Real estate prices and purchasing power

In nearly all OECD countries except Japan, Germany and Italy, real estate prices have increased far more rapidly than per capita wage s in the past 20 years. This amounts to a levy on household income which contributes to the impression of a decline in purchasing power, but which has been attenuated by the sharp fall in long-term interest rates. We calculate the change over the past 20 years in the total levy on income due to home purchasing (mortgage loan repayment and interest paid on the loan), and we find that it has grown faster than the per capita wage in the United States, the United Kingdom, Canada, Australia, Sweden and France, with an extremely negative trend for households in Canada, the United States and Australia. This issue of the cost of residential real estate should therefore be taken seriously by governments.