House price hikes in the last century... guess how much a 3 bed terrace cost in Wimbledon c. 1935 in today's money.

[BluebellBlueballs]

I was reading Raymond Briggs book about his parents, Ethel and Ernest, who bought a 3 bed terrace house in Wimbledon on just a milkman 's
salary.

I looked on Rightmove and you'd be paying at least 1.3 million today for similar.

Guess how much that house would be if bought in today's money at the same time the Briggs bought it, mid 1930s.

Put it this way, unless Ernest was head honcho at the milk company I don't think he'd manage it today.

Would guess £30

Our three bed cost more than four times that in 1836.

In the late 90s I worked in a Saturday/ holiday retail job & got paid an amazing salary considering retail now. It was part commission so I'd average £9 an hour. I shouldn't have bothered with uni, started f/t & bought a house then!

i completely agree House prices outstrip inflation but if a milkman’s salary was £7 a week back in 1930 and a 3 bed semi was £895 then that is also a massive multiplier.

Remember also that £7 was the average wage. Did milkmen then earn the average wage or less?

My mum bought a Hotpoint Keymatic washing machine (that lasted for 18 years!) for £250 in 1967. My dad earned I think £40 a week then i.e £2000 a year. Comparable now would be probably £500 for the washing machine and £35000 a year. Stuff apart from houses has got a lot lot cheaper.

Well said @vera99. A Zanussi washer/dryer and fridge/freezer set me back £1000 in 1982. I recall paying £500 for a TV in about 1988; probably 23/24 inch. White good and furniture were much more expensive.

Yea my Dad bought a house off Kings Rd in Chelsea for £12,500 in the 1960s. They sell for £6m up now. With inflation increase only that would be £309,700 today.
My husband was a city lawyer with very good salary. We bought a house in SW London. Within two years its value had outstripped his buying power. We bought it from two teachers and I sold it to an international banker.

In 1945, my great grandfather died and left my DM, who was then 25 and working as a shorthand typist, £500. With that money, she bought a house in the inner city and converted it into two flats. She lived in one and let the other.

In 1947, she sold that house and bought a two bed semi in the suburbs when my DF came out of the army.

In 1949, my DF was posted abroad with his work. They invested the money from the sale of the house and then they lived in short term company rentals until 1958, when they bought a three bed bungalow on a new estate for £2,000.

In 1969, they sold the bungalow and bought a three bed detached at a very desirable address for £6,000. They moved on in 1975, but that property is now estimated to be worth just over half a million.

I bought my first house in 1980. I was earning £3,500 as a legal secretary. I paid £13,500 for it and had worked seven days a week for a year to get a deposit over just over ten per cent. I borrowed the rest from the local building society. At that time you got tax relief on your mortgage payments, which helped, but my first monthly payment was £158.50. I sold eight years later for £46,000.

The average salary, adjusted to todays value was 11k in 1935. So a house of 490k was even more in achievable than it is today for an average salary of 33k

Stuff apart from houses has got a lot lot cheaper.

Doesn't last as long though does it?

It's 2.5 times his annual salary. Often now people getting mortgages for 5 x two peoples salaries after paying a hefty deposit.

I think this has contributed to the struggle to find employees. People ,say in their 50s, sell their 2mill house retire to somewhere cheaper and buy home outright then live on early pension/ savings/ bit of part time work.

Yup. They are all cashing out of the Ponzi scheme aged 50.

They’ve absolutely played everyone under 45.

I find house prices interesting, because it isn't just down to wages; it's down to other things, as well. The banks' role in it, I find interesting because it isn't much talked about.

I knew a couple who bought their first house for £300 in the 20s. They had to have minimum 10% (£30 deposit). They didn't have that, but were able to borrow £5 from their parents. They could also only borrow 3x salary, and he earned around £100, less than the national average. Even if the wife had been working (she had 2 small children), then they wouldn't have counted her salary in the calculations.

So what happened?

In the case above, he earned around £100. The maximum they could borrow was £300, and then they'd have had to have £30 deposit.
So the maximum house they could have bought was £330.

Once banks took the 2nd wage into consideration, let's say she was earning half him, they could have borrowed £450, assuming they could get a £45 deposit.
So the maximum house they could have bought was £495.

Then banks started lending more times salary, and requiring less deposit. If we say 8 x salary, and a 100% mortgage.
Then they could have bought a house costing £1200-approximately 4x the first example)

So looking at that, it looks ever so nice that they can buy a much nicer house.

But it isn't as simple as that, because everyone else can also have 2 wages, 8x salary. So then the house that was at £330, suddenly there's the same people who have £1200 to spend, but the same houses for sale. So vendors ask (and get) more money for houses.

Person A is selling their house, and last year it went for £300, this time they put it on for £400 but someone wants to make sure they get it, so they offer over at £440.
Person B sees that and decides to put their identical one on the market. The estate agent sees the other house went for £440 so they put it on for £450... and that's one way how prices get pushed up.

As with anything, you get winners and losers. The winners are the people who get on the chain early, and gain from the first bank increasing the amount they can borrow. And everyone thinks how wonderful it is that it's easier to get a mortgage and buy a house.
But once it's standard thing, then it doesn't increase house ownership because the prices just rise to reflect that the same people have more money.

It’s not just London, as a PP pointed out.

My parents bought a house in Sydney for $175k in 1984.
The houses on either side have recently sold for $10 million & $14 million (about £7 million).
Foreign investment is an issue there, too.

Until covid, these sorts of price rises weren’t seen outside of major cities.

In the 1930s when the Briggs bought their house very few people owned a house, especially working class people. Less than 10% of the population were home owners.
£825 was also well above average price then, even for London. Houses near me in an outer suburb were around £500. I wonder how they afforded it? Did they have an inheritance - though this would have been unusual for an ordinary worker's family to have anything to leave?
My parents came to London in the early 1950s after a promotion (office work), and my father earned around £10 per week, which was good money then. They paid £3000 for a house like the Briggs a few years later (in a cheaper suburb than Wimbledon). This would have been 6 x salary but he would have had a rise by then so maybe 4 or 5 x salary.

I grew up there and my parents bought a house for £15000 in 1973 fairly middle class jobs though so an Economist and teacher.

It was 4 bedroom detached though so bigger.

I also think there's other things at play. Until very recently, food prices in this country were extremely cheap for a long, long time. In 1999 a loaf of Hovis was 95p. That's basically the same as the price as 2 years ago. In my borough the cost of things like swimming lessons etc have been pretty much the same for 15 years. This only changed very recently when the price of everything jumped extremely high, and now housed are getting cheaper.
I'm not sure it's quite as simple as inflation. I'm sure it was really difficult to buy a house then too.

Again - in the 1930s only 10% of households were owner occupied. It is currently over 60%.

it must suck to be in the 40% who don’t own their property if you want to buy, but I find it very hard to believe that 90% of the 1930s households actively chose to rent when buying a property was easily affordable.