Can you afford a home in NZ?

[pc]

wrote heaps

Agree... making landlords rich (where they actually own the properties) or making the banks rich (where the landlord owes the bank everything) does nothing useful for the country.
Banks have caused a lot of the problem with the lending to landlords based on the inflated "equity" of other properties "owned".

I would like to see many of these under capitaled landlords loose everything... land tax on investment properties would be great

[fivebob]

It's all very well trying to blame rich landlords and banks for the unaffordability of housing in NZ, but the reality is they are only a small part of the problem.

The biggest problem is the law of supply and demand, there are more people wanting houses that there are properties available so the prices will continue to rise.

The biggest culprit in this case is councils restrictive subdivision and development rules. Councils don't want to spend the money on infrastructure so they make it hard to subdivide rural land, all under the guise of protecting the amenity value of rural living. This causes the cost of land in the areas they do release to be over inflated, or if it's not expensive, it's because nobody wants to live there, and due the the costs involved in resource consents and council development fees there's no such thing as cheap land anymore.

[sergei]

It's all very well trying to blame rich landlords and banks for the unaffordability of housing in NZ, but the reality is they are only a small part of the problem.

The biggest problem is the law of supply and demand, there are more people wanting houses that there are properties available so the prices will continue to rise.

The biggest culprit in this case is councils restrictive subdivision and development rules. Councils don't want to spend the money on infrastructure so they make it hard to subdivide rural land, all under the guise of protecting the amenity value of rural living. This causes the cost of land in the areas they do release to be over inflated, or if it's not expensive, it's because nobody wants to live there, and due the the costs involved in resource consents and council development fees there's no such thing as cheap land anymore.

That is a huge part as well.

My dream is to live in middle of nowhere, but turns out land in middle of nowhere but not too far off from main centre (200-300km) is very-very expensive.

[RomanV]

Simple solution Sergei.

Move to the roughest neighbourhood you can find, and lay down some communist smackdown justice until it's one of the most well behaved neighbourhoods around, sell house for profit since its now in a nice(r) area to live.

[Adoom]

Barely:
I bought when I was 26, end of 2006
I got a "no interest" loan from dad for my deposit. So Dad owns 25% of the value of the house. No way I could have done it otherwise.

I can scrape by, if I'm by myself, but I have NO spare cash for emergencies/fun/toys/house maintenance.......
So I have to have at least one flatmate(technically a boarder). 1 Flatmate is about equal to a $10k a year payrise!! And you don't pay tax on the rent if it is under a threshold per person/per week!!!
2 Flatmates is bearable, but the house and the drive is starting to get a bit crowded and you have to train them to park properly/do the dishes/not leave stuff in the washing machine for DAYS.
3 Flatmates(1 couple) is great for the oodles of extra money, but its just too crowded.

[Adoom]

For me, I could buy in the wops(featherston/southern Wairarapa).

Pro: Its cheaper to buy. More space and a big garage.

Cons:Currently I can drive to work in 20 minutes and bike in just under an hour. In the wops, I think its takes about an hour each way driving and biking is no longer an option(unless I get the train part way).
Getting any flatmates in the wops is pretty slim, so no help with the mortgage
Going to use a LOT more gas just going to the shops.
Slow internet.
Visiting mates/engine tuners is now a mission.

[mr30%jr]

Im 21


my take home pay is 574 dollars
I inherited 100k roughly
bought a house for 185k
borrowed 140k
spent the rest on renovating it (it was a shithole)

my rent per week is 240

i dont have any flatmates

its a 3 bedroom house with a large garage for my car shite

not boasting i dont get paid sweet $&#$% all for a 46 hour week just saying it can be done, not alot people get the head start i did but i still would have bought a house just not so soon

[mjrstar]

I see the house prices as simple supply and demand.
It seems foolish to expect the govt to step in to artifically reduce demand by creating any sort of dis-incentive to put off prospecive land lords/home owners. Because some believe buying a house has become unaffordable.
They have capital gains tax in australia and prices are still comparable with new zealand.

Sure if enough people believe house prices are too high there will be competition to buy, but i can't imagine too many astute home owners (or land lords) rushing out to sell thier house for 50% of what they paid for it.

I'd personally do what i could to hold on to the property?

I'd like a porsche race car do you think the govt could do something to reduce the price of these so i can buy 1 (or 2, it'd be nice to have a spare).

I realsise there is a difference beteween having a piece of your own land and a barely used race car but hey..

[Alex B]

My dream is to live in middle of nowhere, but turns out land in middle of nowhere but not too far off from main centre (200-300km) is very-very expensive.

Nope, you're just living in the wrong part of the country. Amazingly there are jobs in other parts of the country. The pay may not be as high, but you will most likely find the cost of living lower. Have to make sacrifices, can't have it all

[solitaire]

Just barely, don't technically live in auckland - two hours commuting each day.

Personally I am keen on scrapping the depreciation tax or whatever it is. Aggree there are plenty of arguements for and against - but i would love to see these landlords investing their money in local business or investments rather than property, and I like to think the reduction in demand just might make it more affordable for a few people who can't quite make it at the moment.

***note: this is my opinion, not proven fact, don't start pushing your opinion on me and calling it fact either - im not up for a debate ***

[RomanV]

I see the house prices as simple supply and demand.
It seems foolish to expect the govt to step in to artifically reduce demand by creating any sort of dis-incentive to put off prospecive land lords/home owners.

It seems that a mortgage is the only type of big loan that most 'sensible' people are willing to take on, and they're more or less willing to accept ever increasing prices. Partially thanks to the expectation of the ever increasing prices to be ever increasing, so they can make money out of it too.

