Comment by TrackerFF | Hacker News Reader

Comment by TrackerFF | Hacker News Reader

How are the lending laws in New Zealand, if they're regulated?

Here in Norway, one can loan 5x of annual gross income (minus any debt you have), and at least a 15% down payment.

Average annual household income here is 610000 NOK (~64500 USD). Average home price here (end of April) is 4483328 NOK (~473914 USD), so the ratio here would be 7.34 - but that's assuming single income household. For double income, that ratio would obviously halved.

In any case, the average person buying an average home here would have to save up a down payment equivalent to 2.34 annual gross incomes, in order to get the maximum possible loan/mortgage (5x annual income)...and that's assuming this person is completely debt-free.

If this person managed to save up 25% of their annual income, it would still take almost 10 years to save up for that down payment - but the housing market will likely outpace the saving potential of a your average person. So now you have to save up 2-5 extra years to afford the down payment. All while you're paying rent that is much higher than the mortgage would be.

Lesson learned is that being an average single person trying to buy an average house sucks, at least over here.

(Caveat: obviously most people do not purchase "average" homes, but start on the lower end - and most will save up with partners, as well as enjoy appreciating value of their first "starter" home)

Public policies are now heavily favouring public transport and cycling, which both require higher population density than single family homes to be effective. As a consequence, a higher share of the population is expected to live in apartments rather than homes compared to the 70's and 80's.

Additionally, averages tend be impacted by outliers. Take the example of a rich heir buying a multi-million dollar mansion. His property will heavily influence the average house cost and his income is close to 0 since he lives off his capital, thereby reducing the average household income. This can twist the perception of what's actually happening for most people. The best way to fight that is to use medians instead of averages.

I am not able to find reputable sources for data in Norway, but what does your analysis look like when looking at median household income and median appartment prices. As this will more likely reflect the reality on the field.

Of course, people will want to own houses, but large - car optimized - and low density suburbs, are an anomaly of the last 50 years. They actually aren't sustainable, so their expansion has to stop, and the expectation is that the median worker will be steered towards appartment, while the richer elite will be able to afford houses - but that will gradually become a minority.

I had to look it up - median income here seems to be 45910 NOK (~4830 USD), but couldn't find any median price. But just from anecdotal evidence (i.e. sampling from different counties here), the it would be lower than the mean. Ratio wouldn't be too different, if I had to estimate.

> Average annual household income here is 610000 NOK (~64500 USD).

Norway's GDP per capita is about USD70.000. Surely you're using GDP per capita, or average individual income, not household income? I have a very hard time believing that Norwegian average household income is just over half that of New Zealand.

Yeah, per capita - not household income.

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