Average House Price versus Average Industrial Wage

The Central Bank
#1

Right …
It always comes back to a little multiplier for me.
The Average House Price should equal 3 - 4 times the Average Industrial wage.

So looking at Average house prices (including Apartments) …

YEAR NEW HOUSES
Dublin area Whole country
€ €
1970 7,051 6,692
1971 7,913 7,523
1972 8,528 8,249
1973 9,206 9,009
1974 10,943 10,836
1975 13,137 13,254
1976 15,342 15,564
1977 19,055 18,754
1978 25,745 24,082
1979 32,005 29,387
1980 37,822 34,967
1981 44,456 40,167
1982 48,886 44,060
1983 48,169 44,448
1984 48,819 45,419
1985 49,166 46,542
1986 50,891 48,256
1987 50,864 48,151
1988 57,994 52,450
1989 68,393 58,178
1990 80,749 65,541
1991 78,715 66,914
1992 79,200 69,264
1993 75,539 69,883
1994 81,993 72,732
1995 86,671 77,994
1996 97,058 87,202
1997 122,036 102,222
1998 160,699 125,302
1999 193,526 148,521
2000 221,724 169,191
2001 243,095 182,863
2002 256,109 198,087
2003 291,646 224,567
2004 322,628 249,191
2005 350,891 276,221
2006 405,957 305,637
2007 416,225 322,634
2008 370,495 305,269

2008-Q1 397,697 311,113
2008-Q2 390,544 313,678
2008-Q3 347,233 301,680
2008-Q4 329,625 282,023

Does anyone know what the average industrial wage is?

I think I saw 37K somewhere.

So should the Average House Price be 37K times 4 = 148K?

Thanks to 2Pack for the info :slight_smile:

p

#2

Average ind earnings are around 33k. There is no “average earnings” figure but it’s estimated at 42k.

The CRO site data only goes back to 1996 - you can find specific years mentioned but not a data series.

Those income multipliers were developed when interest rates were a lot higher. Not saying it wont go back to that, but different times.

#3

Someone called John has made an estimate here:

irisheconomy.ie/index.php/20 … mment-6563

#4

I do wish the CSO would publish proper wage averages and medians with regional breakdowns. I think what we’d find then is that regions like Galway are in for a much larger drop than even Dublin.

#5

The CSO Database Direct also published graphs for ya, Average Industrial Wages INDEX with base year 2000=100

Please note this does not include public sector and possibly retail .

Be along with Galway number for you later sharper , chill !

https://www.cso.ie/px/pxeirestat/temp/QIOQ1200961685254157.jpg

Sources Referred to by PM Whelan

Average house prices going back years are in this spreadsheet rebased into Euro post 2001

environ.ie/en/Publications/S … 277,en.XLS

also see

environ.ie/en/Publications/S … 295,en.XLS

and page 64 on Loan To Value rations below .

environ.ie/en/Publications/S … 371,en.pdf

you may download some of that data as a ready made spreadsheet from here

cso.ie/px/Doehlg/Database/Do … istics.asp

Now to Incomes .

After tax income has varied a lot over the years, that is why this comparator is not set in stone , but here we go.

Household Incomes ( post 2000)

Most Recent Incomes ( 2006) by county

Average Income and Average DISPOSABLE Income After Tax from 2003

#6

The ratios shoot up after 1996, is that because the banks relaxed the 20pc deposit requirement ?. Anyway, consideration should also be given to the fact that we were building on average 75,000 units pa since 2002 which was crazy when you consider the UK were building approx 170,000 pa.

#7

ah but the experts told us we had too few houses , anybody remember that c 420 houses per 1000 persons guff from 3 years back . The EU average may be around 420 houses per 1000 persons but we have MUCH bigger households than they do .

#8

Thanks for that expatrick. To be honest though the simple multiple to gross earnings is a bit misleading. Need to figure tax and interest rates to get a proper comparison.

