Can you afford a home in NZ?

[BZG Wagon]

How old is everyone? I'm 26, and the thought of spending 1/2 a million dollars to buy an average home in Auckland scares me.

My sister is 34, her first house which cost $220k to build (when she was 24), recently sold for $480k.

Friends my age with houses either:
1) buy really crap houses in crap areas, and get broken into lots.
2) get massive handouts from their parents to buy a house.
3) have parents who sell them one of their rentals at the price they paid for it a decade before.

Also agree with the immigrants comment. When my parents moved to NZ 40 years ago they had to build a new house. They wanted to buy a villa in herne bay (for $25k), but there was some sort of law which wouldn't allow it (or tax them hard or something making it unaffordable). IMO bring something like that back.

[Elmendorf]

After a lengthy and messy process my bank has finally put through a settlement between me and my moronic ex for me to have the mortgage solely and discharge him. Turns out I can afford a home, all be it in a small town 30 minutes away from work.

[AE86less]

How old is everyone? I'm 26, and the thought of spending 1/2 a million dollars to buy an average home in Auckland scares me.

My sister is 34, her first house which cost $220k to build (when she was 24), recently sold for $480k.

Friends my age with houses either:
1) buy really crap houses in crap areas, and get broken into lots.
2) get massive handouts from their parents to buy a house.
3) have parents who sell them one of their rentals at the price they paid for it a decade before.

Also agree with the immigrants comment. When my parents moved to NZ 40 years ago they had to build a new house. They wanted to buy a villa in herne bay (for $25k), but there was some sort of law which wouldn't allow it (or tax them hard or something making it unaffordable). IMO bring something like that back.

I'm 20 and own a $350k 3 beddie house in Glenfield (nothing wrong with it but lots of scope for improvement) on the Shore. Shore people would say that Glenfield is pretty shitty, but I have friends who live in Glen Innes amongst other shitty places and Gfield looks pretty nice to me

I saved about half of my deposit (10%) and inherited the rest from 3 grandparents, parents garunteed the mortgage. I'm paying about $1600 monthly, interest only, about 4/5ths of that is covered by flatmates. The reason for interest only is that I figure that with the money that I would be putting into the mortgage I can renovate the house faster.

I do bathroom renovations for a living and am resigned to the fact that I am never going to become wealthy from my salary. I decided that with that being the case that I should put the bulk of my eggs in the property basket; doing what I do means that I can do work on my house at a fraction of what it would cost to pay the company I work for to do it, and make profit on property that way.

I'd be really pissed if they brought in an immigrant law like the one above, I started saving (I didn't know it was for a house at the time) at the age of 17 and put in the hard yards to get what I wanted. If the government legislated to lower house prices then sure more people would be able to buy them, but those of us who already have bought would be punished for their inability to save.

[BZG Wagon]

I'd be really pissed if they brought in an immigrant law like the one above, I started saving (I didn't know it was for a house at the time) at the age of 17 and put in the hard yards to get what I wanted. If the government legislated to lower house prices then sure more people would be able to buy them, but those of us who already have bought would be punished for their inability to save.

By your comment I presume you never want to move to a nicer or bigger house?

Let’s say house prices doubled. Woo hoo - you've made $350k on your property! But you've decided you want something a bit nicer for your family. The $650k house you always wanted in Devonport is now selling for $1.300m - you'll need $600k extra to buy it and work until you're 80.

But, let’s say house prices halved. Doh! You’ve lost $175k. But the value of your Devonport house has done the same, and you realise for an extra $150k you can afford it & pay off the difference in six years. Yes it sucked you got into the market a bit early, but you’re actually better off with the way things went.

If you had multiple properties, then I could understand where you're coming from.
Personally, I want a house so I can settle down & start a family - I have no interest in buying and selling to make lots of money & I’m fairly avg when it comes to building things (good on you for making a go of it though). Most of my friends are the same but it sucks to see them delay having kids or struggle week to week with mortgages.

...and I've worked hard to save $80k, on my own, while renting & flatting from 17 y.o. as well as paying off my student loan. Call me elitist but I don't want to move to Glen Innes just because it's what I can afford. I just want something nice to show from the years of study, and working damn long hours to get to where I am today. I could have moved overseas like a lot of people, but instead I'm here in NZ, contributing 39% of my earnings in tax...

