Your parents vs you. How many salaries a home cost then and now, and who took the difference

“We bought on one salary”#

Every family has this conversation. Somebody’s dad bought a house at 28 and wants to know why you haven’t. You mumble something about prices. He mumbles something about avocado toast. Both of you are half right, and nobody has numbers.

So I looked them up. In the last article I asked whether buying still pays. This one asks something simpler: how many years of income did a home cost your parents, and how many does it cost you? In eight countries, decade by decade, from 1975 to now. Then: what else changed, from mortgage rules to the bill for your phone, and who’s behind it.

Spoiler: it’s a worldwide problem, for many reasons. And Germany, the country everybody assumes is the worst case, isn’t one on the headline number. It’s worse in a sneakier way.

Guess first

In 1975, how many years of average gross pay did a typical home in (West) Germany cost? Today it’s about 5.7.

Show me

Years of salary, then and now#

Here’s the headline number for each country: the price of a typical home divided by a typical annual income. Every country measures it a bit differently, so compare the trend within a country more than one country against another. Where a statistics office or central bank publishes the ratio, I use it as it is; for the other years I scale it back with the OECD’s index of house prices to income. How each one is built is in the method note at the end.

Three stories hide in that table.

The big jump came between 1995 and 2005. Spain went from 3.7 to 8.1 years of household income, the UK from 2.2 to 4.8, the Netherlands from 3.4 to 5.9, the US from 3.9 to 5.1. Since then most countries have stayed on that new plateau. What happened in those ten years? Money got cheap, loans got long and banks got generous. More on that in a moment.

Italy went the other way. Prices fell against incomes since 1975, and by the OECD’s count real house prices in 2025 were 17% above 1975, which in fifty years is nearly nothing. That’s not a model to copy. It’s what thirty years of a stagnating economy look like from the estate agent’s window.

Germany started expensive and got cheaper, on average. House prices rose 3.3 times in fifty years, average pay 4.5 times. Adjusted for inflation, German homes in 2025 cost about what they cost in 1975. If you live in Gelsenkirchen, that’s true. If you live in Munich, it isn’t. Deloitte’s property survey, which my German figure builds on, counts the years of average pay a new 70 m² flat costs in each city: Munich 11.7, Berlin 9.8, Hamburg 9.4, Frankfurt 8.2. The jobs are in the cities. The cheap houses aren’t.

Your parents vs you: run it yourself#

Pick a country and the decade your parents bought in. The calculator puts their deal next to yours: years of income, the typical mortgage rate and loan of the time, the years it takes to save the deposit, and how much of the income the payment eats in the first year and ten years later. Set the rate to the 1% of 2021 and watch the German housing boom happen in one slider.

Your parents vs you: what did a home cost then?

Country🇫🇷 France🇩🇪 Germany🇮🇹 Italy🇲🇹 Malta🇳🇱 Netherlands🇪🇸 Spain🇬🇧 United Kingdom🇺🇸 United States

Your parents bought in

1970s1980s1990s2000s2010s

Share of income you save for the deposit

%

Deposit only, without buying costs. Saving time ignores interest and pay rises, for both of you.

Your mortgage rate today

%

Set to the typical rate in that country. Try the 1% of 2021.

All countries over time

Years of incomeMortgage payment, % of incomeMortgage rateReal price, 2015 = 100

Your country in teal, your parents’ decade and today in yellow. Tap a grey line to switch to that country.

Years of income for a typical home

Country	1970s	1980s	1990s	2000s	2010s	now
🇩🇪 Germany	7.8	6.8	6.5	5.3	5.3	5.7
🇪🇸 Spain	2.8	2.6	3.7	8.1	6.6	7.6
🇫🇷 France	–	2.7	2.5	3.8	4.0	4.2
🇮🇹 Italy	6.4	4.3	5.0	6.1	5.4	4.8
🇳🇱 Netherlands	–	2.6	3.4	5.9	4.7	6.4
🇬🇧 United Kingdom	–	2.9	2.2	4.8	5.1	4.8
🇲🇹 Malta	–	–	–	4.7	5.6	6.2
🇺🇸 United States	3.3	3.6	3.9	5.1	5.2	4.8

Years of income: price of a typical home divided by a typical annual income, scaled back in time with official price and income series; definitions differ by country (see the article’s method note), so compare the trend within a country more than the level between countries. Payment: annuity on the typical loan share and term of that year, as a share of the same income; “after 10 years” keeps the payment and lets income grow as it actually did. Real price: OECD real house price index, 2015 = 100. A dash means no reliable figure.

