What Would Be A Fair Wage Today, In Housing Terms?
What Would Be A Fair Wage Today, In Housing Terms?
Vince shows the numbers on how much a person must earn in order to buy a house in New Zealand
I'm not arguing it isn't grossly unfair, but I'd like to see the calculations take into account the much higher interest rates there were.
Mortgage interest rates were over 10% for much of the 90's (and over 15% for much of the 80's), which I'd argue the dropping interest rates (in combination with the lack of housing stock) has been a large influence on house prices.
In my view, significantly increasing the housing stock (so sellers are competing to sell instead of buyers competing to buy) would go a long way towards solving this issue. And no private firm building houses has incentive to increase supply to create an oversupply, so it needs to be government led (imo).
Agree about increasing housing stock. I think most people agree with this (although not all would agree it needs to be government led). Where people really disagree is on what increasing housing stock would look like, i.e. do we continue to build out, or do we build up. Auckland seems to be the only city that has properly embraced building up now, mostly because it was just practically impossible to build out any more. Everywhere else is half-assing it as best, due to fierce resistance.
There's a bunch of people living in cities that they'd rather be towns than cities :) Heretaunga Hastings is working through stuff like that but has made a lot of progress. Lots of new infill developments are walking distance to the centre, there's reasonable public transport and will be 2 story with small or no section. Sounds puny, but compared to most houses round here 2 stories is up, not out :)
They're also trying to work on getting more apartment style stuff right in the centre as well, it'll take a while and a fair bit of effort for folks to embrace it but proper cities are vibrant and exciting because people live and work in the middle of them.
Its really hard to make direct comparisons, because there's so many other things all different as well. For instance some things households purchase now either didn't exist back then, or are significantly cheaper now.
Say a computer, we bought our first C64 in the 80s for around $1000 at the time (it came with 2 drives, a monitor, joysticks and software). I think that'd probably be like buying a $3000 + computer these days.
But, one big thing a lot of people overlook is that for many more boomers than today's 20-30 year olds the norm was still that you could more than get by with only one person working in the family. Yes interest rates were often really high, but they were still affordable on one income. The farm hand in the /r/newzealand anecdote1 if they are in a relationship still can't afford to buy a house even if their partner is also in full time work.
I honestly don't think a lot of boomers even realise it. And to be honest that's potentially part of the whole cultural disconnect, because what comes along with both people working is massively less free time in a family, and often significant childcare costs that boomer families didn't pay. If you were a kid in the 80s like me there just wasn't the whole childcare industry there is today because back then, it wasn't needed like it is now.
1 probably either missing half the story or just not even true.
Every generation has their struggles, so it can be hard to understand what it's like for others. If I felt like I had a hard life then someone started complaining about how easy my generation had it then I would probably get pretty defensive.
Elizabeth Warren wrote a book (about 20 years ago) called The two income trap about the problems for families caused by the move to having both parents work. She isn't advocating for families to choose to only have one parent working, but rather for wider societal change and some specific policies. Disclaimer: I haven't actualy read the book, only the wikipedia page.
Not sure about NZ, but Australia had a much higher unemployment rate then, also. Not everyone was riding the gravy train. My family moved to the far side of the country following work that would take dad away from us 10 weeks out of 12.
I think housing terms skewes what people need to live as price increases have greatly exceeded everything else - especially when paying off interest is included.
Yeah, double digit interest rates were the norm for a lot of this time period, meanwhile I first mortgaged my house at 4%.
Given that Vince is so wrong about so many things, it isn't surprising to find that also extends to finance, economics and maths.
I know nothing about them. What didn't stack up in the article?
He uses an "average house price" of $893,639. That is being massively skewed upwards by urban centres. Rural houses are still relatively affordable - a quick search on Trademe finds perfectly acceptable houses in small towns like Ashburton for $300k, and if you get out into rural areas it gets even cheaper. He's also assuming that farmhand would have bought an "average-price" house back in the 90s - in fact rural houses were cheaper back then just as they are today.
Using the Westpac Mortgage calculator he used, a couple each on the median income of $61k ($29 an hour) could afford a property at $809,687 with a 20% deposit. To give him credit, that is still pretty much unaffordable for most people and something we should all be appalled by, but it is nowhere near as terrible as the picture he is painting.
I know nothing about them.
Vince has some extremely questionable views on things like culture, race, history and politics. According to him, ultimately a lot of things come back to "the Jews". He is a contributor to the far-right fringe disinformation outlet Counterspin Media.
Agree. Everything is broken. Eventually something needs to break.