I bought my first house in 1986. It was no kind of earth shattering event. Our animal feed business was new and struggling and my days were spent on a digger mixing cow food and loading wagons. It was a dusty kind of way to earn what was basically the equivalent of today’s minimum wage. I guess my wages back then must have been about £7000 a year.
So what? So what indeed,
Well. So this,
The house I bought was a traditional northern two bedroom terrace in
It was a decent sort of place with a long back garden that climbed up the hill
towards the park at the top of the town. From the highest point of the lawn you
got a long view over the rooftops to the glistening waters of Lancaster .
It was a fine spot to catch the sunset with a few cold cans. Morecambe Bay
The details of my purchase make for interesting reading in the cold light of 2013. I was 26. My salary gave me the chance to take a mortgage of up to £22,500.
Grasmere Rd cost me £21,000 and I needed to borrow
£1000 from my mum and dad for a deposit leaving a mortgage of £20,000. I could
have bought a cheaper place had I so wished. I small terrace without a view in
a rougher part of town would have set me back £15,000. A flat in the worst part
of town would have left change from ten grand.
Paying the mortgage was no big deal. It was about half the cost of renting and rents were hardly high. After the monthly direct debit exited my account, I was always left with plenty of cash to run a car, go the match and ride the train up and down to London most weekends when Liverpool were playing away.
Looking at what an hour’s work at minimum wage could buy you back then makes for interesting reading. Depressing reading. A place on the Kop to watch the European Champions. The price of entry to most gigs. Eight pints of ale. Eight litres of fuel. Three packs of fags. My mortgage cost me 30 hours of cash.
So fast forward.
My equivalent 26 year old in
on minimum wage is now earning
£12000 a year. If he is a graduate like I was, then he is already saddled with
twenty grand’s worth of debt for the dubious privilege of having a degree
certificate tucked away in a drawer somewhere. Maybe he is fed up with being
fleeced by his ‘buy to let’ landlord and decides the time has come to get a
place of his own. His minimum wage packet is enough to get him a mortgage of up
to £40,000, though he’ll have to come up with £8000 or so as a deposit. So on a
sunny Autumnal day my man takes a walk up the hill to Lancaster Grasmere Rd and likes what he sees. It’s
a quiet sort of street within easy walking distance of the town centre. Sound
as a pound.
So he heads back home to pop the postcode into Google.
As in four times more than he can even think of buying. As in not a cat in hell’s chance. And my man will soon enough discover that he hasn’t a cat in hell’s chance of buying so much as a broom cupboard with the kind of mortgage he can get his hands on.
Were anyone on minimum wage actually able to get themselves the £150,000 mortgage they would need to buy
26 Grasmere Rd, it would take 141 hours
of work per month to cover the payments. That would leave 39 hours for
everything else. £60 a week to clothe and feed themselves, pay the gas and
electric and Council tax. And the TV licence. No chance.
This all goes to show what a miserable short straw today’s young people have drawn. The standard of living my generation enjoyed has turned into a complete pipe dream. At the time, the 1980’s were seen as a grindingly hard time as Maggie Thatcher took such delight in smashing the North to pieces. When you compare those times to today, they seem like some kind of lost dream era.
All of this makes the fact headlined at the top of the blog all the more jaw dropping.
So. The fact. The killer fact.
In the 13 years when Tony Blair and Gordon Brown were in charge of the shop, house prices in the
went up by 300%. Fair enough. We know this. And we know that
those who were lucky enough to own a house before the raging inflation kicked
in were suddenly able to borrow money hand over fist on the back our their
bricks and mortar security. We know that millions of Brits used their bricks
and mortar as cash machines and spent and spent and spent. DIY shops boomed.
And wine bars boomed. And coffee shops boomed. And we borrowed and borrowed to
buy German cars and Japanese electrical goods and French clothes and Chinese
tat and American burgers. UK
And night after night Tony and Gordon would appear on the tele to tell us how completely brilliant they were. They were the new miracle men at the helm of Cool Britannia, the land of milk and honey where nobody ever made everything but everyone was entitled to credit enough to hit the town on a Friday night and throw up in the gutter.
There was a perceived wisdom that the rocketing rise in house prices was an unstoppable force. This is what happened in a country as hip and booming as Tony and Gordon’s
. Like Maggie once said, you
can’t buck the market. Of course you can’t! The market is king. The market is
everything. The market is God. The market was Gordon and Tony’s wet dream. Britain
And we bought it. All of us. We bought it on tick. On the never, never. And why wouldn’t we? You don’t buck the market. You can’t. You go with it. You bow and scrape to it. You worship it…
After all the same story was being played out all over the Western world. It was our reward. Our due. Our payback for investing in all those nukes and fast jets and seeing of the demonic threat of Bolshevik communism.
But here’s the thing.
The big lie.
The killer fact.
In the thirteen years that Tony and Gordon held the reigns, the price of an average house in
fell by 5%. It didn’t go up
by 300%. It fell by 5%. One way or another those clever, clever Germans did the
supposedly impossible and bucked the market. Instead of filling their boots
with Asian gadgets care of a walletful of credit cards, they simply got one
with making their cars and machines and wore a wry and knowing smile on their
faces as they watched the crowing antics of Tony and Gordon. Germany
Rd had been in a small German town it would cost
about £40,000 today. My 2013 minimum wage German equivalent would be able to
buy it every bit as easily as I did back in 1986. Except he wouldn’t buy it.
Most Germans have little interest in buying property. Instead they prefer to
rent on a long term basis from excellent landlords who are strictly governed. A
German version of 26 Grasmere Rd
would command a rent of about £100 a month: 16 hours a month of work. Today’s
German equivalent of 1986 me has about £230 a week left to spend after paying
his rent and it costs him a tenner to go to the match.
So Tony and Gordon boasted and boasted that they were God’s gift as they poured petrol on the flames of a raging house market and they basked in the glory of fifty millions of Brits spending up to the limit on credit cards secured by fantasy house prices. The result? A bloody disaster.
conclusively proves that the market was there to be bucked. Germany
Managed. Controlled. Tamed. Bossed.
And who is having the last laugh?
Well, it ain’t us. That’s as clear as clear can be.
But hang on a sec…. for once I use up those last remaining pounds on my credit card to get smashed out of my head tonight, I will remember what is most important. Because at midnight on a Friday night we Brits are really good at remembering what is important. How does the song go?