As the UK prepares to celebrate the Queen’s 60th Jubilee this weekend research reveals the fortunes of the nation’s residential property market since she came to the throne.
House prices across the UK have nearly trebled over the past 60 years, increasing by an average of 186% in real terms. 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, the research from the Halifax shows.
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.
Over the last 60 years, 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. UK House prices have risen in real terms in nearly two out of every three years, some 38 out of 60, since 1951.
The north-south house price divide has widened since 1971. 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 of 130%. The average southern house price in 2011 was 64% higher than the average northern house price, significantly higher than the average difference in 1971 of 42%.
London has recorded the biggest rise in house price with a real rise of 189%, at an average annual rate of 2.7% while 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%.
It also shows that the UK housing market has become highly cyclical since the 1970s. 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: 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 a 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).
Houses are also getting smaller. There has been a marked reduction in the size of properties constructed during the last 60 years. Homes of less than 50 square meters in size accounted for 9% all homes built in before 1980. This proportion doubles to 18% for homes built after 1980. Consistent with this, 17% of homes built before 1980 were flats, compared with nearly a quarter after 1980.
There has 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 of the housing stock built after 1980.
Semi-detached properties account for the largest proportion, 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 compared with 15% of those built between 1945 and 1964.