came mod cons. Most homes in the UK now had electricity, a fridge, a cooker and a TV.
The 1970s were a rocky decade—widespread unrest and hardship on the one hand and a boom in homeownership on the other. The mortgage market took off, and house prices flew. In 1970, the average house price was £4,057.
In 1974, the first microwave was sold, and four years later, the VHS video recorder meant we never had to miss our favourite TV programme again. Our average earnings climbed too. But this was when the gap between wages and house prices began growing wider and wider. The cost of homeownership continued to rise at lightning speed. By 1979, the average house price had quadrupled to £19,925.
Everything changed again in 1980. Margaret Thatcher gave people the right to buy their council houses. And house prices shot up like never before. Rising 16% in 1987 and a further 25% in 1988 – the highest rise ever recorded. By which time, you could expect to pay, on average, £29,143 for a home.
Spiralling interest rates led to the housing crash at the start of the 1990s. Even though property prices dropped by 20%, the average cost of a home was still £58,153 – twice as much as just five years earlier. And a pint of milk cost on average 30p, compared to 50p today.
Slowly but surely, house prices started to creep up again. By 1995, you could now expect to pay, on average, £59,939 for your new pad.
The new millennium witnessed a further increase in house prices. And at almost £30,000 in five years, it was quite a big one. The average cost of a home in 2000 reached £89,597. In just five years, house prices leapt nearly £70,000. This meant the average property cost a staggering £156,236 in 2005. At the same time, the average salary was around £23,900.
Still, on the up, but not such a huge jump, the average cost of property reached £170,365 in 2010.
In 15 years, average property prices increased by over £100,000, meaning you’d need around £197,890 to buy a house in 2015. At the same time, the average salary had only crept up to £27,600. In 2020, the average cost of a home was £247,355. That’s over £245,000 more than in 1950. Quite a rise, wouldn’t you agree?
Home buying has never been that affordable. But it’s become less so in the last 70 years. For example, in the 1960s, the average house price was just over £2,500, compared to a staggering nearly £250,000 today. But it’s not just house prices that have gone up over the years. Here are a few items that aren’t relatively as cheap as they used to be.
- In the 1950s, a loaf of bread cost 4p, a pound of butter was 18p, a pint of milk was 3p.
- In the 1960s, a season ticket to see Manchester United play was £8.50, and the players were paid a maximum of £50 a week.
- In the 1970s you could get two tickets to the cinema for less than 90p. And a brand-new Mini cost £600.
- In the 1980s, a First-Class stamp cost 12p, while a portion of fish and chips was just 83p, and a cut and blow-dry at Toni & Guy hair salon was £23.
It sounds like a bargain, compared to today’s prices!
Over the last 70 years, house prices in the UK have rocketed. So much so, it’s hard to remember a time when buying a new home cost less than £3,000. These days, you’d pay that much for a couple of months’ rent in some parts of the country.
It may not have been easy for you to get on the property ladder when you were younger. But it’s much harder for young people today.
Photo by barnyz 
You need to compare the UK to other countries.
My students in Indonesia earn 1/10th of UK salaries
but a house can be bought for £7,000 ..I’d say 1/20th of UK prices..
In many countries land is plentiful, you just go to the jungle, clear some land build a house, and after 10 years you can claim title.
In the UK why wouldn’t you live in a van or camp ?
Perhaps it was Adam Smith or just custom but it was said “a master`s wages should not exceed that of his workers by more than 4 times”, later that was changed to 6 times.
I`ve no idea when that good sense went out of the window maybe 10 years or so after WW2, nevertheless in some cases these days it often exceeds over 100 times and I would submit as this gap has widened so has property price inflation.and the ability of those “in the know” or the “chosen” ones who have had the benefit of wealthy parentage or the “right” University degree.
Particularly in industry it would appear to be that management have been rewarded by spurious “bonuses” which have less to do with the profitability and output of the product manufactured but the ability they exhibit to enhance shareholders unit values.
I term the “chosen ones”, such as the heads of public bodies like local authorities, in fact most things which are in the feifdom or gift of the government – some might call them the `in folk` oh! and that`s not to forget some of the charities, where the high level pickings look pretty tasty.
London and other major cities property prices are probably heavily influenced by those internationalists “following the money” (obviously someone else`s from whom they have liberated their ill gotten gains or as I understand it hedge funding is a form of gambling – again usually with somebody else`s money).
For my sins though,. and despite all financial and employment vicititudes, here I am at a ripe old age, still 100% owning my own property after kicking off with a £2200 mortgage on a maisonette in 1966. Although I “exist” at present on a basic State pension and a small monthly work financed pension (small because the last company I worked for shot itself in the foot and went bust)
I am in favour of Maggie Thatcher`s “trickle down” future and will be hopeful of passing “help” down to my grandchildren if needed to start their own home purchase cycle at an age when most needed. We had such “help” along the way
I for one was in favour of Mrs May`s suggestions of how to help finance the “end of life period” and still leave a reasonable amount to trickle down which I believe was £100,000 i.e. £50,000 each for two children etc. and which Corbyn so diabolically trashed
Right to buy for council tenants – I’ve always thought that was a sensible policy except that councils should have been forced to build new council properties to replace them.
