Unreasonable price for home

Unreasonable price for home

We buy what we can afford, said Herlin, a friend. In the bad old days, we could get a mortgage in a city, because the people lending them the money were short sighted, and stupid. The average Salary is, for example, EUR 27,000 and at four times income that means the average person can afford a house, which costs EUR 108,000.

The average house price in a big city, let’s say is EUR 500,000. It would mean that the average person would need a wage increase of EUR 98,000 a year to afford a house in that city. How many people do you think will get that? Me, I’ll take that! Supposedly, we live in a different world where those banks now lend people what they can afford. This should mean that people who want to live in a big city may not be able to and will have to choose another city.

These smaller cities will grow, because of the new demand and house prices will start to balance across the country. The houses in big cities will remain high, but only because there are a bunch of dreamers out there who are betting everything that prices will sky rocket again. I am pretty sure also that in such location, you will get a lot of foreign investors, making a long term investment or parking their money. This helps to push up the prices even higher.

What a lovely system we live in! In the capital city is no longer available to local people, unless you are mega rich. In which case, you more than likely would not want to live there.

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