How have savings, investments and house prices performed during the Queen’s reign?

In the 70 years since Queen Elizabeth II’s ascension to the throne, the lives of average British citizens have changed: socially, culturally, and financially.

Housing, savings, and investments were priorities in 1952 just as they are today but how have prices fluctuated over the decades building up to the Queen’s Platinum Jubilee?

Looking back on history can provide you and your clients with valuable financial lessons. Read on for our summary of the key financial facts from 1952 and how they compare to life in 2022.

1. Savings today need to stretch further than in 1952

It is important to consider that life was shorter in 1952 with men retiring at 65 and expecting to live for another 12 years, according to government data. The time between retirement and death has since risen, with Office for National Statistics (ONS) statistics showing that the average is now expected to be nearly 20 years. The ONS goes on to report that 1 in 7 men and 1 in 5 women are expected to now live to 100 years old.

In the simplest terms, it means that in 1952 your client’s savings were unlikely to have to stretch as far upon retirement.

Our currently ageing population will continue to increase pressure on public finances, especially for things like the State Pension. It will likely also elevate the importance of having a retirement pot outside of what the government will provide.

Inflation for the year 1951/52 averaged 9.17% and the Bank of England’s (BoE) base rate was at 4%. According to the Bank of England (BoE), if you had £100 in 1952, the cost of goods and services you could purchase with it would now cost £2,020 when adjusted for 70-years of inflation.

Remember: inflation will erode the real value of your client’s savings. It is important to take this into consideration when client’s make plans for their retirement.

2. The UK stock markets were much more focused on British interests

In the early years of the Queen’s reign, investing was mainly undertaken by the wealthy with fewer than 3% of Britons owning shares. According to Finder, statistics show that today 33% of the population own shares, two-thirds report they have plans to invest, and 75% of Gen Z aim to put money into stocks and shares in the future.

In 1952, the FT 30 was the main stock market index. It was largely made up of industrial companies such as shipbuilders, car manufacturers and textile producers. The make-up of the FT 30 was decided upon by journalists at the Financial Times, who based their selection on the 30 companies’ perceived significance within the UK economy at the time.

By contrast, the FTSE 100, the primary UK index of the present day, is made up of the 100 companies listed on the London Stock Exchange with the highest market capitalisation. The index is also now a far more international affair with 70% of revenues generated by the listed companies being earned outside of the UK.

In the period from the start of 1952 to May 2022, Schroders report that UK equities have averaged returns of 11.7% a year, a figure that exceeds the interest on cash savings for the period while also staying ahead of the average rate of inflation.

The market has resembled a rollercoaster when viewed over the last 70 years with dramatic falls, such as UK equities being outperformed by cash savings in 26 of those years, and resurgent bounces during periods of recovery.

The price of entry for the long-term gains that the stock market can deliver is accepting short-term volatility and the risk of loss.

3. Buying a house in 1952 was more affordable when compared to the average salary

Her Majesty may never have had to worry about having a place to live, but for most Britons, saving for and purchasing a house is a key life goal.

This is Money reports that, when Queen Elizabeth took up her mantle in 1952, the average UK home was priced at £1,891 (approximately £56,000 adjusted for inflation) and was the equivalent of four times the average annual salary.

The housing market has since rocketed during the Queen’s reign. This is Money reports that today the average home costs £260,771 which is more than eight times the average salary.

The road to current prices began with a boom in home ownership in the 1970s, which saw the average house price jump from £4,057 in 1970 to £19,925 by the end of the decade. The housing market crashed in the 90s but quickly bounced back with rapidly escalating prices that continued right through to 2008 when the market crashed once more. Since then, it has rebounded, and prices have resumed their upwards trajectory.

Get in touch

Curious about how your clients can go about securing their futures and preparing themselves for the changes the next few decades might bring?

A useful first step is to point them in the direction of a financial planner to make sure they have the right set-up in place to achieve their personal financial goals.

If you have clients who would benefit from advice, or you’re interested in working more closely with us, please email or call us on 0345 505 3500.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.