Can you afford a home in NZ?

[Miss_S]

lol you guys have some funny ideas.

A bank won't lend to you if you don't have sufficient surplus to pay for other costs.

The average couple in Auckland CAN afford a home, it is a matter of budgeting, which NZ'ers, as a whole, fail at.

I couldn't be bothered reading past page 2.

P.S. I work for a financial planner as a mortgage broker.

A bank will lend you even if you are struggling because they see the property as an investment, not liability like a car, it is easier to get mortgage than a car loan.

Neg. Banks have cracked down HARD in the last 6 months. You wouldn't believe the hoops I have to jump through to get an approval. =/

[Bling]

A bank will lend you even if you are struggling because they see the property as an investment, not liability like a car, it is easier to get mortgage than a car loan.

How would you know if you've never tried to get a mortgage?

Easier to get a mortgage than car loan.. haha I think that sums up how much you know and how much you think you know tbh. How many cars need a 15k deposit?

[sergei]

A bank will lend you even if you are struggling because they see the property as an investment, not liability like a car, it is easier to get mortgage than a car loan.

How would you know if you've never tried to get a mortgage?

Easier to get a mortgage than car loan.. haha I think that sums up how much you know and how much you think you know tbh. How many cars need a 15k deposit?

I personally wasn't getting a mortgage, but my parents were. So I know the process involved, and it was certainly easier that buying a car for myself (finance) at the time. I have to admit that this was decade ago.

[Bling]

Sweet, so pretty relevant to today then isn't it...... was that post a troll then?

Out of interest though, are your parents better off now for buying a house or would they have been better to rent?

[sergei]

Sweet, so pretty relevant to today then isn't it...... was that post a troll then?

Out of interest though, are your parents better off now for buying a house or would they have been better to rent?

they are better off. But they would not be able to buy same house now for the money they had at that time, even if you correct for inflation.
The house was 240k, big enough to accommodate them on second floor and me and my wife on first floor. This sort of house would cost 700k+ now. Hence my point, median income did not increase 3-4 fold in last 10 years, but houses did.

[Mr Revhead]

yeah article out just the other day pointing out that x amount of time ago (i forget exactly but like 10-20years) they average house price was now 8 times the average wage, whereas previosuly it was 2 times

[Bling]

Sweet, so pretty relevant to today then isn't it...... was that post a troll then?

Out of interest though, are your parents better off now for buying a house or would they have been better to rent?

they are better off. But they would not be able to buy same house now for the money they had at that time, even if you correct for inflation.
The house was 240k, big enough to accommodate them on second floor and me and my wife on first floor. This sort of house would cost 700k+ now. Hence my point, median income did not increase 3-4 fold in last 10 years, but houses did.

You made a comment about how its easier to buy a house than a car. Which couldn't really be further from the truth, so I do wonder where you get your information? Stating how a situation was 10 years ago is pretty pointless really. The only reason you even admitted that is that I called you out on it. How about stick to the current facts and figures not what your family may have found 10 years ago

Yep, house prices have gone up. So has the price of everything, including the costs of building a new house. Every year building a house gets more expensive. I know, I have done it so that's not even shit I read on the net.

But unless you have actual experience in housing I wouldn't be spouting all sorts of theories, which is what you look to be doing i'm afraid. I guess I just get sick of people reading shit on wikipedia / other web sources, then all of a sudden they are experts in everything and so post accordingly. If you don't have actual experience just don't say anything as misinformation is a lot worse than posting something you don't actually have a clue about.

House prices may have increased faster, but that's life. Moaning about it will not reduce the house prices. Actually getting off your ass and making sacrifices will get s**t done. For example moving to a not so central location etc. Doing nothing will get you nowhere.

/rant

I take a LARGE interest in the property market, interest rates and all that crap as its something I see can help me get to my end goal. So my opinions may come across strong, but its in my best interest to know about this stuff.

[sergei]

Sweet, so pretty relevant to today then isn't it...... was that post a troll then?

