UK Property Market History: 30 Years On

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The UK’s property market history in the past 30 years has been characterised by a series of peaks and troughs. Since County Homesearch was founded in the late 1980s, there has been an ever-growing problem of lack of housing stock. Demand has consistently outstripped supply, often leading to an exorbitant rise in house prices, and local authorities simply don’t have the funds to build more social housing. Expectations around home ownership are markedly different in 2018 than they were in 1988, particularly in London. On the flip side, home owners have seen brilliant returns on their initial investments.

Buy, buy, buy! 

Way back in the early 1980s, home ownership was on the rise and renting was becoming less and less popular. Mortgages were more readily available and interest rates remained relatively low. Local authority investment in housing ensured that supply comfortably kept up with demand and house prices didn’t outstrip wages rises.

In such buoyant circumstances, home-owning became a real aspiration among the working class. The possibility was finally within their reach. As Prime Minister, Margaret Thatcher tapped into this aspirational feeling and made it a core tenant of her government’s housing policy. Under the 1980 Housing Act, she targeted working-class voters with her ‘Right to Buy’ scheme. This gave people the opportunity to buy their own council house at a heavily discounted price. By the time County Homesearch was launched in 1988, the average discount was 44%.

Approximately 1 million council houses had been sold under the scheme by 1987. It all worked out particularly well for those people who bought quickly, early on in the scheme. In 1987 alone, house prices rose by 16% and 1988 only saw prices climb by a further 25%. At the same time as council homes were being sold off in their hundreds of thousands, local authorities dramatically reduced their housing investment and construction subsequently slowed. Private contractors failed to make up the shortfall and demand soon began to outstrip supply, marking a crucial moment in UK property market history.

From a financial perspective, both the 1980s and 1990s saw a growth in mortgage lending thanks to the ongoing deregulation of the financial sector. It became far easier to secure a mortgage right at the same time as strong confidence in the country’s economic growth continued to push up house prices. Such confidence was knocked however by the recession of 1991 and the subsequent double digit interest rates. With unemployment rising, people struggled to cope with their mortgage repayments and repossession became a concern.

Turn of the Century Housing Bubble

Towards the end of the 1990s everything began to pick up again and since then, house price rises have consistently outstripped both inflation and real wages. The supply of housing has not met the ever-increasing demand and inevitably, a housing bubble was created. With the 2008 financial crash sending shockwaves around the world, house prices plummeted (15.9% in 2008) and it became harder to obtain a mortgage. The situation was only further compounded by investors buying up housing stock to use for buy-to-let.

In more recent UK property market history, the focus has very much been on demographics. Older generations are more likely to outright own their home than they were 25 years ago, but the younger generations are facing a massive struggle to get on the property ladder. Construction of new housing remains low whilst the country’s population is only increasing. Hundreds of thousands of new properties are needed each year to meet the shortfall. Real wages have also failed to keep pace with house prices and by 2015, the average house cost roughly five time the average annual salary.

County Homesearch have had their finger on the pulse of the UK property market for the past 30 years. Contact us on 0333 939 8300 to discuss how we can use our experience and local knowledge to help you.