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TwoSeven:
Handle9:eracode:My wife and I bought our first home in 1978 when we were in our mid-20’s. The absolute numbers were certainly much smaller - but the ratios of price, deposit required, income, servicing etc, were quite similar to those in effect today. However a major difference was that interest rates then were 2 to 3 times today’s 4% levels. In that regard today’s first home buyers have an advantage..
What a load of nonsence. In the 1970s average income to price ratio was around 2-3. Saving a deposit was not just possible but reasonably straight forward. Yeah you had to go without a few luxuries but it was doable. You could also buy an entry level house in an area relatively close to work.
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i am not sure I can agree with this. I seem to remember in the 80s the personal tax rate getting over 60% for over $38k ($150k today) and it was 33% over 6000. (About $23k).
I think the direct tax rate now is a lot lower, although remember we have GST now as well.
Also, in 1975 the population of NZ had just hit 3m people and net migrations was just starting to go negative (more people leaving) so there would not have been the pressure on housing there is today.
now the population is approaching 5m and last year the net migration was about 55000 (arrivals minus departures) and I think todays purchasing power is a lot lower today than it was.
Apart from personal tax rates, the 1980’s saw some horrendous home loan rates. There are are historical rates available on the RBNZ website. Here’s a sample:
In 1976, home loan rates first hit 10%. They continued to climb and by Jan 1980 they reached 13%. They stayed in the range 13 - 20% right through the 80’s and didn’t get back below 12% until late 1991. They stayed above 10% until mid-1998.
Some people seem to think that if you bought a house 30 or 40 years ago, everything was easy. It may have been easier in some ways - but not in others, as these rates indicate. High rates went on for decades and didn’t make life easy.
People who bought homes in the 1970’s might have had a lower income-to-price ratio than today - but they then faced a tough time with these 10++% rates over the next 20 years.
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eracode:
Apart from personal tax rates, the 1980’s saw some horrendous home loan rates. There are are historical rates available on the RBNZ website. Here’s a sample:
In 1976, home loan rates first hit 10%. They continued to climb and by Jan 1980 they reached 13%. They stayed in the range 13 - 20% right through the 80’s and didn’t get back below 12% until late 1991. They stayed above 10% until mid-1998.
Some people seem to think that if you bought a house 30 or 40 years ago, everything was easy. It may have been easier in some ways - but not in others, as these rates indicate. High rates went on for decades and didn’t make life easy.
People who bought homes in the 1970’s might have had a lower income-to-price ratio than today - but they then faced a tough time with these 10++% rates over the next 20 years.
I wish we had the high rates of inflation now as we did back then. As long as you can survive for a few years, the inflation reduces the cost of the money borrowed in real terms.
Here's an article written in 2009 regarding the affordability of houses then and touching on the lowering of the value of the loan in real terms.
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