What I find when I play with it:

• Germany, 1995 vs now: your parents paid 6.5 years of average pay at 8.2% interest, and banks lent them 63% of the price. The first-year payment took about 37% of the income. Today it’s 5.7 years at 3.65%, banks lend 82%, and the payment takes about 27%. On paper you’re better off. In practice you’re competing for a flat in a city where the ratio is twice the national one, and you’re borrowing more of the price than buyers did in 1995, 2005 or 2015.
• The US, 1985 vs now: 3.6 years of income at 12.4% against 4.8 years at 6.6%. The first-year payment is about a third of income in both cases. The difference comes later: your parents’ pay rose 4.8% a year for the next ten years, and their fixed payment shrank to about a fifth of income. That’s the hidden subsidy of the 1980s. Inflation ate their debt.
• Spain, 1995 vs now: 3.7 years at 11.3% over 15 years, against 7.6 years at 2.8% over 25. The monthly bill takes less of the income today, about 34% instead of 41%, because the rate fell and the term grew. But the 20% deposit now costs 1.5 years of income instead of 0.7. Saving it takes twice as long.

Interest rates: the lever behind it all#

The one thing that moved most in fifty years is the price of money. A German ten-year fixed mortgage cost 8.3% in 1985, 8.2% in 1995, 4.4% in 2005, 2.0% in 2015 and 3.65% in 2025. Spain’s mortgage rate fell from 16.5% in 1990 to 2.5% in 2015. A US 30-year loan cost 12.4% in 1985 and 3.85% in 2015.

Falling rates sound like good news for buyers. They aren’t, or not for long. A buyer doesn’t think in prices. He thinks in monthly payments. When the rate halves, he can pay a much higher price for the same monthly bill, and so can everybody bidding against him. The rate cut ends up in the seller’s pocket. The German Kiel Institute found exactly that: the monthly payment relative to income has barely changed since 1980. The price simply rose to eat the cheaper money.

Who set those rates? From 1999 on, the European Central Bank. It held its deposit rate at zero or below from 2012 to 2022 and bought government bonds by the trillion. I don’t think that was a natural law. It was a policy, and a policy has winners: everyone who already owned property, and every government that had to refinance its debt. The losers were savers and everybody who wanted to buy their first home later.

Even a French civil servant says so. Jacques Friggit, who has tracked house prices for the inspectorate of the French environment ministry for decades, found that prices moved in line with household income for 35 years, from 1965 to 2000, and broke out between 2002 and 2007. His explanation isn’t construction or land. It’s the financial environment: cheaper and longer credit.

Measured in gold and in hours#

If you want to see the money effect without the noise, price a house in something central banks can’t print.

In gold, a US house costs half of what it did in 1975, and the UK one about a quarter less. In hours of work it costs 60% more. Put the two together and you get my view in one line: the house didn’t become more valuable. Your wage, paid in dollars, pounds or euros, became less valuable. Gold isn’t a perfect yardstick, it swings with fear and interest rates, and 2025 was a fearful year. But over fifty years, it shows who lost purchasing power. Not the bricks.

Guess first

A median new US house cost 244 ounces of gold in 1975. How many in 2025?

Show me

Getting a loan: from queues to 100% and back#

Your parents had a different problem. Not the price, the loan.

• UK, 1970s: building societies set mortgage rates as a cartel, below the market rate, and borrowers queued for a mortgage. Banks were held back by the so-called corset until 1980. Then came deregulation, and by 2002 Northern Rock’s “Together” mortgage lent up to 125% of the value. In 2014 the Bank of England capped loans above 4.5 times income at 15% of new lending.
• US: in 1975 the average loan was 73.7% of the price. By 2005 first-time buyers put down a median 2%. After 2008, the Dodd-Frank Act brought an ability-to-repay rule, and from January 2014 a “qualified mortgage” had to stay below 43% of debt to income.
• Netherlands: mortgage interest has been tax-deductible since 1893, and in the early 2000s borrowing 110% of the value was nothing unusual. Since 2012 the state has cut the maximum loan step by step to 100% and the deduction since 2014. Prices still rose 108% in ten years.
• France: since January 2022 a binding cap: the payment may take at most 35% of income, and the term may be at most 25 years.
• Malta: since 2019 a Central Bank directive limits first-time buyers to 90% of the value, with a cap on the payment as well.
• Spain: no binding cap. Banks treat 80% of the value as the standard, but that’s a convention, not a rule.
• Germany: no cap on loan-to-value or payment has ever been switched on, although BaFin has had the legal power since 2017. Banks did the job themselves. In 1995 they lent 63% of the price of a house, in 2025 82%. And 38% of new loans now go above 90% of the value, 13% above 100%.