People think "Aaahh, well that's how much a house costs" so just fork out for an ever increasingly large loan to buy an increasingly ordinary section of property.

Problem is, that the % of the average persons wages which is required to actually own a piece of land and a house is increasing rapidly, putting home ownership out of the realm of possibility for a lot of people... That's the point of this thread.

Who wins at the end of the day? The banks who are having similar % of interest on increasingly large loans, whether by a select few top dogs with lots of property, or otherwise.

Investing in property seems to work, but it seems like a shitty idea to me. No actual work is done, no extra productivity that contributes towards the economy at all... Where does this extra money come from, that people are making from selling land for doing nothing? From some other idiot who's willing to pay more, and an ever increasing chunk of that to the bank? This cycle cant continue forever, it's surely bound to reach some sort of stagnation point or equilibrium where the % of people who can afford to buy property balances put the demand/price.

If not, and I'm expected to take on a million dollar loan over 50 years to buy some shitty house, then yeah nah, I think I'm good.

I prefer the idea of investing money in business etc rather than just the 'land + time = money' idea... I'd like to see the government incentivise this kind of investment, if it means giving disincentives for property investment, I cant see it being a bad thing in the long run.

[pureadrenalin]

People don't choose to live in Auckland, people live in Auckland because this is where job is.

Thats just a little small minded.

I decide not to live in the rat race that is Auckland, and I get on just fine.
I got a house almost two years ago, and in another year or two, I might look at getting another for all the reasons everyone is moaning about.

[mjrstar]

caution opinion ahead:

I don't see investing in property as an 'ever increasing' asset, i'd say it's more like a safe(ish) way to guard yourself against inflation. Like romanV states it has to reac critical mass, no-one in thier right mind will borrow 15x thier annual wage to buy a house. (well maybe it it was situated on top of a diamond mine)

The huge boom days are over unless it's an area with a large external infulence. (read diamond mine)

I'd say that house prices (lets say over the last 5 years) have risen far less then the basics of life such as food from the supermarket or petrol etc.

I'd be lucky to get any more than i paid for my house 5 years ago. So not the smartest money making venture, but it has given me some form of solidity and also somewhere to store my crap...


The funny thing with house buyers is that so much of the purchase is based on emotion rather than good business sense. does this make them a better bet than putting your money in shares or local business? probably, well it depends on what you are after.

Sure, the real property investors are simply looking at the bottom line, the majority of whom are smart enough not to be bent over and shafted by law changes.

No i have not looked in to the facts and figures this is just my opinion.

[pureadrenalin]

mjrstar, I totally agree
Also, one of the big reasons people like to invest in property is that its a tangable asset. You can walk up to it and touch it, unlike shares in a company.
Does that make it a better investment? No, but its an emotional link.
One director at some company can do something stupid and drop the worth of my portfolio, but its up to me with regards to property value (maintanence, etc).

[frost]

Im 21


my take home pay is 574 dollars
I inherited 100k roughly
bought a house for 185k
borrowed 140k
spent the rest on renovating it (it was a shithole)

my rent per week is 240

i dont have any flatmates

its a 3 bedroom house with a large garage for my car shite

not boasting i dont get paid sweet $&#$% all for a 46 hour week just saying it can be done, not alot people get the head start i did but i still would have bought a house just not so soon

thats how it works in japan and other Asian country's.
in japan the grand parents give the kids about 100k nz when they turn 20ish to do what they wish, buy a card board box(house). or start a business, they "invest" in the grand children. secession planning.
i think its the best way,

my parents also own 25% of my card board box.

[Bling]

You can walk up to it and touch it, unlike shares in a company.

Yeah and we all know how well some of the finance companies have done over the last couple years. A house may have not gained any value over the same period of time, but its still there, unlike untold thousands of peoples retirement funds which literally just disappeared.

[callum]

I brought my house 4 years ago when I turned 24
and my sister just brought a house today and she turned 20 at the end of last year. Neither of us are on large incomes and both are single. You can afford a house you just have to be smart about it.
My good freind wants to buy a house with his wife. There combined income is more than twice mine but they can't afford a house because they want a house like the one the rent. They have to realize that if they are serious about owning then they can't still live in central auckland.
Owning a house is expensive and alot of work but it's a highly geared investment that some time over the next ten years has to start giving returns.

[S T E A L T H]

I (sorta) agree with sergei. Cheap and easy finance coupled with a rapidly growing population have created the whole "property climber" class which is fuelling the price inflation
The thing is that currently a whole shitload of small-medium businesses in Auckland are secured by their owner's property. A lot of these are mortgaged up to the eyeballs - any serious measures to reduce value will put them in negative equity.

I don't support a capital gains tax on proprty, but I sure as hell support regulating the finance sector and making it tougher to borrow (like it used to be). Won't fix the problem overnight but it will even out over a few years.

[d1 mule]

(tis $2400 a month)

Did you buy a mansion??

haha na man just a 3/4 bed house with a descent garge in a nice quiet street in shirley nothing too flash really

[tsoob]

I brought when I was 21 simalar to mr30%


It does help, however its not impossible for you to own a house.

most of can I or cant I will come down to your mindset on finances and your willingness to change your thinking where you are falling short.

i saw someone post "im a poor student" in this thread somewhere, well thats just your mindset right now. thats fine, good for you.

I know students who have the totally oppisite mindset, that while the are in training they are also running businesses at the same time. again just a mind set.

Yes its tough in NZ but its tough everywhere in the world, so if you actually want a house then you can have one.