The News headlines this week have been filled with stories of families being unable to pay childcare costs which, along with the usual stories of house price increases/ falls got me to wondering was there a link between the two issues.
If we look at the cold hard facts (see table below), there appears to be a direct correlation between households having two breadwinners and the increase in the price of houses. When women first started to enter the workplace in large numbers as part of a family unit (rather than as individuals who would be expected to give up work once married) in the 1960’s and 70’s it was, in the main, to be as liberated individuals with their own spending money and not, as is so often the case nowadays, simply in order to meet the cost of living and owning a home.
This extra source of family income in the early 70’s (more than doubling some households income in some cases), along with other economic factors in play in the UK at the time; enabled families to better themselves with the ultimate status symbol; their home. As with all markets, the simple Laws of supply and demand came into play and prices skyrocketed by 380% between 1970 and 1980 (see table below).
By the early 80’s, the genie was out of the bag and no longer was the extra income ‘extra’. By now, it had become essential to the family budget. Put simply, if families wanted to be able to afford to buy a home, both partners HAD to work. The choice and freedom to work or stay at home for one or other partner had disappeared. Not only that, but for the majority of married/ co-habiting couples who had children, the cost of childcare was no longer relatively easy to afford – in fact, as legislation has been brought in, child-care costs have increased dramatically; creating even more pressure on both parents to go out to work.
Before I am lynched for being a misogynistic pig, I should say that I am firmly of the opinion that Dads make equally as good single parents as Mums (I was a single father for a while) and, I see no reason why either gender should not stay at home to look after the children. However, it is m y personal belief that children benefit from having at least one parent at home in their formative years wherever possible. This blog is purely about exploring the possible causes of the housing boom, it is not in any way attempting to make a social statement about the rights or wrongs of any such cause.
From the 1930’s up until the 1960’s, UK house prices* had been relatively stable with a regular, but generally low, rises in prices of just a few percent per year. The figures below are very basic and taken from the most accurate year-end figures I could find. They do not account for inflation. Nor do my calculations factor in other important variables that would certainly have contributed to some of these rises, such as changes in overall affluence of the UK economy etc. Despite these omissions, I am convinced that this seed change in household incomes was the principle factor behind the housing boom of the 1960’s, 70’s and 80’s.
1930 to 1940 15% drop
1950 to 1960 31% increase
1960 to 1970 96% increase
1970 to 1980 380% increase
1980 to 1990 154% increase
1990 to 2000 70% increase
2000 to 2010 61% increase
The logical extension of this theory and the current concerns of childcare costs is, whether we will see a gradual return to their being just one bread-winner in a family unit whilst one partner stays at home and looks after the children. If this were to happen in sufficient numbers, and I think that highly unlikely, then the price of property would almost certainly drop. Whether that possibility might generally be a good thing or not will, no doubt be hotly debated.
What are your views? You can debate this topic with me and others on my property forum
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About Chris Wood: Chris is an estate agent with over 25 years of property experience. His business, PDQ Estates Ltd is based in Penzance and Helston, West Cornwall. He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco. A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards for estate agents in the UK. No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on Klout LinkedIn Ecademy Facebook and Twitter Married to Amanda, he lives in Penzance with their children who are slowly flying the nest, his three dogs and his elderly Uncle. In his spare time; Chris likes to keep fit and is a long-standing member of the Territorial Army. In 2010 he mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade.
*Unless otherwise stated, all data has been taken from these reports/ sources