A friend I think has the tax summary books going back to the early 1980s. Would be an interesting project.

#9

Galway City

Source (sometimes goes further back )

environ.ie/en/Publications/S … 277,en.XLS

New House Prices

1999 138,928
2000 163,824
2001 171,161
2002 187,607
2003 223,388
2004 242,218
2005 274,905
2006 286,176
2007 300,750
2008 292,777

Second Hand House Prices

1999 147,152
2000 166,145
2001 189,713
2002 206,571
2003 249,404
2004 278,813
2005 317,811
2006 336,948
2007 344,958
2008 333,778

NB Galway PEAK was Q2 2007 @ 325,147

Whole Country ( New House Prices ) By Quarter Back to 1975

Year and National Dublin Cork Galway Limerick Waterfd Other Areas
Quarter € € € € € € €
1975Q1 11,887 11,858 10,667 13,519 12,565 11,090 11,428
1975Q2 12,837 12,804 12,131 14,306 12,714 12,366 12,956
1975Q3 13,269 13,153 12,567 14,248 13,643 12,526 13,521
1975Q4 13,892 13,835 14,194 15,176 13,337 13,516 13,812
1976Q1 14,738 14,770 13,829 17,086 14,776 14,066 14,650
1976Q2 15,250 15,116 16,185 17,892 15,279 12,413 15,069
1976Q3 15,549 15,603 14,725 17,370 15,048 13,441 15,592
1976Q4 17,130 17,770 16,535 19,305 16,385 14,898 16,425
1977Q1 17,149 17,247 16,650 20,337 18,642 16,062 16,734
1977Q2 18,165 18,317 17,991 20,627 20,662 16,213 17,614
1977Q3 19,436 19,934 19,619 21,702 20,708 17,847 18,411
1977Q4 20,042 20,469 20,405 24,089 19,909 18,906 19,046
1978Q1 22,388 23,356 21,158 26,146 22,850 19,517 20,970
1978Q2 24,267 26,484 22,505 24,356 22,832 19,755 22,855
1978Q3 25,093 26,969 23,533 27,026 23,112 22,679 23,907
1978Q4 25,030 27,864 22,699 27,322 23,564 23,249 23,738
1979Q1 27,176 29,803 26,294 28,327 26,049 22,750 25,057
1979Q2 30,314 33,717 30,211 30,078 30,290 26,705 27,764
1979Q3 30,240 32,449 30,571 33,460 34,345 33,096 27,624
1979Q4 30,078 32,312 30,076 29,299 33,651 29,252 28,150
1980Q1 32,512 34,924 34,590 33,390 32,964 29,106 29,742
1980Q2 34,119 37,098 33,813 32,094 32,488 30,264 31,721
1980Q3 35,917 38,985 34,682 33,359 33,605 36,356 34,214
1980Q4 37,643 40,280 35,327 37,441 39,203 32,862 35,643
1981Q1 38,567 40,766 35,849 38,500 40,736 34,289 36,835
1981Q2 39,778 44,208 37,417 35,367 37,796 32,787 37,583
1981Q3 41,169 46,830 37,290 40,343 42,877 37,676 37,442
1981Q4 42,282 48,414 35,958 43,263 44,451 34,305 39,905
1982Q1 43,120 49,440 38,798 45,868 35,663 39,292 41,580
1982Q2 44,239 50,174 37,216 47,025 42,126 42,861 43,099
1982Q3 44,075 48,649 37,987 44,215 41,043 40,097 43,353
1982Q4 44,695 47,731 38,731 45,528 43,207 45,361 43,388
1983Q1 44,621 48,858 40,078 43,268 41,363 45,699 43,097
1983Q2 44,341 46,830 39,703 47,688 41,301 40,304 44,159
1983Q3 45,057 49,422 38,703 46,881 41,664 43,664 44,122
1983Q4 43,774 47,623 38,417 44,707 41,400 38,773 42,494
1984Q1 45,017 49,280 43,030 45,961 42,177 41,258 41,702
1984Q2 45,492 49,464 39,731 47,090 40,484 43,716 43,909
1984Q3 45,843 48,924 40,045 43,282 43,497 44,932 45,279
