What is the current house price to income ratio?

[podd]

I was reading an online article in the Belfast Telegraph newspaper that the current average house price to average income ratio in Northern Ireland is now about 10/1.

Would anyone know what the current average house price to income ratio is in the Republic of Ireland?

 

[ClubMan]

One way of very roughly estimating it might be to find the average house price (e.g. perhaps in the Department of Finance Monthly Economic Bulletins or the CSO website) and the average industrial wage (CSO) and work it out from there?

 

[bacchus]

There is some data about UK [broken link removed] if that's of any help. I let you assess how biased this website may be considering the URL name.
I would have though (just a guess though it would be close to 6 as well in ROI considering bank rules for mortgages

 

[podd]

I would have thought (just a guess though it would be close to 6 as well in ROI considering bank rules for mortgages

Thanks, had just wondered if the house price to income ratio in ROI (or UK for that matter) was anything like the 10/1 in NI.

It appears that NI is just "out on a limb".

 

[delboy159]

Average industrial wage is about 32k. Average house price nationally is about 307k. Crued sums would give us a ratio of 9.6 in Ireland.

 

[Satanta]

Average industrial wage is about 32k. Average house price nationally is about 307k. Crued sums would give us a ratio of 9.6 in Ireland.

This is a very crued method. It's based on the assumption that all properties bought are bought by a single owner, on 32k, paying 307k for a one bedroom property.

To give it context you'd have to balance up how many "average" homes are bought by couples (or at least more than one mortgage holder), where the effective mortgage to income multiple would be halved (basically, using the average house price you'd also have to use the average wage balanced against the average number of owners).

 

[Sarsfield]

Average industrial wage is about 32k. Average house price nationally is about 307k. Crued sums would give us a ratio of 9.6 in Ireland.

Is average industrial wage the correct measure of income? My understanding was that it's a measure of incomes in of waged staff in industry only. This excludes professionals, services, agriculture etc. Also, wages/salary aren't the only form of income for a significant portion of the population.

 

[ClubMan]

The CSO and/or DoF websites publish different average wage figures by sector etc. - e.g. public service, private sector industrial, private sector services etc. As I mentioned originally any approach to estimating the income multiple is going to be rough and ready depending on the data available.

 

[Satanta]

Even more telling is the comparison of house prices with the average industrial wage: in 1984, the average price of a new home was 4.3 times the average industrial wage; in 1994, it had dropped slightly to 4.2 times; in 2005, it was 9.1 times (and 11.5 times in Dublin).

Strange source to quote information on it, but may be of some interest.

I presume the reference here to a multiple of the average industrial wage is as the article is focused slightly towards "Housing and homelessness".