The housing market is going insaner than usual, and every time this happens there’s a flurry of stories about how kids today can still get on the property market if they do it tough and give up on the lattes.
There are almost always problematic gaps in these stories: something about young people who have advanced degrees but no student loans, or who saved their entire salary for a deposit, sans rent and food but ‘did it all themselves’ don’t seem quite right to me. But the broader point is that having a tiny number of individuals making extraordinary sacrifices to enter the housing market is still a huge departure from historical norms. Previously most people bought houses, because most people could. But prices are currently at an historical high relative to incomes. The fact that young people buying houses in Auckland is such a singular event that it is newsworthy is a signifier of the problem in of itself.
There’s no continuous data series that lets you track house prices back to the 60s, so here’s two merged together: average individual incomes and then median household incomes. Houses are twice as expensive relative to income as they were in the early 1980s. Couples on two incomes find it harder to service a mortgage than single income earners did then! (And don’t get me started on the high interest rates in the 80s, that were part of an inflationary cycle that reduced the value of those mortgages dramatically, while my mortgage is still there after four years of the Reserve Bank undershooting its inflation bound.)