Does it make any more sense this time?
From the Herald today
“The average annual weekly wage increase of $28.06 was not enough to offset a $30,000 increase in the national median house price and an increase in the average mortgage interest rate from 5.52% to 5.86%,” the survey found.
We did this one last time, in June. Today’s story is better in that it links to the Massey report. It could still do with a bit of interpretation.
Quick, without a calculator, roughly what would be a large enough weekly wage increase to offset a $30,000 increase in the national median house price? Would we need to up the $28.06 by ten percent, or ten dollars, or a factor of ten?
[Update: I should also note that the word “weekly” wasn’t in the description of wage increases last time, so this is a definite improvement]
Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »
Off the top of my head I think a pay rise of roughly $30/week is enough to cover the 30k increase in house cost.
$30/week * 50 = $1500
5% of 30k = $1500
rough enough
10 years ago
Yes — though this is close enough that the difference between 5% and 5.5% matters, and the fact that it’s only 80% of the sale price that needs to be covered since they assume 20% deposit.
10 years ago
But,yes, that was essentially the calculation I did and that I thought Herald readers shouldn’t have to do.
10 years ago
It would have to be a bit more as you pay your mortgage out of your after tax income. If your income is small enough not to pay tax I would imagine you are not going to get a mortgage.
10 years ago
That’s true in real life, but it’s not true for the real-estate affordability index.
10 years ago