I'm sure banks justify their lending any way they can. Sure, higher income earners will be borrowing at a level much lower than 9 times their salary.
But you need to take a macro view. Why is it that property prices are now 9 times the average wage compared with 2.5 times the average wage in 1983.
Please justify why a house should cost 9 times the average wage today whereas it only cost 2.5times the average wage in 1983.
So tell me. If you are buying a house today on 9 times the average wage what do you expect it to rise to in the future? Remember, we are only talking about the averages, and there will always be specific variances to these figures.
If wages rise at 3% do you expect property to rise at greater than 2.7%? (3 times 9) Wouldn't this level of growth be below the rate of inflation?