Out of interest though, are your parents better off now for buying a house or would they have been better to rent?

they are better off. But they would not be able to buy same house now for the money they had at that time, even if you correct for inflation.
The house was 240k, big enough to accommodate them on second floor and me and my wife on first floor. This sort of house would cost 700k+ now. Hence my point, median income did not increase 3-4 fold in last 10 years, but houses did.

You made a comment about how its easier to buy a house than a car. Which couldn't really be further from the truth, so I do wonder where you get your information? Stating how a situation was 10 years ago is pretty pointless really. The only reason you even admitted that is that I called you out on it. How about stick to the current facts and figures not what your family may have found 10 years ago

Yep, house prices have gone up. So has the price of everything, including the costs of building a new house. Every year building a house gets more expensive. I know, I have done it so that's not even sh*t I read on the net.

But unless you have actual experience in housing I wouldn't be spouting all sorts of theories, which is what you look to be doing i'm afraid. I guess I just get sick of people reading sh*t on wikipedia / other web sources, then all of a sudden they are experts in everything and so post accordingly. If you don't have actual experience just don't say anything as misinformation is a lot worse than posting something you don't actually have a clue about.

House prices may have increased faster, but that's life. Moaning about it will not reduce the house prices. Actually getting off your buttocks and making sacrifices will get s**t done. For example moving to a not so central location etc. Doing nothing will get you nowhere.

/rant

I take a LARGE interest in the property market, interest rates and all that crap as its something I see can help me get to my end goal. So my opinions may come across strong, but its in my best interest to know about this stuff.

I don't need to know a lot to figure out that median salary != median house. This is my point. I don't care what interest rates are doing, or what prices materials to build new house.
My points where the following:
1) Median wages/salary cannot afford a median house in area where they work: true or false?
2) Houses went up in prices a lot quicker than inflation (that including prices on materials to build new house): true or false?


Since you are stating that prices are more expensive because of the materials, could you please explain to me why a 25yo house is very expensive?
New Zealand is one of the least densely populated countries in the world, while land prices are very high (unreasonably high).

What you are doing now is justifying your expense, as if I was attacking your personal position, I am sorry if I came across like that. It is a very good thing if you can afford your house. I certainly cannot (at least from my point of view).

I don't need to go and apply for a mortgage, as right now I don't want one now, hence I haven't spoken to bank or brokers, all I did is to have a look at weekly spam they put in my mail box that has houses for sale in the area, to realise spending $350,000 is out of question (that equals huge chunk of my salary after tax, without interest for 10 years).

Simple arithmetic will tell me that I cannot afford, without taking a risk. To be honest if every one was thinking ahead regarding their finances, we would not be in this situation right now. People in NZ and majority of western world live on borrowed money. This is not right approach, as all it does is creates a debt for future generations. Who will suffer when housing bubble bursts? Next generation, who will have to clean up after us. Right now we are printing more money as equity of property market, and that cannot go infinitely, just look at USA, property market went bust and this is what caused world wide recession. To easy to get a credit card these days.

[Bling]

1) Median wages/salary cannot afford a median house in area where they work: true or false?

You do realise that different areas have different housing values yes? So median income and wanting to live in the TOP suburb in Auckland for example is just a stupid idea. You could easily afford a median house in a lower valued area though. So I would say the way you are looking at it is wrong. You are trying to buy into an area you can't afford. I also think there is no right answer to your question. Lets say everyone is on median wage, there will only be some areas they can live due to the above popular areas being worth more. So I can't answer that question for everyone. But for me its false.

2) Houses went up in prices a lot quicker than inflation (that including prices on materials to build new house): true or false?

Probably, can't say I have looked deeply in to that, as really, it has no relevance to now. Unless its to be used in an argument as to why housing is so expensive. Its just part of life really, sure you can be annoyed about it, but its not going to change, so best use that energy for better things.

Since you are stating that prices are more expensive because of the materials, could you please explain to me why a 25yo house is very expensive?

Houses are built on land, land cannot just be regenerated in popular areas and so it increases in value. You compare a 25yo house in a shit area and one in a nice area. The house itself could be identical, but obviously the price will not.

