Housing is commonly left out of inflation measures, which is why low inflation rates are always reported. Unfortunately for Kiwis, the reality is that housing costs make up a large and ever-growing proportion of our expenses. This study will show that the average house-buying power of the average Kiwi worker is less than 40% of what it was 26 years ago.

The average house price in New Zealand on the 31st of January 1992 was $105,000, according to Real Estate Institute of New Zealand figures. This is as far back as figures go – 26 years. The average wage in New Zealand was $14.72 in the first quarter of 1992, according to Trading Economics. Assuming a 40-hour workweek, this works out to an average weekly wage of $588.80.

If a person saved 50% of their average wage in 1992, they would save $294.40 a week, which would be $15,351 per year. This would allow that person to buy the average New Zealand house after 6.84 years. So a person who completed university at the end of 1991, at age 21, and got a job at the average wage with their Bachelor’s degree, could expect to own an average house, mortgage-free, before age 30.

Saving half of one’s income is some feat, however, especially if one also has to pay rent or a mortgage. Saving 25% of the average wage, a more attainable proportion, would see a person in 1992 save $147.20 a week. This would be $7675 per year, which makes the average house attainable after 13.68 years.

Still, that means that in 1992, anyone who was willing and able to work at the average wage could own their own house outright within 13.68 years if they could only save a quarter of their income. This means by age 35 if they graduated from university at age 21 and saved a quarter of their income after then. Easy times.

In 2018, things are very different. The average wage has now gone up to $31.08 by the second quarter of 2018, but the average house price has jumped to $560,000 in those 26 years.

Using the example above, a person who qualified from university at the end of 2017 at age 21, and who immediately got a job at the average wage, would earn $1,243.20 per week. 25% of this is $310.80, which works out to $16,206 per year. Because the average house price is now $560,000 in New Zealand, that means that the average Kiwi worker now has to work for 34.56 years before they can expect to own their own house outright.

This means that the average Kiwi in 2018, even if they graduated at age 21 straight into an average wage and saved 25% of their income perpetually, still couldn’t afford to own the average house freehold until age 55, whereas such a thing was attainable 26 years ago by age 35. The middle-class dream is now dead in New Zealand. Kiwis are now tenants in what used to be our own country, enslaved by capital.

Another way of looking at this grim equation is that the average wage in 2018 has a mere 39.6% of the average-house-buying power that the average wage had in 1992. Even a person who managed to save 50% of the average wage from age 21 – a frankly incredible feat in today’s economy – couldn’t own the average house until age 39.

To correct this imbalance, the average wage would have to rise 155%, from $31.08 to $79.25. This is the cold, hard maths of our situation: the average wage would have to be almost $80 to give the average Kiwi worker the same chance of owning the average home as in 1992.

Note that an average wage of $79.25 an hour would represent no change in wealth from 1992. Even with an average wage that high, we would still have no more average-house-buying power than the average wage did in 1992. All of the benefits of the last 26 years of technological and logistical advances would go to their creators and the capital that financed them.

$79.25 is what the average Kiwi worker would have to make per hour today, in order to have the same average-house-buying power as they would have had in 1992. If the average worker got a share of that, the average wage would be over $100 per hour.

Note also that it’s much harder to get a job paying the average wage at age 21 now, compared to 1992. A Bachelor’s degree is no longer the mark of excellence that it was in the mid 1990s – now one needs a Master’s degree to be at that level, which means two more years of no earnings and borrowed money. Moreover, the open borders of neoliberalism mean that you now have to compete with half of the planet just to get that one job.

Note thirdly that $560,000 is the average New Zealand price and is no way representative of Auckland or even Christchurch or Wellington. If you want to buy an average house in a relatively major centre you will be looking at paying even more than $560,000.

In summary, the Baby Boomers of New Zealand have subjected Generation X and the Millenials to what can only be described as intergenerational rape.

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