Here’s the irony. Germany has the strictest image and the loosest rules. The loan is no longer the bottleneck. The bottleneck is the cash you need on top.

The state’s cut on the way in#

In 1983 the German transfer tax on property (Grunderwerbsteuer) was cut from 7% to a flat 2%. In 1997 it went up to 3.5%. Since 2006 every state sets its own rate, and nearly all of them raised it. Today Bavaria charges 3.5%, Brandenburg, North Rhine-Westphalia, Saarland and Schleswig-Holstein 6.5%. Add notary and land registry, often an agent, and you need 9 to 12% of the price in cash before you’ve bought anything. The bank won’t lend that.

That’s why the Kiel Institute finds that the up-front cash a buyer needs for a flat rose from under two annual incomes in the 1980s to over three in 2015 to 2024. Buying costs alone take a median of 1.46 years of saving, and in Starnberg it takes 27.6 years to save the whole up-front sum.

Meanwhile the state helped buyers less. The owner-occupier grant (Eigenheimzulage) was abolished in 2006. The Baukindergeld ran from 2018 to 2020 and was gone again. What stayed is the tax on buying. A subsidy is temporary. A tax is forever.

Everything else got dearer too#

Now to the second half of the family conversation. Even if the house cost the same, would your money go as far as your parents’ did? No.

Your gross pay shrinks faster on the way to your account. In 1975 social contributions in Germany (pension, health, unemployment, employer and employee together) took about 31.2% of gross pay. In 1995 it was 39.3%, in 2026 it’s 42.3%, a record. Long-term care insurance didn’t even exist before 1995; today it takes 3.6%. The average employee’s deductions rose from 22.8% of gross pay in 1970 to 33.4% in 1995 and are at 30.2% now. The state’s share of the whole economy, taxes and contributions together, went from 34.8% in 1970 to 41.9% in 2025.

And then there’s the list. None of these existed in this form in 1975, or they were much smaller:

To be fair, the broadcasting fee of 1974 is about €16.90 in today’s money, so it’s only 8% dearer in real terms. What changed in 2013 is that every household pays it, TV or not.

Your budget has new mouths to feed. In 1973, West German households spent 20.5% of their consumption on housing and energy and 28.1% on food. In 2023 it was 37.5% for housing and energy and 14.4% for food. And then there are things nobody paid for in 1975 because they didn’t exist: a mobile contract for everyone in the family, home internet, a streaming service or two. Destatis counts €142 a month for information and communication per household in 2023, against €51 in 1998.

Want a fair look at the tax wedge too? The OECD’s figure for a single worker on average pay in Germany, income tax and all contributions as a share of labour cost, fell from 52.9% in 2000 to 49.3% in 2025. Still the highest of the seven countries I looked at: France 47.2%, Italy 45.8%, Spain 41.4%, the Netherlands 35.9%, the UK 32.4%, the US 30.0%. Spain is the one where it rose (+2.8 points since 2000).

Building a house: rules, rules, rules#

Why don’t more homes get built when prices are high? Because building got expensive faster than everything else.

• Residential building prices rose 89% from 2010 to 2025. Consumer prices rose 38%. Against consumer prices, building in Germany is about 60% dearer than in 1975 (own calculation from Destatis indices).
• The industry-financed ARGE Kiel institute put the bare cost of a typical block of flats at €983 per m² in 2000 and €1,432 in 2014, a rise of 36% against 27% for the cost of living. Rules set by federal, state and municipal governments since 2000 add about €430 per m², around 11% of the total. Environmental groups dispute this, because the study ignores what insulation saves on heating. Fair enough. The bill still lands on day one.
• Energy rules got tighter in 1977, 1984, 1995, 2002, 2009, 2014, 2016, 2020 and 2024. There are about 3,900 building standards in Germany, a fifth of them binding by law. The federal government has been working since 2024 on a “Gebäudetyp E” that lets builders skip some of them. As I write, it still isn’t law.
• And so: 714,226 flats were finished in 1973 in West Germany alone. In 2025 it was 206,600 in all of Germany, the lowest since 2012, and it took 27 months from permit to keys.