A few years back I suffered from corruption in the local council over the right to buy policy.
Personally I’ve never wanted a mortgage weighing me down and thank goodness I managed to get a council bungalow in an area that suits me reasonably well at the moment but can still see various problems ahead.
The only person anyone can trust and rely on is oneself and then we die.
Homes should be for living in – not seen as a hedge against inflation and potential financial gain.
Germans during this period enjoyed an economic boom, good governance and sound money thus many were quite happy to rent property as their savings were not being inflated away. In the UK the lower income groups with cash savings in building society accounts have been well and truly stuffed – doubly so if they rented their house.
Sound money, balancing the budget and getting net migration to zero is needed to control the price of houses but I am afraid the property owning classes are hooked on home ownership and the government is hooked on keeping the borders open and throwing money all over the place.
In 1970, I bought a beat up end terrace house for £400.
The answer is DIY but nobody is willing/able to do it now.
It’s a supply and demand situation. Supply is very carefully controlled to keep prices rising.
Plus you can blame immigrants. They’re all living somewhere in the chain.
Harryagain, and yes I did the same in the early 1980s and purchased a completely unmodernised Victorian terraced house, of which in those days there were many and were all relatively cheap. The downside is that you had to invest a lot of money to bring them up to scratch including insertion of damp courses etc. However those houses don’t exist any longer, or more to the point they exist but not in original unmodernised states, and consequently those houses are not available to those people where money is a bit tight. Jake is right though about the immigration factor because every single person who comes to this country illegal or otherwise will have to be housed somewhere in time, bearing in mind our borders are as porous as ever, with few being returned to either France or their country of origin, and until the ruddy useless and incompetent resident clown in Downing Street aided and abetted by Priti Patel are gone or removed, things will not change.
So what caused house prices to fly away and wages to effectively stagnate for the lower middle classes and working class.
That’s the big issue. I suggest it started when the government didn’t implement a house building programme, followed by PFIs and the growth of the NHS. Stealth Taxes started to appear. It seems to me the education, education, education of Labour didn’t help either. Everything Labour governments have introduced has destroyed the ability of the working class to i prove themselves. The Tories have now jumped on the bandwagon of stealing labour via stealth taxes and joining a socialist project in Brussels didn’t help either.
Ive been looking for the av wage in 1950. Until 1960 footballers wages were capped at £20 a week .
But a tenner in the uk was the price of a one way ticket to Oz..heavy subsidy if you qualified.
So who in Jamaica could come up with 25 guineas for a one way ticket to Tilbury ?
Haga shrieky in the Standard this week is retailing the Leftie lie that Windrushers were recruited by the Government to rebuild Britain .
Same Government that conscripted my chippie cousin and shipped off to Korea.
As I remember being told, my Father bought our family home (the one I grew up in) for around £600. I guess that would have been around the end of WWII. Shortly afterward he bought my Grandmother’s house for around the same sum. She was living in it as a tenant. The landlord wanted to sell up and she was afraid she would be evicted by the new owner. So Dad stepped in. He wasn’t wealthy. It wasn’t until the 50’s that he was earning (what we thought was very good money!) £20 per week. I remember a tin box with lots of money slots in, all marked up for the various outgoings each week. He must have struggled to pay off both mortgages. He did spare time jobs for other people and Mother did field work where she could take us children with her.
I have said for ages that because speculators started using housing as a ‘commodity’ (instead of it continuing to be treated as a basic necessity) that the inflationary prices began to take off. I can remember trying to move house in the late 80s and finding queues of punters waiting to view every house. Gazumping was rife. It didn’t last of course. there was the inevitable crash and repossessions began to rise.
I still think that bricks and mortar are a very safe ‘investment’ for any family but people have to be prepared to work very hard to keep it all going because life in the 21st century is not stable by any means! Oh and I would NOT buy a new-build at present after the reports I have been reading about the shoddy building quality!!! Well what else can you expect with the ‘loose’ government that this Country suffers at present!!
Picture at top of page.
I’m guessing the local council erected the stone flower beds just after the scamdemic was announced.
Cant see the cycling route or bus lanes though.
I once did a regression analysis of house prices in the UK and for two hundred years, property prices trended at 1% above inflation. In recent years, we’ve had mass immigration to stoke demand, fiat currencies since 1972 and now out of control money printing.
So, the question is, do we have a property market crash or hyperinflation to sort this mess out? I would say that although either scenario will create its own set of winners and losers, the end result will be misery for the lower 50% of society, the next 30% will have a difficult time with the next 9% doing very well but the last 1% will be richer than King Solomon.
I’ve been a bit busy lately but I’m planning to write a series of articles about this soon.