We’re constantly told that housing is now more unaffordable than ever. The most common statistic used is the house price-to-income ratio, which has increased from around 4 times in the 1980s to approximately 8 times today.
But that comparison overlooks one very important factor: interest rates.
In the 1980s, mortgage interest rates were around 15%. Today, they’re closer to 6.5%. For most homeowners, what really impacts the household budget isn’t the purchase price alone—it’s the monthly mortgage repayment.
When you compare house prices to mortgage repayments, the picture changes. Mortgage repayments represented around 47% of income in the 1980s, compared with around 53% today.
So yes, housing is still less affordable today, but it’s not twice as unaffordable as the headline price-to-income ratio might suggest.
The lesson is simple: the facts you choose to focus on shape the way you think. Your thinking influences your decisions, your decisions drive your actions, and your actions ultimately determine your outcomes.
Start with the right facts, and you’ll make better decisions.
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Since 1990, Chan & Naylor has partnered with business owners and property investors in managing their taxes and building a tax-effective wealth. Choosing Chan & Naylor means you’re not just selecting a service provider; you’re gaining a partner aligned with your financial goals. You’ll have access to a dedicated client manager supported by a team of accountants that specialises in business and property tax.
Disclaimer
This article serves as general information only and may not account for the unique circumstances of individual readers. For personalised and strategic solutions tailored to your specific situation, we invite you to seek professional advice from Chan & Naylor. Our highly experienced team is dedicated to helping you navigate the complexities of Australian taxation, ensuring that your financial strategies align with the latest regulations. Contact us today to embark on a path of informed and customised tax planning for your property investments.
