Talk Money: August 4

  • 04/08/2016
Talk Money: August 4

Paul received an email from Jeff in Christchurch:

"Every day we are bombarded with news of how unaffordable houses are now and how the wage gap in relation to house prices is getting wider. This all appears anecdotal at best. I would be very interested to see how historically the data stacks up. For example: average income and house price for 1950s, 1960s, 1970s, 1980s, 1990s and the associated gaps if any."

Economist Shamubeel Eaqub crunched the numbers back to 1957 for his book Generation Rent.

From 1957 to the late 1980s the average house price was between two and three times the average annual household income. The average price rose to four times the average household income by the late 1990s.

They peaked at around six and a half times the average household income in 2008.

Prices then eased, but are trending up again, and have risen back above six times the annual household income.