The Irish housing market has faced a drastic increase in price of homes over the last 30 years. Of course inflation has contributed to the increase of the cost of homes, but inflation cannot nearly explain the massive jump in prices of Irish homes. More specifically, costs of housing has jumped more than five times the cost of a home 30 years ago.
So what does explain the massive rise in costs of property prices? Could it be that increase in salaries contribute to the rise of price in homes? I know that the average income today is much higher than it was 30 years ago. However, the rate that average income has increased over the last few decades is nowhere near the amount that housing prices have increased.
The maximum mortgage loan a homebuyer can be granted is his or her average salary multiplied by 3.5. According to the Irish Mirror, the average take weekly income of an irish person is €734 per week. Multiply this by 52 and you have €38168 before taxes. Even income before tax …