Friday, 10 June 2022

What Was the Average Royal Tunbridge Wells House Price in 1952?


Well, what a weekend the Jubilee was. Street parties, gatherings in the park, the purple buntingegg and cress sandwiches, union jack flags, cheese and pineapple on cocktail sticks, and let's not forget the trifle – the Platinum Jubilee Party.  And no decent party is worth its salt without a game or a quiz.

So, if you have post-Jubilee blues, let me ask you, how much was the average Tunbridge Wells house worth in 1952?

To start with, let me look at what a property is worth today in Tunbridge Wells.

The average price paid for a property in the Tunbridge Wells arein the last 12 months was £531,440. 

Now, let's go back to 1952. Sir Winston Churchill was the Prime Minister, Newcastle won the FA Cup, London was covered in the Great Smog, free prescriptions on the NHS ended (it cost 1 shilling or 5p in new money), and King George IV, at the age of 56 passed away on the 6th February, meaning Princess Elizabeth became the Queen - as for housing

The average price of a Tunbridge Wells home in 1952 was £4,339.

This means Tunbridge Wells house prices are 121 times higher since 1952. 

Yet over the last 70 years, the country has been subjected to 4.5% per annum inflation.

The 1952 Tunbridge Wells home is equivalent to £83,448 today when adjusted for inflation.

This means Tunbridge Wells house prices have increased by 504.8% in real terms since 1952.

So, does that mean house prices are more expensive today compared to 1952?

In 1952, the average annual male wage was £452, 8 shillings and 1 pence, meaning the average Tunbridge Wells house was 9.59 times the average wageToday the average home is 8.85 times the average wage.

Yet let us not forget the average mortgage payment in 1952 was £11 per month. The average Brit earned £34 per month, meaning 32.3% of the household income was going on mortgage payments, whilst nationally today, according to the Nationwide, it stands at 28%. 

It's cheaper, in real terms, to buy a property in 2022 thain 1952.

 And that’s the point, some things in real terms (real terms being true spending power of the money after taking into account wages, costs and inflation) were more expensive and some cheaper 70 years ago. For example, in 1952, petrol was equivalent (in today’s inflation-adjusted prices) to £1.02 per litre, a pint of beer £2half a dozen eggs £2.20cheddar cheese £2.40 per 500g, a basic radio £430, a Hoover £530 and a 12-inch TV £1,600.

So back to property, the Queen’s reign has seen some amazing house price rises in the UK, yet that growth hasn’t always been in constant upwards direction as we have had a couple of dips along the way.


We had a house price crash in 1990, when the average value of a Tunbridge Wells property dropped from £130,582 to £108,147 in 1996, only for them to start rising again.

 

Tunbridge Wells saw another house price crash between 2008 and 2009, and the average house price dropped from £390,627to £333,015 in a year.

 

So, what else has changed about property and housing since the Queen came onto the throne?

 

In 1952, only 32% of people owned their own home, whilst 50% of people rentedfrom private landlord and 18% rented a council house.

 

By the time of the Silver Jubilee in 1977, 56% of people owned their own home, with 12% of people privately renting and 32% rented from the council.

 

Come the Golden Jubilee in 2002, 70% of people owned their own home, with 11% of people privately renting and 19% rented from the council.

 

Today, 63% of people own their own home, 20% of people privately rent and 17% rent from the council.

 

So, to conclude, as we look forward into the 21st century, I am sure the property market will be totally different again in 70 years. 

 

I hope you enjoyed reading this article and do share it with your friends if you find it interesting.

 

PS for all you Rightmove fans, the average Tunbridge Wells apartment in 1952 was worth £2,388, and a terraced home in Tunbridge Wells could be bought for on average £3,557.

Has the Royal Tunbridge Wells Property Market Peaked?

Should you buy now or wait for the bargains?

 

• Many commentators believe we have seen the peak of the Tunbridge Wells property market.
• So, should savvy bargain hunters wait for Tunbridge Wells house prices to fall?
• Or could postponing your house buying for any anticipated Tunbridge Wells house price drop be a costly mistake?

Over the last two years, the Tunbridge Wells property market has been a rollercoaster ride of hyperactive demand together with the new sport of getting your offer accepted when you compete with 30 other bidders

Yet there are clouds on the horizon that the

Tunbridge Wells property market could be at its peak.

Bank of England interest rates have increased four times in the last few months to try and combat inflation. Meanwhile many Tunbridge Wells households are finding it tough to counter the most significant drop in real incomes in a single year since records began in the mid-1950s, all at the same time as gas, heating oil and electricity prices are predicted to rise again in the autumn

Hence why some economists are predicting house price drops in the coming 18 to 24 months of 3% to 5%.

So, surely this is not the best time to buy a Tunbridge Wells property – and surely savvy buyers should wait for Tunbridge Wells house values to fall?

Is it realistic to see double-digit national house price growth? Certainly not.

The question is how far the Tunbridge Wells property market will slow and whether the slowing will drop into modest falls.

Let me look at household income first.

