Can you afford a home in NZ?

[BZG Wagon]

I live in Auckland because that's where there is demand for my profession.

Average wage for a CA in Auckland = $127k
Average wage for a CA in London = $190k (+ significant tax advantages)
Average wage for a CA in Sydney = $230k

London / Sydney look skewed due to massive changes in FX rates the last couple years. It's also worth noting house prices are crashing in the UK & US.

London = 7.8m people.
Auckland = 1.3m people

Auckland has a bigger land area then London. House values in Auckland don't make sense IMO.

[solitaire]

I live in Auckland because that's where there is demand for my profession.

Average wage for a CA in Auckland = $127k
Average wage for a CA in London = $190k (+ significant tax advantages)
Average wage for a CA in Sydney = $230k

London / Sydney look skewed due to massive changes in FX rates the last couple years. It's also worth noting house prices are crashing in the UK & US.

London = 7.8m people.
Auckland = 1.3m people

Auckland has a bigger land area then London. House values in Auckland don't make sense IMO.

theres a cultural factor, in london everyone lives in a flat, the population density is higher and the price you pay for what is essentially a box is scarey, also a lot of places are not sold, they are leased - everyone i knew in london that had property would not sell it because of the gapital gains tax, so freehold titles were few and far between.

[Bling]

I live in Auckland because that's where there is demand for my profession.

Average wage for a CA in Auckland = $127k
Average wage for a CA in London = $190k (+ significant tax advantages)
Average wage for a CA in Sydney = $230k

London / Sydney look skewed due to massive changes in FX rates the last couple years. It's also worth noting house prices are crashing in the UK & US.

London = 7.8m people.
Auckland = 1.3m people

Auckland has a bigger land area then London. House values in Auckland don't make sense IMO.

Wasn't really meaning to compare in that way. Just an example of another city where prices are mad.

What would you earn down here in chch for example though? I'm all googled out, but lets say average price here is 50% less than Auckland. Would your wage be 50% less too? I've never lived in Auckland, it just seems that due to the large number of people that do, demand for resources is higher than somewhere like chch. It's not like you can just pack up and leave, but I would have thought there would still be potential down here for a CA to earn good $$$. Hypothetical of course.

[solitaire]

It's not like you can just pack up and leave, but I would have thought there would still be potential down here for a CA to earn good $$$. Hypothetical of course.

But so cold!!!!!

[Bling]

I'm working in the rain most of today, harden up

[BZG Wagon]

What would you earn down here in chch for example though? I'm all googled out, but lets say average price here is 50% less than Auckland. Would your wage be 50% less too? I've never lived in Auckland, it just seems that due to the large number of people that do, demand for resources is higher than somewhere like chch. It's not like you can just pack up and leave, but I would have thought there would still be potential down here for a CA to earn good $$$. Hypothetical of course.

A CA with similar experience would probably earn something quite comparable to what I'm getting now - so there's a big possibility for a lifestyle improvement.

However I'm quite specialised in Financial services, so put simply; I wouldn't be able to get a similar position outside of Auckland and I'd most likely have to take a bigger pay cut and take a more junior role somewhere. Additionally there wouldn't be the same career prospects so in 5 - 10 years that pay gap would most likely widen.

[solitaire]

sorry whats a ca?

[wde_bdy]

Charter Accountant

[solitaire]

Charter Accountant

ah thanks, yeah its kinda obvious now you've spelt it out for me

[SkylineObsession]

We're in the process of finding out at the mo. Mind you, if i still had a job we'd likely be able to afford something cheep. Have no money saved for a deposit though.

[Looonie]

We are getting beaten by people who put down completely unconditional offers - they're not even interested in a building inspection because they are that desperate. I wouldn't buy a car without an inspection, I sure as hell won't do the same with a house.

