House prices are often hard to figure out. Is the market high? It is low? What is normal?
I'm fond of the ratio of average house price to median household yearly income. This gives a number that you can compare across countries and over time.
For you Americans: https://www.longtermtrends.net/home-price-median-annual-income-ratio/
The lowest I've seen in my lifetime is 3.6 in the USA in 1973.
The highest I've seen in my lifetime is 8.9 in NZ in 2022.
NZ has fallen off of that back down to about 7. Which is now equal to the highest the US has ever seen.
The 2005-2007 subprime meltdown, where up to 25% of subprime loans became bad debt, the peak was at 7.
The US is back up to about 7.
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we r now back in the territory everything bubble. price distortion by currency almost overrides income growth in most top cities worldwide + each local currency cycle. too hard 2 fig a clear trend just from charts.
Why average house price and not median?
Didn't Millionen Dollar Villas skew that?
Great graph. Says way more than only the average house price.
Thinking the same
I wonder what the ratio would have been like in 1890. I read Piketty’s book and find the argument intruiging that mainly the two world wars produced the middle class and that income and wealth distribution are simply bouncing back to normal as they were before 1914.
12.7 in Vancouver as of Dec ‘24
https://wowa.ca/infographics-finance-realestate-canada/home-affordability-of-canadian-metro-areas-oct-2024
Portugal - Hold my beer: "Historically, the average US home cost about 5 times the annual household income, with a peak of over 7 during the 2006 housing bubble. In 2023, it stands at 7.35, its highest ever. However, Portugal takes it to another level, with an Average House Price to Income Ratio of 11.82 “times”, soaring to 19.2 “times” in Lisbon."
Good point
I think in Switzerland it would be somewhere around 12-15 years. But also house standards are far higher. Since building more durable and more isolated also means far higher prices.
I don't know. I'm following here, not leading.
Interesting. Perhaps. I should read that.
I just noticed the second graph in my link, set to all time and go back before 1950. Homes were far more expensive than now, compared to average personal income. I guess people lived in large families still so that made it possible.
YIkes!
Source: https://medium.com/@fernandes.antonio/the-evolution-of-house-prices-in-portugal-and-its-impact-on-the-youth-189303f20fd4
the OECD link offers the "growth since 2015" graph which I find mostly useless.
I assume these are using pre-tax annual income. If you look at the largest cities in Australia that ratio is 9-13x median income.