Massive change in UK property market over 60 years, jubilee research shows
As the UK continues to celebrate the 60th anniversary of The Queen, property researchers have released a rash of figures and reports showing how the country’s residential property market has changed over the years.
Today the market is suffering under a cloud of austerity and it wasn’t much different when Elizabeth II came to the throne in 1952.
But during her reign the unique nature of housing in the UK means that despite four cycles of boom and bust, house prices have grown by more than 250% over and above the general rate of inflation during.
As a result the total value of the entire housing stock of the UK’s in 1952 now equates to the value of the housing stock in single cities such as Manchester (£25 billion), Bristol (£30 billion) and Glasgow (£31 billion) according to new research from Savills.
‘Over the past 60 years we have seen great changes in the way we view housing. Our demands on and requirements from housing have changed, meaning that it has become part necessity, part luxury and part investment,’ said Lucian Cook, director of research at Savills.
‘Combined with a mismatch between housing demand and supply and a shift to smaller households, this has meant that more of the nation’s surplus income has been directed at housing. As a result house prices have risen more in line with the standard rather than the cost of living, leaving the UK with an asset class worth a total of £4.3 trillion,’ he explained.
Comparing the position now to 1952 Cook said; ‘General rationing has been replaced by mortgage rationing and inflation appears much less of a risk, meaning that it is currently difficult to identify the triggers for the next cycle of boom and bust.
‘It shouldn’t be forgotten first 10 years of the Queen’s reign was a decade of austerity when house prices fell in real terms by 3%. It wasn’t until the early 1970s that we saw the cycles of boom and bust with take hold, with each subsequent decade recording significant real house price growth Periods of boom and bust have been interspersed with more stable price growth, causing the housing market cycles to increase in length in the second half of the Queen’s reign,’ he explained.
Home ownership has peaked and it therefore seems unlikely that we will see a repeat of such dramatic recent price growth. ‘In the short term our forecast is for real house price falls at a national mainstream market level, as inflation strips out price growth. We expect these to lead to a period of much less spectacular house price growth than we have become accustomed to at certain parts in the housing market cycle. Future house prices booms and sharp corrections are inevitable but there’ll be a long wait for the next boom,’ added Cook.
According to research from the Halifax the average UK house price has increased 7,278% in nominal terms from £2,200 in 1951 to £162,338 in 2011. This is three times the rise in retail price inflation over the same period.
House prices in the south have outperformed northern house prices over the past 40 years. The average house price in the south has risen by 164% in real terms, greater than the real increase in the north at 130%. The average southern house price in 2011 was 64% higher than the average northern house price.
London has seen the biggest increase in house prices with a real rise of 189%, at an average annual rate of 2.7% whereas UK prices increased by 144% over the same period.
The South West recorded the second biggest increase at 163%, followed by Yorkshire and the Humber at 159%. Scotland recorded the smallest increase with a real rise of 91%.
‘The UK housing market has undergone some extraordinary changes over the last 60 years, reflecting the changing way we live our lives. Today, the typical UK household is very different compared with the 1950s following the substantial growth in home ownership and the shift towards single occupancy households,’ said Martin Ellis, housing economist at the Halifax.
‘The quality of our homes has improved markedly. House prices, however, have become prone to pronounced swings over the past 40 years and the rapid decline in the number of homes being built since the 1950s has contributed to the demand-supply imbalance that has characterised the UK housing market in recent years. This is likely to continue to play an important role in determining the landscape of the UK housing market over the coming years,’ he added.
The Halifax research also shows that prices have risen at an average annual rate of 1.8%, slightly faster than the 1.6% per annum average rise in real earnings over the period.
House prices in the 1980s recorded their biggest increase with a real rise of 42% between 1981 and 1991, greater than the increase of 30% over the last ten years. The worst performing decade was the 1950s when house prices declined by 7% in real terms.
Notwithstanding the decline in the 1950s, house prices were relatively stable in the 20 years to 1971 with annual growth averaging 0.9%. There have since been four periods of rapid real house price growth in 1971 to 1973, 1977 to 1980, 1985 to 1989 and 1998 to 2007. Each period was succeeded by a substantial drop in real house prices. The most recent housing boom, which lasted ten years, was by far the longest period of rapidly rising house prices.
Whilst more than 15 million homes have been built in the UK in the past 60 years, the number of houses built each year has fallen by one third since 1951, from 201,860 to an estimated 137,000 in 2011.
This drop has been driven by a dramatic fall in the volume of public sector housing being built. House building reached record levels during the 1960s, with a peak of 425,830 units completed in 1968. Private sector completions also reached a record high in 1968 (226,100).
The research also found that there has been a marked reduction in the size of properties constructed during the last 60 years. Homes of less than 50 square feet in size accounted for 9% all homes built before 1980. This proportion doubles for homes built after 1980 to 18%. Some 17% of homes built before 1980 were flats, compared with nearly a quarter, 23%, after 1980.
There has also been a marked shift in the type of properties built in England over the past 60 years. Detached homes represent just 10% of the current English housing stock that was constructed between 1945 and 1964. In contrast, detached properties account for more than a third, 36%, of the housing stock built after 1980.
Semi detached properties accounted for the largest proportion at 41% of the English housing stock built between 1945 and 1964, but represent only 15% of homes built after 1980. Flats account for 20% of the housing stock that was built after 1980.
And research from the Nationwide shows that Her majesty has done well in terms of property. Buckingham Palace is estimated to have been worth £11 million when the Queen took the throne, it is now estimated to be worth £1 billion, an increase of 9,000%. Windsor Castle was worth £2 million when the Queen began her reign, and is now estimated to be worth £189 million, a rise of 9,350%.
Whilst the average UK house in 1952 was valued at £1,891, it is now worth £162,722, according to Nationwide data which first began being collected also 60 years ago in 1952.