New Zealand is one of the least densely populated countries in the world, while land prices are very high (unreasonably high).

How do you work that out? The whole area of NZ divided by the number of people living here? Pretty sure people don't live in a large majority of NZ due to it being bush / paddocks and all sorts of other out there locations that no one wants to live. The majority of people want to live near work (you are one of these people) They either have to pay higher prices for their house or living further from work to get a more affordable house. House and land down south for $20,000 or head to a nice area of Auckland and pay $2,000,000.

Just look at USA, property market went bust and this is what caused world wide recession. To easy to get a credit card these days.

US property market is a whole different ball game. Sure the NZ property market will be flawed too, but you have to try pretty hard to f**k up as well as the US did. My opinion of course


I just think your view on property is rather flawed. The only thing you can see is that you can't buy in your area so everything is over priced and shouldn't be and you'll never be able to afford a house etc etc. This will be true if you don't want to make any sacrifices to get a start. Reminds me a lot of the current generation, they want everything now and on a plate. Whereas there's people that will look at it with a different attitude and will accept they might need to make some sacrifices early on in order to get benefit later on. Be it living an extra 20 minutes from work, or not being able to buy the latest Xbox game.

People that aren't willing to make any sacrifices will only end up punishing themselves. I'm not saying everyone should go out and buy a property as you are dumb not to. Don't get me wrong, for a lot of people its not the best option. However for some people, with a little sacrifice, they could actually do quite well for themselves. Only problem is they can't get past the attitude of "I want to live in a really nice house in a sweet area, and I want it NOW".

That's just how I see it. No one with their first property will think of it as the house they will retire in, i'm sure. More of a stepping stone that they can move up from later down the track. You say simple arithmetic, I say you are looking too narrow minded at what could potentially be in front of you.

[sergei]

ok, I get your point, could you tell me please what is the average price in the "ghetto", not far off from average price on the North Shore.
Here some info on that:

http://www.emigratenz.org/house-prices-auckland.html

I was looking at the cheapest houses in greater Auckland area. You will have to travel 100kms to get into cheap house (huntly area), that is not an extra 20min to work, as you would describe.
Also looking at Christchurch, you are not far better off there either:
http://www.emigratenz.org/house-prices- ... hurch.html although Addington / Somerfield / Spreydon row starting looking more reasonable.

As "lack of land" in NZ is very poor excuse. The scarcity is very artificial, I believe partially blame on subdivision laws.

[solitaire]

Whats the definition of cheap house? I think we need to make sure we are talking about the same thing...

[sergei]

Whats the definition of cheap house? I think we need to make sure we are talking about the same thing...

cheap house is something that can be had for $300-400p/w as mortgage repayment by my definition. That works out to $150,000 to $250,000.

[frost]

the difference between USA and NZ, is America have a surplus of house's
and new zealand have a deficit,
i think it was 25 thousand house's needed each year or something, to sustain property rates,

fivebob saying the local councils making it hard to build new house's is correct,
the whole system if slow, very slow,
there is a massive fight between developers and councils over releasing more land for development,

im trying to secure land for apartments and im only allowed to build 3 stories high in the area i want, if they wanted people to afford house to live they will need to let go of some slack for us developers to do whats best for the situations,

if i could build say 5 high the cost of each unit would drop by 40%.

[sergei]

the difference between USA and NZ, is America have a surplus of house's
and new zealand have a deficit,
i think it was 25 thousand house's needed each year or something, to sustain property rates,

fivebob saying the local councils making it hard to build new house's is correct,
the whole system if slow, very slow,
there is a massive fight between developers and councils over releasing more land for development,

im trying to secure land for apartments and im only allowed to build 3 stories high in the area i want, if they wanted people to afford house to live they will need to let go of some slack for us developers to do whats best for the situations,

if i could build say 5 high the cost of each unit would drop by 40%.

So, I guess govt. is to blame. Instead of making gimmicky campaign to help with mortgage of first time buyers (that campaign failed miserably btw), they could have given some slack on zoning/divisions, to promote growth. Instead almost every MP has rental property no doubt is in no interest to put that source of income/investment at risk.

