Ratio of salaries to mortages

edanto

Does anyone have any information on the ratio of salaries to mortgages in Ireland?

I think this would be an interesting stat, just based on conversations with people that have bought their home more than 10 years ago, but I can't find data.

There's a thread that mentions the UK situation here

that thread wrote:

Does anyone know, and can provide links to the info, of:

1. What is the current ratio between salaries and house prices? Is there any evidence of house prices being 7, 8 or 9 times the average salary in an area? What was the ratio in the last crash?
*
This is covered best in the Halifax 2005 Housing Report

Gerrards cross is currently the most expensive at 18 times average salary.

There are only 3 postal towns that fall below 3.5 (Lochgelly, Nelson and Cowdenbeath)

Move Channel (Halifax Summary Report) (http://www.themovechannel.com/sitefeatures/viewpoints/buyer24.asp )

Last crash it peaked at 5.02 sometime around May 1989.

We are currently running around 5.5 and peaked at around 5.7 in July and September of 2004.

whizzbang

I have a funny feeling we don't want to know...

A Random Walk

Average salary in Ireland is I believe somewhere around 36k. You can do the maths.

Pa ElGrande

You can use the salary survey's on the jobs sites for your particular profession as a guide. Wages tend to be higher in dublin than the rest of the country.

Salary Survey 2007
http://www.brightwater.ie/salary-survey.aspx

http://www.finfacts.ie/Private/isl/hudson2006.pdf

http://www.jobsearch.ie/applicants/construction-jobs-ireland.htm

CSO Earnings
http://www.cso.ie/statistics/earnings.htm

patrickolee

Thanks for posting that Pa, very interesting... looks like the public sector is the place to be! Especially Gardai and Prison Officers.

edanto

So, let's assume (or 'pretend') that an average mortage is 250k - that's 6.9 times the average salary of 36k.

Now... where in the world could we find the figures for 1997 or 1987? Maybe on that CSO site....
/off to click and sift a bit more

EDIT-

average house price is apparently a bit more than that -

The average price paid for a house nationally in December 2006 was €310,632

here

Weekly industrial earnings in Dec 2006, €623.69 cso

Giving us a Dec 2006 ratio of 9.58 :eek:

Jonny Arson

I can't remember clearly but I think the statistic here for average industrial annual wage to mortgage was something like a ratio of 1:13 :eek:

I showed about 12 or so years earlier average industrial wage to mortgage was 1:3

It is criminal as far as I'm concerned

HelterSkelter

Some interesting stats from a quick Google, some a bit old though...

http://www.myhome.ie/advice_news/article_detail.asp?cate_id=274&subcate_id=320&news_id=2045

http://archives.tcm.ie/businesspost/2003/03/30/story515701258.asp

http://www.cso.ie/statistics/indearnings.htm

godtabh

edanto wrote:

So, let's assume (or 'pretend') that an average mortage is 250k - that's 6.9 times the average salary of 36k.

Now... where in the world could we find the figures for 1997 or 1987? Maybe on that CSO site....
/off to click and sift a bit more

I've a ratio of 1:6

HelterSkelter

Look at table 8.4 of this document from the CSO, it shows the average mortage value from 1993 - 2002

CSO Table

edanto

Bingo! So the average mortgage in 1997 was £62,000 (or €78,740). Good find. Any ideas on what salary we could take as average? i.e. which industry we should choose?

I'd go for a service industry, I think that's our biggest group, right?

-edit-

Well, I can only find an industrial wage and it's for the end of 1997 - about £293/wk... which gives a ratio of 1 : 4.06

so - 2007, a ratio of about 1:9.58
1997, a ratio of about 1:4.06

any way of getting the data from further back?

The_Conductor

Ratio of slightly over 1:12 from the EBS for me.

whizzbang

smccarrick wrote:

Ratio of slightly over 1:12 from the EBS for me.

yikes! that doesn't sound easy to manage!

The_Conductor

whizzbang wrote:

yikes! that doesn't sound easy to manage!

Now that I've gotten married, its gotten somewhat easier.
Most providors will give you virtually anything at all, once your parents are willing to act as guarantors on the mortgage. I've reached the stage where I have managed to remove them as guarantors though, thankfully. Its not too bad though- I am very careful with my finances and have no debt, other than mortgage debt (no overdraft or credit card debt)- so in some respects my finances, while expensive, are ordered and more easily managed than many other peoples.

ixoy

And that folks is why I want to wait until these levels are more sane. I couldn't understand how people could afford places when these ratios were imbalanced.

The ratios are based on gross annual wages, correct?

FWIW, I decided to hold off and we'd have had a ratio of about 1:6.

chump

What about two income households - what has been the increase in those in the last decade or 2?

