How much have property costs really changed?
An 85-year-old from Perth has remembered his mortgage interest rate in 1990, when he was paying the standard 17% home loan interest rate.
He was talking after hearing about the increase of mortgage rates in May 2022 of a quarter of one percent.
His comments were:
“Back then, people didn’t complain — they just adjusted.” “Higher interest rates are not the end of the world … but I think youngsters have got it pretty good.”
It is an interesting comment, as I was also paying 17% back in 1990, on an average 3 bedroom, 1 bathroom, single garage house, that cost $100,000. It was about a 1 hour drive from central Sydney.
Now I am in an average (or is it below average) 4 bedroom, 2 bathroom, double garage house that might fetch $300,000. It is about a 1 hour drive from central Brisbane.
Both on a block of land about 800sqm.
An 80% mortgage on the 1990 property, at 17%, would have been about $263 per week, or about 46% of the average full time wage of that year.
The average rate in 1990 was under 17% but over 10%, so a revised figure might be:
An 80% mortgage on the 1990 one, at 10%, would have been about $162 per week, or about 28% of the average full time wage of 1990.
An 80% mortgage on the current one at 2.4%, (the new UBank variable rate) would be about $214 per week, or about 28% of the average full time wage in 2021.
Minimum and Average Wages 1990 and 2021.
Minimum Wage:
1990: $214.49 for a 38 hour week
2021: $772.60 for a 38 hour week
www.fairwork.gov.au/factsheets/FWO-fact-sheet-minimum-wages.pdf
Average Full Time Wage:
1990: $566.60 per week, Male 38 hrs.
2021: $1,541 per week, Male 38 hrs.
Sources:
6350.0 Average Weekly Earnings, Australia, 1941-1990
www.abs.gov.au
August 2021, median weekly earnings.
www.abs.gov.au