1984Q4 45,453 47,503 41,779 47,869 45,892 44,534 44,109
1985Q1 45,667 47,783 41,330 47,694 43,077 45,462 44,629
1985Q2 46,404 49,766 41,843 47,455 42,892 42,958 45,049
1985Q3 46,636 49,725 42,292 51,292 46,899 41,311 44,040
1985Q4 47,689 49,698 46,122 49,201 46,119 44,889 46,201
1986Q1 47,201 49,562 41,091 49,586 46,396 53,370 45,777
1986Q2 48,373 50,758 43,789 52,599 48,669 49,625 46,354
1986Q3 49,030 51,502 44,243 50,993 48,529 46,533 47,790
1986Q4 48,350 51,575 45,450 47,790 45,102 46,216 45,992
1987Q1 47,994 48,923 44,729 46,855 47,586 46,438 46,612
1987Q2 47,482 50,548 44,911 48,193 45,802 45,741 45,071
1987Q3 48,946 52,676 45,292 48,714 50,137 49,738 45,971
1987Q4 51,511 51,925 50,495 49,560 48,594 48,217 45,398
1988Q1 51,021 54,478 45,825 50,739 50,762 46,766 48,053
1988Q2 51,028 56,616 47,162 48,938 51,381 46,514 46,634
1988Q3 52,661 58,923 53,041 53,213 49,022 46,121 47,288
1988Q4 54,426 61,128 50,966 54,764 58,346 48,901 47,686
1989Q1 56,845 66,729 53,100 55,985 55,317 49,075 49,816
1989Q2 55,954 66,781 53,281 54,815 53,003 49,049 47,727
1989Q3 58,574 69,758 56,748 60,695 53,390 50,208 51,934
1989Q4 62,453 71,353 56,351 61,954 58,894 54,798 57,402
1990Q1 65,366 78,269 60,231 66,233 63,717 51,515 56,277
1990Q2 64,700 81,624 61,185 67,906 59,727 52,849 53,210
1990Q3 66,772 85,497 60,800 68,490 64,898 56,533 56,411
1990Q4 65,425 78,292 61,935 69,168 60,945 55,846 57,127
1991Q1 67,007 80,914 65,286 67,319 65,253 53,418 56,892
1991Q2 64,974 76,436 62,132 62,561 61,756 51,183 57,320
1991Q3 66,694 78,462 63,462 67,958 64,593 52,474 58,970
1991Q4 69,070 79,732 67,248 69,198 66,471 56,821 61,186
1992Q1 69,688 78,980 66,805 72,450 62,776 55,046 60,898
1992Q2 68,764 78,389 65,162 71,616 60,768 52,881 61,591
1992Q3 69,276 81,516 63,482 72,757 58,197 48,853 64,044
1992Q4 69,370 78,263 64,974 86,148 58,826 53,685 62,674
1993Q1 67,975 71,942 68,497 76,631 61,990 57,699 64,724
1993Q2 69,955 75,373 69,036 73,213 69,756 63,423 64,094
1993Q3 70,956 78,088 67,460 76,301 68,174 59,798 65,102
1993Q4 69,753 74,700 67,901 73,988 65,347 62,922 66,104
1994Q1 73,016 81,145 68,612 75,408 68,811 68,514 68,448
1994Q2 72,084 80,042 72,418 76,467 66,819 69,288 66,971
1994Q3 70,933 82,948 68,674 75,497 66,764 67,912 64,147
1994Q4 74,997 84,068 76,719 82,332 70,750 71,069 67,931
1995Q1 77,731 83,281 75,939 88,511 69,663 68,896 73,547
1995Q2 76,655 87,578 75,751 86,868 73,297 67,019 68,759
1995Q3 77,208 87,096 75,382 87,679 73,391 71,449 70,892
1995Q4 80,303 88,717 78,740 89,701 74,780 71,835 73,522
1996Q1 81,571 90,951 81,906 88,265 80,619 71,715 75,740
1996Q2 84,702 96,254 83,038 89,045 83,018 78,587 78,771
1996Q3 90,903 99,321 87,051 96,727 80,980 85,555 87,894
1996Q4 91,947 102,115 89,028 98,288 87,889 82,329 86,437
1997Q1 93,355 106,659 91,965 100,144 83,448 87,236 86,415
1997Q2 100,598 122,635 96,457 109,220 88,385 88,272 92,010
