I made the mistake of trying to figure out how much my parents’ house cost them in “today’s” money

Image courtesy of Esparta Palma.

Earlier today, I made the mistake of hitting up a currency converter site run by the UK’s National Archives. I’m currently looking into moving house and for a brief moment I wondered what things would be like if you could buy a house today and mortgage it around the cost that my parents did around 1985. I wish that I hadn’t looked.

The results of converting 1985 money into 2005 money (that’s as far as the Archive figures currently go) left me feeling sad and reconfirmed my belief that housing in the UK – whether it’s to buy or to rent – is currently one of the biggest social cluster f**ks the UK government isn’t doing enough about. Probably because too many in power are personally benefiting from the higher prices and lack of availability or are friends with those who are benefiting or have lots of constituents who are benefiting from this national scandal.

Because the housing situation in the UK is a national scandal and should be treated as such.

Anyway, the results of using the calculator? My parents’ first-time buyer, detached house, in Cornwall, was valued at £25,000 when they bought it back in 1985. The cost in 2005’s money (and let’s not forget that Pound Sterling, since the recession started, isn’t in a fab state at the moment)… £50,250.00. And during the heady days of the housing market of 2005, let’s just say that houses like my parents’ one were valued at much higher.

Looking at similar properties on their street that have been up for sale this year all the prices are within £20,000 of £200,000 and sometimes £30-50,000 more, depending on extensions. Average local wages tend to be below £20,000 a year. You would need a 10% deposit to get a mortgage for one of the houses on the street, so £20,000, but according to this article you would need to also be earning more than £30,000 a year to even get a mortgage worth £150,000.

This huge disconnect between wages and house prices is not better in the rental market, where properties are owned mainly be people who bought them during the housing boom and are now letting them through letting agencies who add a great deal to the rental fee, which in an ideal world would just be the cost of the mortgage payments that the real owner is paying off. In fact, there are a great many instances where the cost of rent in Cornwall per month is maybe at least £200-300 more than what the mortgage payments on the property would be.

Basically, the point of this blog post: the housing market is extremely f**ked-up in the UK and certainly in areas like Cornwall where wages are low, but to buy or rental prices are high. We need more houses, flats and apartments, at actual affordable prices. I also question whether the likes of Cornwall Council have a true grasp of the idea of affordable.

I’m not saying that houses can be sold for £50,00 today, but we should consider why building costs are also as high as they are at the moment, as shown by the estimations in this document. Personally, I think if the UK can get on top of its housing demands then we could actually improve the nations’ economic outlook.

EDIT
Wages could also go up, but I think the main issue is how high prices are in comparison to wages.

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2 thoughts on “I made the mistake of trying to figure out how much my parents’ house cost them in “today’s” money

    • Maybe, if there’s suddenly a huge decrease in the size of the country’s population leading to an overstock on houses. Though I suspect the rich will try to turn those all into third, fourth and fifth homes…

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