House prices should be no more than 4x average wage

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    • #57473
      Anonymous
      Participant

      Miguel Martín, President of the AEB banking association, recently said that average Spanish house prices should be no more than 4x the average salary before tax. Given that the average salary is €22,790 (in 2010), that means the average Spanish house should cost around €91,000.

      The problem is that house prices are still 6x average wages. House prices have to fall further if Martín is right.

      He’s talking about primary housing for Spaniards, not holiday-homes on the coast, where the link between wages and the cost of housing breaks down. But at some level the markets are connected….

      http://www.periodistadigital.com/economia/vivienda/2013/05/14/la-vivienda-no-tendria-que-suponer-mas-de-4-anos-de-salario-bruto-de-cualquier-espanol.shtml

    • #116851
      DBMarcos99
      Participant

      house prices should be no more than 4x the average salary before tax

      If only that were the case in London! (more than 10x the average).
      But I don’t see it ever being like that again in a vibrant capital city in western Europe. Lisbon?
      What’s the multiplier in Germany or Holland? Anyone know?

    • #116852
      Chopera
      Participant

      I’ve just run a €91k house purchase with €20k savings through idealista’s mortgage simulator, and a 30 year mortgage at 4% comes out as €388/month (including repayment). To me that seems very cheap for someone on €22,790 a year.

      http://www.idealista.com/hipotecas/?pagar=395000

    • #116855
      Chopera
      Participant

      @DBMarcos99 wrote:

      house prices should be no more than 4x the average salary before tax

      If only that were the case in London! (more than 10x the average).
      But I don’t see it ever being like that again in a vibrant capital city in western Europe. Lisbon?
      What’s the multiplier in Germany or Holland? Anyone know?

      You can pick flats up for €91k in Madrid. It’s just that someone on €22k a year would be able to afford more (or can afford a bigger mortgage to be precise)

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