A rulebook that adds €31,000 to every flat doesn’t show up in any statistic of “taxes”. But it’s the state setting the price, just as surely as the Grunderwerbsteuer.

Not just Germany#

A few lines on the others, in their own words:

• Spain had double-digit mortgage rates into the 1990s; in 1990 the first-year payment on a typical home took over 70% of a median household’s gross income, by the Banco de España’s own measure. The cheap money of the euro then drove the ratio to 9.4 years in 2007. The tax deduction for buying a main home was abolished in 2013.
• The Netherlands subsidised debt for 130 years with the interest deduction and then wondered why prices were high. Rent rules and box 3 tax (see the last article) drive landlords out on top.
• The UK went from mortgage queues to 125% loans to income caps in thirty years. Mortgages there reset every two to five years, so the 2022 rate shock arrived at the kitchen table fast: the Bank of England’s two-year fixed rate went from 1.92% in 2015 to 4.29% in 2025.
• France has had stable prices relative to income for decades, until the 2000s. Today it has the strictest loan rules of the group.
• Malta has some of the lowest mortgage rates in the euro area (1.97% in 2025) and terms of up to 40 years. Against average pay per employee, a home costs about 6.2 years of income now and 4.7 in 2005, by my own rough calculation from Eurostat data. Against GDP per head it’s flat, because Malta’s economy grew faster than its wages. For the decades before 2005 there’s no reliable figure.
• The US has the most liquid mortgage market in the world and the 30-year fixed rate. That rate costs 6.6% today, about 70% more than in 2015.

What I do with that#

My view, not advice:

• Stop comparing yourself with your parents on the price tag. Compare the whole package: the rate, the cash you need up front, the taxes, and what’s left of your gross pay. In most countries the price tag did get worse. In Germany the package did.
• The deposit is the real hurdle. If you want to buy in Germany, the number to plan for isn’t the loan, it’s the 10 to 30% plus buying costs in cash. Build that in an account you don’t touch, or invest it if you have years to go.
• Don’t let cheap money do your thinking. The 1% of 2021 made everybody a genius. Run the numbers at the rate of the decade, not the rate of the month.
• Look at where you buy, not just whether. A home in a German region at 4 years of income is a different investment from a Munich flat at 12. If your work lets you, the cheapest way to make housing affordable is to move.

What if I’m wrong?#

Then it’s because of one of these:

• German homes are cheaper against wages than in 1975, on the national average. Real house prices ended 2025 where they were in 1975. And the monthly payment burden has hardly moved since 1980. The “generation that can’t buy” is partly a big-city story.
• Real net pay rose. Net pay per employee rose about 11% after inflation from 1995 to 2023. Not much, but not nothing.
• We live bigger and better. Living space per head in Germany rose from 34.8 m² in 1990 to 49.2 m² in 2024. New homes are warmer, safer and cheaper to heat. Part of the building cost buys something real.
• Food got cheap. Its share of the budget halved since 1973. Phones and internet are new costs, but they replaced a lot of others.
• The tax wedge fell in Germany, France and the Netherlands since 2000, and the solidarity surcharge has been off most payslips since 2021.
• Demand, not just the state. Smaller households, people moving into the big cities and population growth push prices up whatever the government does. Even a perfectly free market can’t build Munich faster than people want to live there.

All true. My point isn’t that everything got worse. It’s that the things that got worse aren’t accidents. The cheap money came from central banks, the buying tax from state finance ministers, the contributions from the pension and health systems, the building costs from the rulebook. A young buyer doesn’t fight the market. He fights the bill for decisions he never voted on.

This article is education, not investment, tax or legal advice. It contains my opinion, scenarios with the sums shown and no product tips.

