Probably comparatively few people are able to buy a house `cash down’. Banks or building societies may advance part of the purchase price. The charge is usually made 1% over the bank rate.
During 1931 the popularity of house purchase by instalment grew – and a total £90 228 000 was loaned. This was back in the days when a house cost around £500. An advertisement in a local paper focused on a single estate agent in one of our local villages who has recently sold over £5 000 000 worth of property. The average price of a house is this village in 2006 is around £290 500.
Some straight forward 11+ mathematics follows.
Back in 1931, by dividing the total money loaned by the average house price we can see that 180456 loans were made in the whole country.
In 2006, to find out how many times 290 500 went into 5 000 000, we had to divide once again. The local estate agent had to make just 17 sales.
However, and there is always a however, £290 500 in today’s money divided by the £500 cost all those years ago suggests a rise in value 581 times greater.
The 11+ question is: Assuming the rise in house prices maintains a similar pattern in the future, how much will our ten to eleven year olds have to pay for a house in another seventy five years?
If we round it all up our £290 500 house becomes £300 000. Our 581 becomes 600 so the cost of a house in 75 years time will be £180 000 000! )