Are you worried you will NEVER own a home?
If you are a potential first home buyer (FHB) you may be feeling disheartened by the negativity in the media as to whether younger generations will ever own their own home.
There is no doubt house price to salary ratio was lower in the 70s and 80s – often seen as an unfair advantage for baby boomers. On the other hand interest rates by the late 80s were at times crippling – who remembers 17%? Anyone who rode out 17% interest rates probably thought they would NEVER pay off their home. But they DO. And they DID. Historically, property prices usually rise over time. Surprisingly most home owners end up coping with market fluctuations, bringing up children and still doing okay.
|1990 vs 2015
|Average Mortgage Size1
|Average Interest Rate2
|Average Monthly Repayment
|Average Monthly Household Income
|Repayments as % of income
As you can see, even with a significantly lower average mortgage in 1990 home owners weren’t much better off while interest rates were high.