Method note#

• Germany: a new 70 m² flat at the Deloitte national price for 2025 (€5,200 per m², €364,000) divided by the average gross pay of full-time employees in 2025 (€64,441, Destatis) is 5.65 years; my own calculation, as Deloitte gives this ratio only for cities. Earlier years scale this with the BIS house price index and the pension insurance’s average pay (West Germany before 1991). The mortgage-bank association vdp, using buyers’ net household income, gets 6.3 (1995) and 5.7 (2025), the same trend.
• Spain: Banco de España, price of an average dwelling divided by the gross income of the median household, from 1987; 1975 and 1985 scaled with the OECD index.
• France: Observatoire Crédit Logement, purchase cost in years of the borrowing household’s income, from 2001; earlier years scaled with the OECD index.
• Netherlands: CBS average price of existing homes divided by the median gross household income (2015, 2025); earlier years scaled with the OECD index.
• Italy: own calculation, Deloitte price for a new 70 m² flat divided by Istat net household income, scaled with the OECD index.
• UK: Nationwide first-time-buyer price divided by full-time earnings, from 1983. Rates: building societies’ standard variable rate (1975, 1985), Bank of England two-year fixed rate from 1995.
• US: median price of new houses sold (Census) divided by median household income (Census). Loan share: average loan (FHFA) to 1995, first-time buyers’ median (NAR) from 2005.
• Malta: own calculation, low confidence: median asking price divided by average gross household income (2025); 2005 and 2015 scaled with the NSO house price index and compensation per employee (Eurostat).
• Payment: an annuity on the typical loan share, term and rate of that year; after ten years the payment stays the same and income grows as it actually did. Rates are typical for new loans in that year, and in countries with variable rates the real payment moved with them.

Sources#

• OECD, Analytical house price indicators (price-to-income, real house prices)
• BIS, residential property prices, Germany
• Deloitte Property Index 2026
• Destatis, gross earnings of full-time employees 2025
• Social Code VI, Annex 1: average earnings since 1891
• Bundesbank, rates on new housing loans with initial fixation over 10 years
• Bundesbank, older series of 10-year fixed mortgage rates and all mortgage agreements
• vdp, Spotlight on owner-occupier financing, 2025
• Financial Stability Committee, 13th report to the Bundestag
• Banking Act § 48u (borrower-based measures)
• Bundesbank, sectoral systemic risk buffer cut to 1%
• Kiel Institute, Beyond interest rates: upfront costs and housing affordability in Germany (Working Paper 2307)
• Kiel Institute/GREIX, years of saving for the up-front cash by district
• ARGE Kiel, Kostentreiber für den Wohnungsbau, 2015
• ARGE Kiel, Bezahlbarer Wohnraum 2021
• Destatis, consumer prices, long series from 1948
• Baunetz Wissen, history of the energy-saving rules
• DIN, keynote on Gebäudetyp E and the number of building standards
• Statistical Yearbook 1975, completed dwellings 1973
• Destatis, completed dwellings 2025
• Bundesamt für Soziale Sicherung, pension contribution rates since 1957
• IAQ Sozialpolitik aktuell, social contribution rates 1995–2026
• IAQ Sozialpolitik aktuell, gross and net pay per employee
• Federal Ministry of Finance, tax and contribution ratios
• Bundesanzeiger, average health insurance add-on 2026
• Bundestag research service, VAT rates since 1968
• Fuel Emissions Trading Act § 10 (CO2 price)
• Wikipedia, insurance tax rates in Germany) and broadcasting fee history
• Destatis, structure of consumer spending over time
• Destatis, income and consumption survey 1973
• OECD, Taxing Wages
• Umweltbundesamt, living space per head
• Banco de España, house price and mortgage indicators and methodology
• Observatoire Crédit Logement/CSA, household solvency Q4 2025
• IGEDD, Jacques Friggit, note to the Senate on house prices, 2024
• LegiFiscal, HCSF lending rules
• CBS, average sale price of existing homes and household income
• ESB, lower loan-to-value limits for new Dutch mortgages
• Istat, household income and living conditions 2024
• Nationwide UK house price data since 1952 (copy on DataHub)
• Bank of England, mortgage lending and the housing market, 1982
• Bank of England, the building societies in the 1980s
• Bank of England, two-year fixed mortgage rate (IUMBV34)
• Bank of England, Financial Policy Committee, June 2014
• Central Bank of Malta, borrower-based measures
• ECB, key interest rates
• Eurostat, house price index and GDP per head
• CBS, Dutch house prices up 108% in ten years
• ECB, interest rates on new loans for house purchase
• FRED, median sales price of houses sold (MSPUS)
• Census Bureau, historical income tables, H-5
• Freddie Mac, Primary Mortgage Market Survey
• FRED, average hourly earnings of production and nonsupervisory employees
• World Bank, commodity prices (gold)
• FHFA, monthly interest rate survey, loan-to-price ratios
• NAR, 2025 profile of home buyers and sellers
• Federal Register, ability-to-repay and qualified mortgage rule, 2013

Education, not advice. I don’t know your situation, and past returns promise nothing. Check my numbers, then make your own call. You’re a grown-up.