In my last post I looked at the (reasonable) price of country properties in the 1950s. In this post I shall be looking at the history of house prices more generally and how they rose out of reach of people on average incomes.
In 1975 a newspaper reported that the average cost of a flat in London was £10,000, although the price could “spiral in dizzying fashion depending on area”. That average price was almost exactly three times average annual teacher’s salary, making it affordable to those on average salaries. Recently the average price of a flat in London was reported as £466,000, more than twelve times the average teacher’s salary. Writing in the Times in 1977, Derek Darby made the following comments on rising house prices:
“But one calculating surveyor in a letter to a newspaper recently had even worked out that, assuming prices rise by 10 per cent a year, today’s very modest semi costing around £7,750 will reach the astronomical sum of £140,000 in 30 years. Armageddon will surely strike before that. Won’t it?”
In 1977 that very modest semi cost less than two year’s annual salary of the average teacher. I don’t know exactly when it passed the £140,000 mark, but in October 2015 the average cost of a semi-detached house in England was £176,000, about five times the average teacher’s salary.” But the average cost of a house is deceptive, with prices being much higher in some parts of the country than others (and all parts need teachers or indeed other people on average or lower than average salaries). In Cambridge a perfectly ordinary 1930s three-bedroomed semi-detached house in Highfield Avenue recently sold for £710,000, about two hundred times its price in the early 1960s. Meanwhile teachers’ salaries have risen by a factor of about thirty.
The complete guide to investment by Gordon Cummings, published by Penguin in 1963, includes a chapter on buying a house, not because it was seen as a good way to invest cash (in those days houses were for living in, not for making money from) but simply because it was “the biggest and most important financial transaction undertaken by many people”. The author went on to explain how building societies would normally lend up to three times the borrower’s annual gross income, repayable over a term of 20 to 25 years. The average price of a new house in the early 1960s was about £3,000, almost exactly three times the average teacher’s salary. Mortgage repayments would have taken up about a quarter of the teacher’s salary – within the limit recommended by the guide. The book highlighted the fact that “the post-war shortage of houses has created a scarcity demand which leaves the seller with all or most of the advantages”. But that shortage had not led to rampant rises in prices.
After the second world war you could have bought two cottages, numbers 42 and 44 Glenvilla Road, in Hampstead, London, for a modest total of 3,500, putting at least the smaller, one-bedroomed, cottage within the reach of average teacher. And even the larger of the two, with two bedrooms, cost only £2 a week to rent, at a time when average teacher earned about £8 or £9 a week.
Moving out of London, an unfurnished two-bedroomed flat in a modern purpose-built block in Saffron Walden, Essex could be rented in the late 1940s for £1 6shillings a week, inclusive of rates. If you wanted the flat furnished, the rent would be more than doubled, a reminder that furniture was comparatively expensive in those days. In the early 1950s a large town house in Cambridge for example, divided into 4 flats and a flatlet, came with an asking price of £6,000. Throw in the furnishing, and that went up by a third to £8,000. And in the late 1950s a built in Electrolux refrigerator added £50 (or nearly two per cent) to the cost (£2,600) of a a newly-built three-bedroom semi-detached house with a garage in the village of Shelford, close to Cambridge. In 1957 one prospective buyer turned down the opportunity to buy a large Victorian house in De Freville Avenue, of the type that nowadays sells for more than a million, for £2,600, as she didn’t have enough furniture to put in all the rooms. In these days of buy-to-leave it seems like a missed opportunity but in the days when houses were for living in and furniture was comparatively expensive, it may have made perfect sense.
In Cambridge in the late 1940s, a newly-built three-bedroomed semi with a large garden in one of the less fashionable suburbs, would have cost average teacher little more than a year’s salary at £520-675. Finance was available for those who could put down a deposit of £35 in the form of a loan of £500 to be repaid over 20 years at 14s 9d a week, an amount which would not have made a very large dent in the teacher’s salary. Meanwhile a three-bedroomed Victorian terrace house in Searle Street, conveniently located for the town centre, colleges and parks, could be had for £700, less than twice the teacher’s annual salary. Recently the same house sold for £575,000, more than 15 times the average teacher’s salary.
If a family had two teachers’ salaries coming in, they could have afforded something a bit grander: in 1959 an eight-bedroom house in Cranmer Road was on sale for £5,000, about six times the average salary of a teacher. Last year it sold for £2.85 million, about 80 times the average salary of a teacher.