With houses costing more now than ever before, homebuyers are wondering whether their 1980s counterparts have had it easier. Many factors play a role in this comparison, including rising income, higher levels of education, working conditions, and inflation. But perhaps the most crucial factor is how income relates to house prices and how easy it would be for homebuyers to save and achieve a mortgage.
According to Domain Group chief economist Andrew Wilson, the average weekly wage in NSW was $407.70 in the 1980s, compared to $1556.30 in the 2010s. The median house price in 1985 was $73,000 while it was $995,804 in 2016. Looking at the average wage in relation to house prices, it seems that it has never been harder to save a deposit than today.
But even if the deposits needed to buy a home now are high, the low interest rate environment makes it easier for homebuyers today to cover repayment costs. 1980s homebuyers faced high interest rates two to three times higher than what it is today, threatening large repayments in first home ownership.
Social differences also have an impact. "In 2016, partners work and bring more money together," said Charles Tarbey, Century 21 Australasia chairman. "In the '70s and '80s, people had a family and were getting married in their 20s, not their 30s." It was also more difficult to find a property back then without the help of online portals.
So even if statistics show that it is harder to enter the market and save for a deposit in 2016, homebuyers in the 1980s also had their share of property woes—they are more likely to be married, have a single income household, and with less access to various mortgage products than millennials.
Collections: Mortgage News
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