Statistics show that house prices across most of the UK are now rising at almost pre-credit crunch levels. Although the price changes vary from region to region, some places are seeing increases as large as 14.48% year on year. This is great for homeowners, but for those looking to buy the first step of the property ladder is getting harder and harder to reach.
Since 1973 house prices in the UK have skyrocketed. The average price of a house back in 1973 was £9,767, but by 2014 this figure was much larger at £178,124. This signifies a humongous 1,724% increase which in other words means that you’ll be paying 18 times more for your home now than you would have back in the 1970s.
As a result of this sustained rise, we take meteoric increases in house prices as a given, but should we? As houses in the UK become more and more unaffordable we thought it was time for some perspective on just how ridiculous the rising prices are. So we applied the inflation being experienced in the housing sector to household products and wages, and the results are quite shocking.
The Average Weekly Shop
From 1973 to 2014 the average price of a weekly shop increased from £8.96 to £56.20 (an increase of 527%). But if the cost of the weekly shop had risen in line with house prices the story would be very different.
A 1,724% increase applied to food shopping would mean that the average consumer would be spending £154 at the supermarket every week.
The shopping basket can then be broken down to look at a few select items:
|Actual Price 1973||Actual Price 2014||Potential Price in Line With House Inflation 2014||Percentage Over and Above the Actual Price|
|Rump steak (kg)||£1.99||£16.02||£36.29||226.53%|
|Sliced white bread (loaf)||£0.11||£1.16||£2.01||172.93%|
While huge house price increases might seem like the normal state of affairs, when you realise that a similar increase in food prices would lead to £11 chickens and you paying £4 for a kilogram of bananas, it really puts the 1,724% figure into perspective.
With rent and mortgage payments being many peoples largest monthly outgoing any increase over and above increases in your wages will leave you slipping down the property ladder. Average incomes in the UK have increased from £2,170 per person in 1973 to £27,174 per person in 2014, and this means that wages have only increased 1,152%. Therefore, on average, house prices have been far outpacing wages. And this of course means that property in general is becoming harder and harder to afford.
If wages had kept pace the average income would be £39,573 and we would all be much, much happier.
If you think the UK as a whole has had it bad when it comes to affordable housing spare a thought for those who live in London. In the 31 years from 1973 to 2014 house prices have risen 2,723%, costing a massive 28 times more than they did back in the 1970s. The average house price is also £362,699 leaving people needing deposits approaching the middle of five-figures in order to get financing.
Another statistic of note is that inflation of this size applied to the average weekly shop would mean that Londoners would be paying £244 a week.