Houses are Less “Affordable” than 50 years ago
Although the quality of homes has improved a lot during the last 5 decades, houses have become less “affordable” for homebuyers compared to 50 years ago.
According to the research from Halifax, house prices have increased by 273% in real terms in the last 50 years – from an average of £2,507 in 1959 to £162,082 in 2009. Over the last 5 decades, the UK house values have (on average) increased by 2.7% a year – allowing for inflation; with the fastest growth recorded in the last decade (1999 – 2009) at a 5 % annual increase.
It has been suggested that there were four distinctive periods with sharp and rapid increases in house prices over last 50 years:
- - 1971 – 1973
- - 1977 – 1980
- - 1985 – 1989
- - 1998 – 2007
Remarkably, it is always followed by a period of significant fall after each period of sharp rise in property prices in real terms.
During the last 50 years, there has been an increase in owner-occupation from 43% in 1961 to 68% in 2008. The biggest rise was recorded in 1980s right after the government’s introduction of the Right to Buy Scheme. Oppositely, private rental homes dropped from 33% in 1961 to only 14% in 2008.
Chief Economist at the Halifax, Martin Ellis stated that “the last 50 years have witnessed some remarkable developments in the UK housing market.” The quality of homes has improved significantly in a sign that the proportion of households without an inside toilet fell from 14% in 1960 to 0.2% in 1996. Moreover, the basic of having a hot water supply increased from 22% in 1967 to almost every household having a central heating system today.
The massive increase in property value over time (with the average home being quadrupled in price) can be seen as a force for some people to start “long-term” investment in the property market.
For more information on the changes in the UK housing sector, visit Guardian News
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