How on earth can they pay around 10 times their annual income to buy a home? I just despair at what the London ratio must be.
1960: £2200 / £500
1970: £4300 / £850
1980: £22,000 / £4000
1990: £60,000 / £9000
2000: £78,000 / £15,600
2010: £162,000 / £21,000
2020: £230,000 / £28,500
Today: £250,000 / £29,800
I'm happy... worked hard, bought and sold well. Something anyone can do with a bit of gumption.
so that is alright then Jack? do all those kids who live in slums realise that it is their fault for having parents without "gumption"
It great you have put this statistics, it gives an opportunity to put things into context. Newspapers are misleading people.
These numbers have to be taking interest rates.
In 1980. Average house price is £22,000 and income is £4000. That is 5.5 times income.
In 2020. Average house price is £230,000 and income is £28,500. That is 12 times income.
So it seems house prices are unaffordable now.
What about interest rates?
In 1980s, interest rates were 15%. On £22,000 that is £3,300 in interest alone. Wages were £4,000. That is £700 for disposable income after paying the interest.
In 2020, interest rate is very low at 2%. On £230,000 that is £4,600 in interest. Yet income is £28,5000. That is £23,900 for disposable income after paying the interest.
Comparisons are never like for like.
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