The_Conductor

chump wrote:

What about two income households - what has been the increase in those in the last decade or 2?

Really it depends on the lending institution.
They have gotten a lot more strict in the last year or so- but 7 times joint salaries in a 2 income household is easy enough to get even now.

gurramok

A Random Walk wrote:

Average salary in Ireland is I believe somewhere around 36k. You can do the maths.

How do you know?...There has no statistical release of the data for average wage. There has been for specific sectors like average Industrial wage but not for overall workforce.
I can quote the budget.ie website which says that 66% of the workforce earn below 34k p.a.
So what this means is that the number of bodies out there that don't earn enough for a sizeable mortgage to buy those houses is pretty huge.

edanto wrote:

Giving us a Dec 2006 ratio of 9.58

I'd say its higher due to the factor above, and as we all know even worse in Dublin. (13-15 times not surprising)

A Random Walk

gurramok wrote:

How do you know?...There has no statistical release of the data for average wage.

Fair enough, the figure I quoted was what I heard for average industrial wage from I assume the CSO. Don't have time to find the raw stats, but I'm sure a dig on the CSO website should find them.

whizzbang

I was talking to a guy over in the UK last January and he was sweating over the mortgage he took out that was 4.5 times his salary. That was a reality check.

Raskolnikov

The average industrial wage ain't €36K, it's a couple thousand less.

ixoy

Any idea what the mean industrial wage is? It should be a bit more representative, especially if there were figures for mean average wage of a mortgage holder.

The_Conductor

ixoy wrote:

Any idea what the mean industrial wage is? It should be a bit more representative, especially if there were figures for mean average wage of a mortgage holder.

According to this the average industrial wage is around 30,000.

ixoy

smccarrick wrote:

According to this the average industrial wage is around 30,000.

I understand that's the average, but statistically that is different to the mean figure. I'm wondering if there's much of a difference and what it might be.

The_Conductor

ixoy wrote:

I understand that's the average, but statistically that is different to the mean figure. I'm wondering if there's much of a difference and what it might be.

I would hazard a guess that the mean is actually lower than the average (with the explosion in minimum pay service jobs- there are a lot of people on very low pay).

Most people don't know the difference between an average and a mean figure

horgan_p

it's complete lunacy.
pretty soon you'll have to check cv's in night clubs " dunnes stores ? no sorry girl"

gone are the days of 2 average people getting a house on their own,now at least one person must be relatively well paid.both my gf and i earn circa 30k (the average industrial wage) and i'm afraid to get a mortgage.

untill it comes down to a level where average ordinary people (i.e. the guy from tescos and the girl from dunnes) can afford a house together, then i'm staying the hell out of it.


p.s. neither me nor my partner work in a supermarket

The_Conductor

Well- its not just Dunnes Stores girl and Tesco guy who have this problem. Graduate recruitment in the civil service is well below the average industrial wage too. Two civil servants can't afford a mortgage either.......

Sarn

smccarrick wrote:

I would hazard a guess that the mean is actually lower than the average (with the explosion in minimum pay service jobs- there are a lot of people on very low pay).

Most people don't know the difference between an average and a mean figure

Eh, I think you mean the median instead of the mean (the mean is the average). But yes a quoted mean without indicating the spread of data doesn't help a lot.

eth0_

smccarrick wrote:

Now that I've gotten married, its gotten somewhat easier.
Most providors will give you virtually anything at all, once your parents are willing to act as guarantors on the mortgage. I've reached the stage where I have managed to remove them as guarantors though, thankfully. Its not too bad though- I am very careful with my finances and have no debt, other than mortgage debt (no overdraft or credit card debt)- so in some respects my finances, while expensive, are ordered and more easily managed than many other peoples.

When your parents go guarantor on a mortgage, what exactly is involved? Do they just have to meet with your bank manager and sign papers to that effect?

How does this affect say, you are made redundant and need to claim on your mortgage protection - do they expect your parents to cover your mortgage payments rather than the insurance?

The_Conductor

It doesn't work like that in my case.
I suffer from a long term medical condition. If I am sick or made redundant my mortgage protection will not pay my mortgage for me- it will only pay if I die.

My parents acting as guarantor was a legally binding contract that if for one reason or another I was unable to pay my monthly mortgage repayments, they would step in and cover them wholly or in part, until such time as I was in a position to resume payments of my own accord. I needed them to act as guarantor- not because of the likelyhood that I may be on longterm sickness leave- but because the morgage was too high a multiple of my salary (there was an assumption built in that I would subsidise my mortgage by letting out two bedrooms to help with monthly bills).

So- I do not have insurance against redundancy/illness- but I do against death (and even then I get charged a weighting)..... A bit gruesome.....

Iago

our mortgage is around 1:2.3 more than manageable as long as we're both working.