12 August 2013 10:38am

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A sad but true story...with many suffering in same way.
I did some calculations recently to see what was the real cost of buying a 3 bed semi inside M25 - at various points in the past - versus total life time net wages. Assuming national average wage throughout life and 85% Repayment Mortgage.
A 1970 purchase cost 8% - 1990 24% - and today 40% of net lifetime wage.
Apart from increasing HPs from £5000 in 1970 - £100,000 in 1990 - and £300,000 today - the biggest factor was falling real wages.
In the 1970s - annual wage growth was 17% pa - 9%pa in 1980s - 5% pa in 1990s and now 2.5 % pa.
Wages doubled every 4 years during 70s, and pro rata every 8 years in 80s - thus massively reducing the value of any debt - especially mortgage debt.
Funding the equivalent of a 2/3rds final salary pension is likely to cost a further 40% of lifetime net earnings.

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