Decades of housing growth
This is according to the Halifax, which has looked at the housing market over the past 50 years and identified the key changes. The analysis starts at the end of the 1950s and commences with the record growth in housebuilding through the 1960s. The worst performing decade for house prices was the 1990s when prices fell by 22% in real terms.
The average UK house price increased by 273% since 1959 in real terms (i.e. after allowing for retail price inflation), at an average annual rate of 2.7%. This is faster than the 2% per annum average rise in real earnings over the period. The average UK house price was £2,507 in 1959 and was £162,085 in 2009.
Pronounced cycles have been a key feature of the housing market since 1959. There have been four distinct periods of rapid real house price growth: 1971-73, 1977-80, 1985-89 and 1998-2007. Each of these periods was followed by a significant fall in real house prices.
Owner-occupation in the UK has increased by 25 percentage points from 43% in 1961 to 68% in 2008. The biggest rise in owner-occupation occurred in the 1980s following the introduction of the Right to Buy scheme.
Martin Ellis, housing economist at Halifax, said: “The last 50 years have witnessed some remarkable developments in the UK housing market. There has been a significant shift towards owner-occupation with the majority of households now living in their own homes rather than renting. There have also been substantial changes in both the number of households and their composition; the typical UK household now is very different to 50 years ago.
“Levels of housebuilding have fallen sharply over recent decades, led by a reduction in building by the public sector. At the same time, the types of homes built have altered greatly both in terms of type and amenities. No doubt, there will be further dramatic changes over the coming years, most likely including ways that we are currently unable to foresee.”