An economics lesson in response to Jim Adam’s vilification of landlords.
My parents were in their early 20s when they purchased their first house in Tokoroa for $6000. Their wages were $5200 per annum, which equated to 86.6 per cent of their house price.
In my late 20s I purchased a house in Tauranga for $110,000 when my income was $33,000, which equated to 30 per cent of the house price.
Nowadays, the nationwide average house price is $672,504 and the average annual wage is $52,000, which equates to 7.7 per cent of the average house price in New Zealand.
The disparity between house affordability and income, along with inflation is to blame – not landlords.
Landlords selling their houses, to increase the supply, to lower house prices, does not solve the housing affordability problem.
Investing can be a back-up plan for the future, when your job involves manual, physical labour that eventually health or age, will prevent the ability to earn an income.
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Source: NZ Herald