[Bling]

So you don't want to pay the current price for a good area house, you would rather all prices halved so you could get it cheaper. Am I reading it wrong?

You're saying better to have lost half your assets, than have your asset double in price. Which I guess is fair enough as you don't have a house. But imagine if you did have a house that you worked hard for then someone took half the value off you. Would you be annoyed or happy that its now relatively cheaper to buy a better place.

While we're at it though, throw away half of your savings, you'll be right.

You're 26, so to be fair, you haven't been alive long enough to have worked hard for a nice place. People often struggle their whole life to get that place they really want. Not everyone will get there either.

[AE86less]

By your comment I presume you never want to move to a nicer or bigger house?

Let’s say house prices doubled. Woo hoo - you've made $350k on your property! But you've decided you want something a bit nicer for your family. The $650k house you always wanted in Devonport is now selling for $1.300m - you'll need $600k extra to buy it and work until you're 80.

But, let’s say house prices halved. Doh! You’ve lost $175k. But the value of your Devonport house has done the same, and you realise for an extra $150k you can afford it & pay off the difference in six years. Yes it sucked you got into the market a bit early, but you’re actually better off with the way things went.

I'd also be stuck with a house that was worth $150k if I sold it, and a mortgage of double that to try and pay off.

[BZG Wagon]

So you don't want to pay the current price for a good area house, you would rather all prices halved so you could get it cheaper. Am I reading it wrong?

You're saying better to have lost half your assets, than have your asset double in price. Which I guess is fair enough as you don't have a house. But imagine if you did have a house that you worked hard for then someone took half the value off you. Would you be annoyed or happy that its now relatively cheaper to buy a better place.

While we're at it though, throw away half of your savings, you'll be right.

You're 26, so to be fair, you haven't been alive long enough to have worked hard for a nice place. People often struggle their whole life to get that place they really want. Not everyone will get there either.

You are reading it wrong. In the case of AE86less, if one day he were wanting a bigger, nicer house, then he would be better off with house prices halfing - regardless of how he felt.

The point being only winners with house price inflation are 1) Property Investors and 2) Home owners down-sizing or cashing up. Everyone else loses.

And it's a simplified example; I don't expect house prices to half or in fact go down at all. I expect they will stay constant or rise slowly, but at less than the rate of wage inflation. So not, I'm not waiting for house prices to halve.

How have I not been alive long enough to work hard for a nice place? You know nothing about me, the length of study I've done or the hours I work.

[BZG Wagon]

By your comment I presume you never want to move to a nicer or bigger house?

Let’s say house prices doubled. Woo hoo - you've made $350k on your property! But you've decided you want something a bit nicer for your family. The $650k house you always wanted in Devonport is now selling for $1.300m - you'll need $600k extra to buy it and work until you're 80.

But, let’s say house prices halved. Doh! You’ve lost $175k. But the value of your Devonport house has done the same, and you realise for an extra $150k you can afford it & pay off the difference in six years. Yes it sucked you got into the market a bit early, but you’re actually better off with the way things went.

I'd also be stuck with a house that was worth $150k if I sold it, and a mortgage of double that to try and pay off.

...but you wouldn't sell it - unless you're saying a house is a short term way for you to make money & exit the market.

And suprise, surprise; you can transfer your mortgage if you bought a new house. Look at the long term advantage.

My view is a house shouldn't be an investment. It should be where you live and where your family grow. House price rises have virtually killed this notion. For example:
http://www.guardian.co.uk/money/2010/mar/21/house-prices-young-couples-marriage
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10622124
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10631912

[Bling]

You are reading it wrong. In the case of AE86less, if one day he were wanting a bigger, nicer house, then he would be better off with house prices halfing - regardless of how he felt.

You realise his mortgage wouldn't halve aye? People sell houses for all sorts of reasons, upgrade/downgrade, lose job, many reasons.

How have I not been alive long enough to work hard for a nice place? You know nothing about me, the length of study I've done or the hours I work.