1997Q3 104,146 123,537 94,739 112,442 93,120 94,642 96,781
1997Q4 111,981 139,361 98,815 117,410 97,761 93,572 101,434
1998Q1 117,818 146,645 106,705 118,460 99,817 92,117 109,514
1998Q2 123,278 162,259 107,568 113,616 102,397 104,666 113,954
1998Q3 124,569 164,076 110,708 115,826 100,030 120,315 115,550
1998Q4 135,828 169,662 122,464 123,631 113,800 109,686 126,150
1999Q1 142,329 182,295 130,002 132,090 112,095 122,893 131,540
1999Q2 142,837 186,987 134,023 130,411 117,918 126,631 132,662
1999Q3 151,496 200,022 143,538 142,500 127,177 133,140 139,350
1999Q4 158,140 207,979 157,693 149,776 130,365 142,759 144,786
2000Q1 160,685 205,753 163,160 153,321 142,842 144,294 147,368
2000Q2 167,378 225,753 162,979 158,120 145,122 146,217 150,324
2000Q3 169,458 220,603 168,090 164,022 147,257 146,076 155,281
2000Q4 180,013 233,902 172,941 179,921 149,420 146,670 164,032
2001Q1 182,990 248,386 174,509 170,500 150,860 154,433 165,642
2001Q2 187,784 250,268 183,059 172,758 155,007 153,741 169,196
2001Q3 178,876 235,428 166,543 170,023 150,817 157,917 165,936
2001Q4 181,171 236,041 172,962 171,354 151,586 155,593 166,301
2002Q1 189,931 240,402 178,922 180,430 159,302 158,783 171,922
2002Q2 196,905 252,657 185,397 180,300 167,858 160,384 181,316
2002Q3 199,220 266,742 183,365 195,325 170,975 174,411 179,450
2002Q4 206,879 267,240 190,630 198,349 177,206 174,467 186,575
2003Q1 213,904 278,819 201,094 215,724 185,769 186,132 192,065
2003Q2 222,532 289,345 202,298 219,970 196,580 187,848 200,300
2003Q3 225,356 295,158 211,549 226,706 203,765 204,896 205,464
2003Q4 235,688 303,193 233,465 231,657 201,615 205,703 213,494
2004Q1 238,084 311,813 232,783 230,558 203,781 210,838 216,079
2004Q2 246,299 322,899 229,341 244,074 210,095 227,363 225,083
2004Q3 249,348 324,304 236,719 233,180 207,984 217,176 231,217
2004Q4 262,277 329,447 252,726 261,304 221,725 223,067 239,209
2005Q1 264,472 342,304 255,027 265,291 213,717 238,619 242,197
2005Q2 275,394 346,683 268,938 282,475 220,321 233,445 252,075
2005Q3 275,810 351,263 262,000 277,394 226,019 243,200 256,012
2005Q4 287,134 361,242 275,468 273,334 243,861 270,968 263,524
2006Q1 294,580 390,629 285,610 284,052 250,330 250,630 269,128
2006Q2 308,302 397,337 314,696 279,059 298,878 271,284 277,465
2006Q3 309,206 425,925 317,283 289,497 267,873 281,705 280,568
2006Q4 313,087 419,330 303,925 294,602 284,078 290,626 281,086
2007Q1 320,969 417,800 322,364 304,215 276,361 285,823 293,826
2007Q2 331,947 426,900 334,160 325,147 290,135 305,560 306,712
2007Q3 319,214 412,324 332,265 281,270 285,534 293,174 293,265
2007Q4 314,333 402,346 310,160 275,796 311,956 278,517 288,500
2008Q1 311,113 397,697 316,232 296,367 280,934 302,604 285,794
2008Q2 313,678 390,544 316,561 308,225 278,881 293,175 288,087
2008Q3 301,680 347,233 320,302 281,177 271,161 290,537 285,389
2008Q4 282,023 329,625 299,113 254,120 269,879 252,322 259,944

