The four prices rising faster than house prices

It's hardly surprising that we're so obsessed with house price rises, after-all in the 40 years since Harold Wilson won the general election in 1974, prices have risen from an average of just £10,000 to a staggering £185,000. However, while we have been busy bemoaning the death of affordable housing, much more quietly, there are actually four prices in Britain that have risen far faster than house prices over those 40 years.

A new study by online estate agent emoov.co.uk revealed that by far the biggest price rise is in a packet of 20 cigarettes. This has been a very deliberate effort on the part of successive governments, who planned to tax them out of our shopping baskets. It means that in the last 40 years they have risen 4370% from 20p to £8.74 - around half of which is taxation - meaning that the price of cigarettes is rising roughly two and a half times faster than the price of houses. These taxation efforts have worked too. In the mid 1970s, half of all people smoked: nowadays this is closer to 20%.

Second on the list is the price of a copy of the Daily Mail, which has risen from 2p to 60p - 3000%. Much of the price rises for newspapers in general has been fairly recent, as a result of a combination of declining advertising revenues and a shocking decline in circulation (over the past decade the size of the newspaper audience has shrunk by an incredible 50%). It means that the papers have lost their economies of scale, and it costs more to produce each copy. In the last ten years the price of papers has doubled - and most of them have also shrunk in size.
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The third fastest price rise has been in the price of a cinema ticket, which is up from 45p to £9.60 or 2133%. Again much of the rise has been recent - with prices up a quarter in the last four years. The cinemas are said to be struggling with falling audience numbers, so they have invested in bigger, louder technology, in order to tempt people to come. As a result they have been forced to charge each person more for their ticket in order to cover their costs and stay afloat.

Fourth is the price of a first class stamp, which has risen from 3p to 62p - or 2067%. This is another example of pressure from changing trends. In the past decade, consumers have moved away from the postal service. We no longer send letters, when emails are so much cheaper and more efficient, so the postal service is reduced to posting junk mail and internet deliveries. In order to try to cover their costs more effectively the Royal Mail has responded with some astonishing price hikes. In 2012 alone it put the price of a first class stamp up 30% and a second class stamp up 39% - which makes it easy to see where the runaway prices have come from.

You could easily argue that far from being a sign that house price rises are affordable, this could be an indication that life is getting more expensive across the board, as companies desperately try to stay afloat while peddling things people no longer want or need. However, it's worth putting that into perspective.

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The good news
Over the same period, the average weekly wage has also been rising, and is up 1616% - which means it's almost keeping pace with the price of houses - although clearly cigarettes, newspapers, stamps and cinema trips are still rising well beyond most people's means.

And while these things are definitely outstripping wages, over the past 40 years, the price of huge number of other things has risen far slower than wages. Take the price of a pint of lager, for example. This is up from 20p to £3.19, but this is a rise of 1595% - which puts it behind wage growth. Similarly, some basic household staples like a pint of milk or a dozen eggs are growing at as little as half the rate of wages.

Some of the other huge household expenses are getting cheaper too. The typical Ford Hatchback (comparing the Escort Mark II to the Focus) is up 1077% from £1,299 to £13,995 - which is just two thirds of the rise seen in wages. Flights have also become far more affordable. The price of a flight to San Francisco, for example is up from £225 to £1,084 - a rise of 482%. However, compared to wages this constitutes a real drop - bringing overseas holidays within the reach of thousands more people in the UK.

So while house prices may seem to have risen alarmingly, it's worth bearing in mind that there are other things out there which are rising faster, and that once you take wage inflation into account, there are some ways in which we are better off.

The question is whether anyone feels this way? Are you feeling richer today than in the past, or are you being crippled by the prices that have been rising beyond wages for the past 40 years?

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