What I meant was, after 10 years of study/working, not many people can walk in and buy a nice house in a nice area. If you think that's incorrect, sweet as. Just going by experience. And that people work a lot longer than you have to achieve the same thing. The way you say it, its as if your 36/46 and have worked so many years so deserve a nice place. I'm 27 and know for a fact I haven't done enough to get a nice house in a nice area. That's not going to stop me working my way to that goal. 10 years time and I will be getting close to reaching my goal, not tomorrow just because I think i've worked hard enough for a few years.

As for homes being out of reach, yes that's true. But half that problem is people all want to be living in the nice areas and will NOT compromise on location or anything to get a place. They will happily complain about how unaffordable it is. While other people slowly work their way up the ladder of life without trying to jump to the top of the ladder in one hit. Compromise has been covered in this thread, so no point me repeating it But I don't make sacrifices at times just for fun, but in the hope it will make things easier for me later down the track.

Good to get different opinions on it though

[sergei]

You are reading it wrong. In the case of AE86less, if one day he were wanting a bigger, nicer house, then he would be better off with house prices halfing - regardless of how he felt.

You realise his mortgage wouldn't halve aye? People sell houses for all sorts of reasons, upgrade/downgrade, lose job, many reasons.

How have I not been alive long enough to work hard for a nice place? You know nothing about me, the length of study I've done or the hours I work.

What I meant was, after 10 years of study/working, not many people can walk in and buy a nice house in a nice area. If you think that's incorrect, sweet as. Just going by experience. And that people work a lot longer than you have to achieve the same thing. The way you say it, its as if your 36/46 and have worked so many years so deserve a nice place. I'm 27 and know for a fact I haven't done enough to get a nice house in a nice area. That's not going to stop me working my way to that goal. 10 years time and I will be getting close to reaching my goal, not tomorrow just because I think i've worked hard enough for a few years.

As for homes being out of reach, yes that's true. But half that problem is people all want to be living in the nice areas and will NOT compromise on location or anything to get a place. They will happily complain about how unaffordable it is. While other people slowly work their way up the ladder of life without trying to jump to the top of the ladder in one hit. Compromise has been covered in this thread, so no point me repeating it But I don't make sacrifices at times just for fun, but in the hope it will make things easier for me later down the track.

Good to get different opinions on it though

Ok, here is the question: would you live in Otara?
here is another question: why people need to speculate on property market to get a decent place? Why people with above average wages cannot afford a decent place, without committing to life time sentence?

If you think that we are fussy: I live in Glenfield. I had neighbour that was running with a gun after his wife, another neigbour from next flat doing exactly the same, I had to call noise control to get the same neighbour to pull speakers out of his window (he is racist swine, he was trying to get to my Maori neighbour). I also had russian couple and polynesian couple neighbours beating the living shit out of each other. I already live not in a very nice area. I was looking around the prices in the area and they are unaffordable. If I want to upgrade I am looking at >0.5 Million. If I want to down grade I am looking at birkdale (0.3Million for nice 2 bedroom place) at the best and otara at worst.

Right now I don't pay for rent directly. I live with parents. If I try to get the job out of town, it means that job has to pay more than in Auckland to get even with rental.

Ideally, I would like to save for 5-10 years and buy house for cash. I am saving but there is no way I could buy the house on just savings, I would still have to borrow what I see phenomenal amount of money.

Most people here that bought house had some sort of help, inheritance, interest free loan from parents, or even parents paid for it. Many were lucky to buy in the right time.

[Dell'Orto]

We most certainly had no help buying our house, but we also couldnt have bought it without each other.

[Bling]

Yeah I couldn't buy a place on my own either. No free money for us either, every $$ put in is ours.

Ok, here is the question: would you live in Otara?
here is another question: why people need to speculate on property market to get a decent place? Why people with above average wages cannot afford a decent place, without committing to life time sentence?

Otara?? You know i'm not in Auckland aye I'm not going to be drawn into this again as its been covered I think last time you asked. Just rent, will be much less stressful.

[mjrstar]

But, let’s say house prices halved. Doh! You’ve lost $175k. But the value of your Devonport house has done the same, and you realise for an extra $150k you can afford it & pay off the difference in six years. Yes it sucked you got into the market a bit early, but you’re actually better off with the way things went.

I think the main problem with house prices "halving" would be the number of people who then had banks wanting to see a bit more of thier cash back, since there is no-longer equity in the property, then what do you do, sell up and owe the bank a packet, or rob another bank and pay them back to a level that the property can be secured at.