Income Stat Attack

Source

cso.ie/px/pxeirestat/Dialog/ … ts/&lang=1

Only select Galway , this is COUNTY not City , I know.

Index of Disposable Income per Person (State=100) Disposable Income per Person (excluding Rent) (Euro) Index of Disposable Income per Person (excluding Rent) (State=100)
Galway
2000 96.4 12,326 95.6
2001 95.2 13,804 94.4
2002 96.2 14,916 95.6
2003 95.8 15,947 95.4
2004 97.6 17,017 97.4
2005 95.9 17,882 95.7
2006 96.4 18,777 96.2

#10
#11

My Grandad’s first house was 1 times his salary, and he had to go to England to get a mortgage as no Irish bank would loan someone a whole year’s salary. It may be drifting up over the decades, but I would guess it would have to flatten out some time.

#12

My thoughts exactly… Would anyone care to explain the relationship between multiples of average wage and average house prices? Sure, I gather it’s been an ‘historical’ phenomenon since some time after the time whizzbang’s grandad was in the market for a house. But anything apart from that? I mean are there any tangible phenomena that relate the economic quantities? It strikes me that it’s a formula for (a) deteriorating quality of build of the ‘average house’ and (b) sitting ducks.

#13

I guess it has to sit between a range of around 1 and around 8 in Ireland’s history, but perhaps 10 is the top possible in a “Perfect storm”. Could be an interesting new 1 - 10 scale! With 1 being “Trust no-one” and 10 being “Guaranteed depression to follow”

#14

a very long term ratio is 4x it was c.5x in ex Patricks 30 year series bar in recent years when it hit 8x

#15

I agree. It’s more of a general economic indicator than a reliable guide to pricing a property… Like bond yields or the baltic exchange dry index.

#16

Perhaps the answer to the upward drift may have to do with basic things like averaged wages. The standard hourly rate is a new thing, Henry Ford been the best example I can think of. Prior to that it would have been too risky to loan to workers who were dependent of seasonal wage.
Once more reliable annual wages became norm, then lenders could see a guaranteed return and the franchise expanded. Demand grew and so did expectations and term lengths and asking prices getting us to where we are now.
Other factors like advances in home material manufacturing may have prolonged the period of houses costing one or two years salary.
Any thought on this?

#17

I think using broad strokes i.e. multiples of income to value a home is very dodgy. Just from my own personal experience and the research I have done, I see no “standard” multiple in this country or any others.

Historical precedent as a guide/rule of thumb is very different from a economic valuation.

#18

Well said Grumpy.That is one of the main reasons there won’t be further large falls in prices,the affordability has improved greatly,interest rates when the old 3-4 times rule applied were more than double those now,therefore banks will lend twice as much and thus house prices are bid up by that amount.Interest rates will never be put up appreciably until the housing market recovers. Inflation is going to take care of this mess as it always has done in the past.

#19

Based on your conclusions - we will be in continuous Boom Bust cycles. Our interest rates are decided in Frankfurt. Do you think they will continue to allow this.

#20

Absolutely.