Halifax has published the results of a study into major changes to the UK housing market over the past 50 years.
It found that the average UK house price has 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.
House prices recorded their biggest increase in the latest decade with a real rise of 62% during the 2000s marginally ahead of the 61% increase in the 1980s. The worst performing decade for house prices was the 1990s when prices fell by 22% in real terms.
Halifax found 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.
The proportion of homes that is privately rented has fallen significantly from 33% in 1961 to 14% in 2008. The private rental sector was bigger than both the owner-occupied and social rented sectors until the mid 1950s. There has been a more recent increase in the private rented sector from 9% in 1991 to 14% in 2008.
The relative size of the socially rented sector in 2008 (18%) was smaller than in 1961 (25%). The proportion of the dwelling stock that is socially rented expanded rapidly through the 1960s and 1970s, peaking at 33% in 1981. A sharp reduction in local authority house building and the sale of council houses have contributed to the sector’s contraction since the early 1980s. In addition, the composition of the sector has changed significantly with a marked shift away from local authority provided housing towards provision by housing associations.