I am in a position where i do have a couple of properties, as it turns out my "investment" property is much flasher than my own residence. I didn't buy it for a massive incerease in value, but more for somewhere to protect myself against inflation.

Should I get hammered on a place I paid 600 for now only being worth 300 and along the same lines for the modest 400k house I live in?

You are saying Don't worry your negative 500K will now buy you a sweet house in a flash area.

[duddley]

Otara = suburb in south Auckland where even the cops probably lock their cardoors!

Yeah I couldn't buy a place on my own either. No free money for us either, every $$ put in is ours.

Ok, here is the question: would you live in Otara?
here is another question: why people need to speculate on property market to get a decent place? Why people with above average wages cannot afford a decent place, without committing to life time sentence?

Otara?? You know i'm not in Auckland aye I'm not going to be drawn into this again as its been covered I think last time you asked. Just rent, will be much less stressful.

[slacker]

Otara = suburb in south Auckland where even the cops probably lock their cardoors!

Yeah I couldn't buy a place on my own either. No free money for us either, every $$ put in is ours.

Ok, here is the question: would you live in Otara?
here is another question: why people need to speculate on property market to get a decent place? Why people with above average wages cannot afford a decent place, without committing to life time sentence?

Otara?? You know i'm not in Auckland aye I'm not going to be drawn into this again as its been covered I think last time you asked. Just rent, will be much less stressful.

Although many would now argue that parts of Papakura and Manurewa are probably worse than much of Otara

but yeah, still not a nice neighbourhood

[Bling]

In that case, in our Otara (Aranui), you can get a 1 bed for 150k and 3 bed for 200k. Fact still remains Auckland is an expensive place to live. Like it or lump it. Maybe if you culled half the population prices would lower to the level of other cities in NZ.

[AE86less]

Maybe if you culled half the population prices would lower to the level of other cities in NZ.

And I could get to work in half the time in the morning

[duddley]

As soon as the mrs finish's her maternity leave we will start saving for a house it may be a bit of a stretch but i would rather pay off my own mortgage then somebody elses and also not have to put up with slack landlord getting around to repairing things.

[BZG Wagon]

You realise his mortgage wouldn't halve aye? People sell houses for all sorts of reasons, upgrade/downgrade, lose job, many reasons.

Totally - but how often does that happen? And how often does it happen to someone around the age of AE86less?

How have I not been alive long enough to work hard for a nice place? You know nothing about me, the length of study I've done or the hours I work.

What I meant was, after 10 years of study/working, not many people can walk in and buy a nice house in a nice area. If you think that's incorrect, sweet as. Just going by experience.

By nice house I mean an average house. Come to Auckland one weekend. See what you can get for $450k. What's wrong with someone my age wanting that? My parents managed to build a nice house at my age. Friends & colleagues in their 30's & 40's managed some very nice places at my age. But we can't.
Plus you can't climb the ladder - most people on the average wage will be working their entire live to pay off their 'avereage house' which is really a sh*t house in a sh*t area.

A $400k mortgage will clock up $28k in interest a year, which you'll pay straight to your landlord... sorry - bank, before you even start paying a cent of the capital.

I earn a fair amount which I'm greatful for, but when I'm riding or driving through a nice area I'd like to live in one day, I seriously wonder how I'll ever be able to afford a house there. Look at $800k houses in Auckland, they're not as flash as your'd expect. If I were 10, or 20 years older it would have been a breeze.

[BZG Wagon]

I think the main problem with house prices "halving" would be the number of people who then had banks wanting to see a bit more of thier cash back, since there is no-longer equity in the property, then what do you do, sell up and owe the bank a packet, or rob another bank and pay them back to a level that the property can be secured at.

I've worked in banking for 6 years - you'd be surprised at the number of houses with negative equity in them (and you bet there'll be lots we don't know about). As long as you pay your morgage, the bank will turn a blind eye.

That is unless you're a serious property investor - then it's a completely different story.

The property market in the states crashed because you can cancel your mortgage simply by handing over the keys to the house to the bank. So as soon as houses fell below their equity level, people just gave them up on mass which left all the banks exposed.

Out of interest; if you had to start building your portfolio from scratch again in the current market do you reckon your could it?