House prices are now more than 130 times higher than they were when Queen Elizabeth II ascended the throne in 1952 (70 years ago), or almost four times higher (365%) when taking inflation into account. 

To coincide with the Queen’s Platinum Jubilee celebrations, an analysis carried out by property firm Savills depicts how the housing market has fared over the past 70 years.

The story of the past 70 years

Savills’ findings show that when the Queen came to the throne on February 6 1952, the average house price was just under £2,000, the equivalent of £56,000 in today’s money. Since the reign of the Queen, this amounts to house price growth averaging 2.2% per annum above the rate of inflation every year.

Lucian Cook, head of residential research at Savills, comments: “House price growth over the past 70 years has meant that the nation’s housing stock has become a vast source and store of household wealth during the Queen's reign. But the ability to benefit from this has largely been dependent on the year you were born, meaning the capital appreciation we have seen through different housing market cycles has created a marked divide between the housing haves and have nots.”

He added: “That means different generations now have very different views on the benefits of house price growth, how much new housing we build, where we build it and what is expected from housing policy.”

“Over the Queen’s reign, there have been six periods where annualised price growth has been over 5% in real terms which have to lead us to this point. While this has been punctuated by a series of relatively short-lived, but uncomfortable, downturns, the upswings have been magnified by a systemic undersupply of housing over the past 40 years.”

In the beginning

The start of the Queen’s reign kicked off a major national house building programme, with no real sign of inflation-plus house price growth until 1958. A period of economic volatility commenced shortly after, which was closely matched by the fortunes of the housing market through the 1970s and early 1980s.

The first pronounced period of sustained inflation-adjusted house price growth was initiated by the introduction of the Right to Buy in 1980, thus coinciding with Thatcher’s dream of homeownership. Facilitated by the MIRAS (Mortgage Interest Relief at Source) in 1983, headline house prices increased by 79% over this period, even after adjustment for inflation.    

Cook commented: “This period fundamentally altered the way in which we looked at our home as a route to financial prosperity, fuelling the nation’s obsession with house prices.”

“But the longest and most unprecedented upswing in values took place between Q4 1995 and Q3 2007. During this time the average loan to income ratio increased from 2.3 to 3.1.”

Cook concluded: “On a nominal basis, house prices increased by 87% over the 2001 to 2004 period alone. This created a sizeable wedge between those who were and weren’t able to get onto the housing ladder over this period. It is a divide which became entrenched in the post-credit-crunch, age of mortgage regulation, and has been a catalyst for government intervention in the housing market, through schemes such as the soon-to-end Help to Buy”

A comparison to the present market

Cook says that with inflation eating into households' disposable income and interest rates on the rise, they expect to see a marked slowing in price growth as the current supply-demand imbalances ease over the remainder of this year. However, the recent mini-boom has only just put prices back to where they were in Q3 2007 on an inflation-adjusted basis. Despite the low underlying interest rate environment, he says that this reflects the fact that UK house price growth was relatively subdued immediately prior to the pandemic.

He finishes by mentioning that with a strong employment market, mortgage regulation having stress-tested borrowers’ ability to sustain rate rises and many having already locked into historically low-interest rates, there do not appear to be the triggers that have fuelled previous market downturns.

Peaks and troughs: Housing market cycles

Table 1: House price growth of the past 70 years

Via @PropertyInvestorToday