At best, the outlook is gloomy as real household disposable income is set to drop by 2.4% in 2022/23, the largest drop since records began in 1956. This is despite the £17.6 billion of financial support for British households revealed in Rishi Sunak’s Spring 2022 Statement with the National Insurance thresholds, energy bill support package and duty cut on petrol. Without these changes announced by the Chancellorreal household disposable income would have fallen by an additional 1% in 2022/23.


Second, as interest rates increase, mortgage rates will increase in line, increasing mortgage costs, so surely that will curtail demand, meaning Tunbridge Wells house prices will drop, and buyers should wait to catch a bargain?

Finally, with inflation on the rise, the real value of people’s savings will decrease quicker, and the value of their deposits will diminish, meaning Tunbridge Wells prices will surely drop, and people should wait to buy? 

Surely the Tunbridge Wells property market has peaked and

buyers should wait for the bargains?

Well, I don't think so, and these are the reasons why I say that: 

I believe, subject to no significant shocks in the world economy, Tunbridge Wells house price growth will be very slow in the next 18/24 months and go into low single digits (even the odd month dipping ever so slightly into the red), but not the 16% to 19% annual drop we saw in 2008/9. 

Let me look at real household income. Every economist predicts growth in real household income in 2023/24 by around 1%.

If the two years are combined, the predicted effect on real household income in the next two years (2022/23/24) is a net loss of 1.4%, whilst in the credit crunch years 2010/11/12, the net loss was 2.7%. 

I was looking at the increase in mortgage rates. 79% of owner-occupiers have fixed their mortgage costs and had their affordability stress-tested to Bank of England interest rates of 3% to 4% under the Mortgage Market Review rule changes in 2014. I believe the most significant impact of increasing interest rates will be at the point of taking on a new mortgage by first-time buyers (as opposed to servicing or the porting of an existing mortgage from one house to the next house).

The four successive Bank of England base rate rises, inflation and the rising cost of living are likely to bring more cautiousness over summer and autumn when it comes to people buying a property. Yet, there is still a massive imbalance of demand for property over the number of properties for sale to quench that demand. 

The potency of the job market and the ongoing mismatch between the supply of properties on the market and demand for those properties will support property values. 

Finally, the by-product of increasing inflation is that it makes buy-to-let more attractive. If there is a reduction in first-time buyers, this will be counterweighted by more landlords buying again, supporting the current level of Tunbridge Wells properties. 

But what if Tunbridge Wells house prices do drop significantly?

So let’s assume that Tunbridge Wells house prices do fallirrespective of the reasons above, it will not inevitably help Tunbridge Wells buyers.

If we have a house price crash, people tend to find their careers are at risk, and their salaries don’t rise as much. The younger generation (i.e. first-time buyers age range) often gets hit the toughest by recessions.

If first-time buyers wait until 2024 to buy and Tunbridge Wells property values drop by 10%, that will prove more expensive.  

In the last 2008/09 crash, lenders weren't offering 5% deposit mortgages. The lowest deposit mortgage that first-time buyers could get was with a 10% deposit and even then, they were hard to come by.

When writing this article, first-time buyers can obtain a 5% deposit mortgage for a fixed rate of 2.66% for five years. 

The typical first-time buyer terraced house in Tunbridge Wells

sells for £429,700.

So, if they were to buy now, on this mortgage deal, the first-time buyer would have to stump up £21,485 deposit and their mortgage payments would be £1,494.59 per month. 

Yet, let’s say property values in Tunbridge Wells do drop by 10% in the next 18 months, the terraced house would now be worth £386,730, so a significant saving. Or is it? 

Everyone believes interest rates will rise further, so let’s assume they go to 3% by the autumn of 2023. That means the mortgage rate for a 10% deposit mortgage will be in the early 5%s, so let me assume 5.29% (because the banks tend to increase the gap between the base rate and the mortgage rate in recessions to allow for the extra risk).

The monthly mortgage payment on the 5.29% mortgage would be £1,821.49 per month, and you would need to double your deposit to £38,673.

So even if Tunbridge Wells' house prices did drop by 10%, the first-time buyer would be £3,920 worse off a year in mortgage payments and would have to find double the deposit.

...and then there is the other cost of waiting.

You have two years’ worth of rent to pay. The average rent for a Tunbridge Wells property is £1,332 per month.

If you waited a couple of years for Tunbridge Wells house prices to drop by 10%, you would spend £31,968 in rent.

Choosing to buy a Tunbridge Wells property makes even more economic sense if it is a long-term choice, as homeowners can ride out any house price drops. 

Homeowners who plan to stay in a property can generally rely on getting their money back within six to ten years whilst not paying any rent.

Will Tunbridge Wells prices go up, or will they go down?

Remember, George Osbourne said house prices would drop by 18% in May 2016 if we voted to leave the EU, whilst many economists said they would drop by 5% to 10% when Covid hit in March 2020.

And we all know what happened.

If you think you will be better off owning your own Tunbridge Wells home rather than renting one, don't bother to wait for the suggested house price drop that may never happen.  

These are my thoughts, what are yours? Let me know in the comments.