Halifax recently released a report that looked at the key trends and developments in the UK housing market from 1951 to 2011, using 60 years of research comprising their own extensive data and other data sourced from the Office of National Statistics and the Communities and Local Government Department. Unsurprisingly, it contains some rather interesting information!
Over the past 60 years UK house prices have nearly trebled, increasing by an average of 186% in real terms. The average annual rate of increase was 1.8 %, measuring a little higher than the 1.6% per annum average rise in real earnings of the same period. It's a very slight difference, but over the course of 60 years it's impact has become substantial.
For, in 1951 house prices averaged 3.9 as a multiple of gross annual earnings, while over the last ten years that multiple has averaged 4.8, the highest its ever been. In 1951 the average cost of a house was £2,200, while in 2011 the average house price was £162,338! This is an absolutely staggering increase of 7,278% in nominal terms, which is three times the rise in retail inflation over the same period (2,477%). However, £2,200 in 1951 is the equivalent of £56,698.88 in 2011, making it a 286% increase in real terms. House prices have risen in real terms in 38 out of the recorded 60 years.
But of course it hasn't been all steady increases; it's been much more exciting than that! House prices rocketed by 42% from 1981 to 1991, the biggest increase recorded. The 1950s was the decade of decline for house prices, falling by 7%. This can be explained by the surge of housebuilding in the post-war reconstruction years driving down prices. Following this decline, house prices steadily increased at an average of 0.9% until 1971, when the market started to begin its trend of wave-like peaks and troughs. There have been four periods of this rapid real house price growth: 1971-73, 1977-80, 1985-89, and 1998-2007. In each case there was a substantial drop in real house prices at the end of it, the infamous 'boom and bust' scenario, which still somehow manages to surprise everyone when the bubble bursts.
The rate of increase differed depending on where in the country the houses were located. The homes in the south of England on average rose in price by 164% in real terms, whereas the homes in the north went up by 130%. Since 1971 London has seen the biggest increase in house prices, with a rise of 189%, followed by the South West, with 163%. Yorkshire and Humber came third, with 159%. Scotland's increase was the smallest, with a real rise of 91%.
Since 1951 more than 15 million homes have been built in the UK, while the population has increased by between 12 and 13 million. The number of houses built each year since 1951 has dropped by a third, from 201, 860 in 1951 to around 137,000 in 2011. This fall has been attributed to the dramatic fall in the volume of public sector housing being built (dropping a massive 81% during the 60 year period). 1968 was the year that saw the highest number of houses built, with 226, 100.
Although it is thought that the average person is taller today than the average person in the good old days, it turns out that the homes we live in are getting smaller. No doubt this is a result of reduced space due to a growing population, leading to better space management. After 1980 the proportion of houses of less than 50m in size (538 square feet) doubled from 9% to 18%. Similarly, the proportion of flats increased from 17% to 23% in the decades post-1980.
That said, the type of properties being built in England over the last 60 years has shifted considerably all across the spectrum, not just flats! But sticking with flats for the minute, they account for 20% of the housing stock that was built after 1980, but only 15% of those built between 1945 and 1964. But the differences are even more pronounced for detached and semi-detached properties! Of the current housing stock in England, only 10% of detached houses were built between 1945 and 1964. But detached houses make up 36% of the housing stock built after 1980. Between 1945 and 1964, semi-detached houses made up the largest proportion of the housing stock built in that period, but represents only 15% of homes built after 1980!
Many things have changed in the housing market in these 60 years. Thankfully, one of the main aspects, that of housing quality, has not been so much of a roller coaster ride, but rather rocket ship that has broken free of the earth's gravity. 42% of homes in 1947 didn't have a fixed bath or shower (a fact which would probably explode the head of a modern day mirror-fixated narcissist), yet by 1991, this proportion has crashed to just three out of every thousand (0.3%). Not only that, but in 1947 64% of households were without a basic hot water supply, compared to just one in a hundred (1%) in 1991.
Home ownership has doubled over the last 60 years, from 32% of households in 1953 to 66% in 2010-11. The Right-To-Buy scheme, introduced in the 1980s was key to this elevation, lifting owner-occupation from 57% to 68% by 1991. It reached its peak at 73% in 2003, and has steadily declined ever since.
The proportion of privately rented accommodation has fallen dramatically from 50% in 1953 to just 17% in 2010-11, although it has nearly doubled in the last decade. The socially rented sector made up 18% in 1953, and today makes up 17%, although this apparent stability belies the down-up-down journey, having reached its peak at 32% in 1981.
Not only have the households changed, but so too has the makeup of which these households are comprised. The figures show that what is thought of as the traditional family unit has disintegrated over these 60 years. The number of households occupied by married couples has nearly halved since the 1970s from 70% in 1971 to 40% in 2011. The number of households occupied by singles has increased from 19% in 1971 to 33% in 2011. As the trends are expected to continue in this fashion, it is probable that the proportion of singles-occupied households with overtake that of married couples in the next decade.
Phew! Clearly the UK housing market has undergone massive transformations in the last 60 years, evolving as the needs of the country and its people changed. What will the next 60 years have in store for the UK housing market? If the previous 60 is anything to go by, it should be quite a ride!
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