[frost]

correct,
the govt don't help people, they help themselves,

[Bling]

ok, I get your point, could you tell me please what is the average price in the "ghetto", not far off from average price on the North Shore.

That's for you to do, i'm not going to research affordable housing in Auckland, I have nothing to gain . No need to go "ghetto" really. Just be realistic.

Whats the definition of cheap house? I think we need to make sure we are talking about the same thing...

cheap house is something that can be had for $300-400p/w as mortgage repayment by my definition. That works out to $150,000 to $250,000.

You could be paying off a $305,450 home!

This assumes a loan over 25 years at an average interest rate of 6.29%p.a. with minimum fortnightly payments of $800 and a $42,760 deposit)

[solitaire]

Whats the definition of cheap house? I think we need to make sure we are talking about the same thing...

cheap house is something that can be had for $300-400p/w as mortgage repayment by my definition. That works out to $150,000 to $250,000.

You are in the wrong city mate, cheap house is 330,000+ at least in auckland. Move to Dunedin and you'll be sweet as far as i can see on trademe.

I have discussed this with Bling at length and we have differing opinion's (after all, thats what they are, no one knows whats going to happen next) and i don't want to start a debate (Bling hopefully you will offer your perspective on this as well to balance out my point of view)

I am really hopefull that this anti "investment property tax haven" legislation they are looking at bringing in will make a difference, it won't help me as I am already in the market but hopefully if all the property investors sell off a few of their less favoured properties or at least slow their aquisition it will increase supply and therefore force down the prices. It's never going to go down to the $250,000 that sergei is hoping for, but it should make it feasible for a lot more people

The herald (if you believe those biased idiots) seems to indicate that it is becoming a buyers market - that can only be good for first home buyers!

[sergei]

Whats the definition of cheap house? I think we need to make sure we are talking about the same thing...

cheap house is something that can be had for $300-400p/w as mortgage repayment by my definition. That works out to $150,000 to $250,000.

You are in the wrong city mate, cheap house is 330,000+ at least in auckland. Move to Dunedin and you'll be sweet as far as i can see on trademe.

I have discussed this with Bling at length and we have differing opinion's (after all, thats what they are, no one knows whats going to happen next) and i don't want to start a debate (Bling hopefully you will offer your perspective on this as well to balance out my point of view)

I am really hopefull that this anti "investment property tax haven" legislation they are looking at bringing in will make a difference, it won't help me as I am already in the market but hopefully if all the property investors sell off a few of their less favoured properties or at least slow their aquisition it will increase supply and therefore force down the prices. It's never going to go down to the $250,000 that sergei is hoping for, but it should make it feasible for a lot more people

The herald (if you believe those biased idiots) seems to indicate that it is becoming a buyers market - that can only be good for first home buyers!

I am with you on this one.

[Bling]

No more IT talk, this is a housing thread that seems to be creating good discussions. As you were

The market is very messy at the moment, i'm taking the plunge soon and putting my place on the market. Prices seem to be where they were about 2 years ago (roughly) so still not low, but have slowed down a lot / gone backwards a bit. If I can't get a fair price I will not bother selling, no need to sell, just a want. I think that will be the situation for a lot of people. So they will just hold out. Whereas the ones that can't afford it MAY be forced to sell no matter what they can get back.

Whether the new tax laws etc will have any adverse affects on the market i'm not sure. That will come down to how good accountants can work the books in some cases I imagine. There will be people bailing out of owning rentals, but I also think people will still be buying up for rentals. It may end up weeding out the investors that can't afford a rental in the first place from those that have the big $$$ that can weather whatever happens with the property prices and will just hang on no matter what.

[frost]

It may end up weeding out the investors that can't afford a rental in the first place from those that have the big $$$ that can weather whatever happens with the property prices and will just hang on no matter what.

that sounds about right,
the rich will get richer and the average stay average,
the system works

i got a friend who has a house in cashmere hills, worth well over 2 mill
its empty, been empty for about 1 year, to him it doesn't matter if he cant find someone to fill it because he can wait it out,