You've almost hit the nail on the head, its not necessarily first buyers/families who are doing this though, you'll probably find its more often than not investors. Those delightful $&#$% middle aged c**ts who have $&#$% up our country, world and economy for us, seeking to get even richer. They have funding lines pre-approved for no-deposit finance through certain investor schemes which allow them to buy up stuff cheap with cash down unconditional offers, do a quick reno and rent or turf it for profit.

In addition to the council not streamlining the free-up of available land for future developments, this is the biggest factor causing the un-reasonable price of housing. CGT wouldn't necessarily fix it as investors would merely change their strategy to hold and rent rather than sell and pay CGT.

[wde_bdy]

Sorry, but that is a load of crap.
How can investors be swooping in and buying up stuff cheap? If it is so cheap then offer more than an investor sees in it. An investment is only worthwhile if there is actually a return to be made, which means the rent/capital gain has to support the value being paid or you lose money. Given the changes to LAQC's and depreciation tax loss funded property investment just doesn't work any more.

Callum

[BZG Wagon]

We're preapproved so the only condition I'm putting down is "subject to satisfactory building report" - I only bothered with a finance clause once Really I should add it in but I'm trying to make our offers look more enticing.

When you see a young couple in the auction room with their parents, extended family, even worse - kids, you know you're gong to have a hard day.
As they get closer to the limit you'll usually see the wife start to get anxious.
Then the time between bids slows, the husband starts to sweat as he goes beyond what he can afford while the parents offer and extra $10k - $15k to their kids.
The auctioneer will try and goad an extra bid out of them and they'll say they're out.
Then they'll reluctantly put in an extra $500 - $1k ("wouldn't you hate to lose out on this house for the sake of another $500. Think of all the wasted weekends spent looking" is a common line from the auctioneer) and the process repets until they've gone $20k - $50k beyond their original limit.

[GTsedan]

^ Try not to be too disheartened with the challenges you face. I have no idea why the hell someone would buy a place without doing their due diligence. Family friend is a building inspector and he's got a few horror stories. Sadly it appears that more and more places are being offered at auction so its a sign of the times. Though it sounds like things are a hell of alot difference than the market auction up there.

Anyone else looking, read whats on here

http://www.interest.co.nz/

http://www.interest.co.nz/property/55542/roost-home-loan-affordability-report-shows-affordability-dip-august-outlook-better-wh

(latest Roost property report, scroll to the bottom for regional reports)

and here

http://www.propertytalk.com/forum/forumdisplay.php?14-New-Zealand

I don't agree with alot of stuff that on there but a bit of knowledge never hurt anyone, make up your own mind.

Best of luck

[Looonie]

Well yes, auctions are a different story and a joke IMO...

wde_bdy: If they have pre-approved 100% financing, and they rock up to see a house and sign an agreement there and then on the bonnet of the car, unconditional, knowing they can give it a lick of paint and sell it for an extra 50-80k to someone else, nobody else will even get a chance to make another offer. This is referring to your normal listings, not auction process. Even if a house is going to auction they can still negotiate an offer prior.

BZG Wagon: We found (after spending 3 months searching at the start of the year) that the good stuff sells pretty quickly, so the key is to search regularly, visit promptly, decide quickly and put an offer together as soon as you can. Good properties that are well priced don't stay around for long, the stuff that isn't selling is crap or overpriced (or both). There is nothing wrong with making the offer conditional on building inspection, valuation (if you're borrowing over 80%) and LIM report, in the end it will come down to the figure being acceptable to the seller, and if you're quick enough you can hopefully get something signed up before a better offer comes through.

[Bling]

I was looking about 3.5 years ago..... so boom time. Houses were selling before their FIRST open home.... Needless to say if you didn't check listings every night, you didn't even stand half a chance. Something to consider if you haven't already is getting your name on some agents books. Also check daily for new properties. I ended up finding mine on trademe via private sale and all negotiations were done over their dining table. Scary times as a first timer!

Auctions are probably only popular as agents are good at convincing vendors that it's the best way to go. I imagine it's the best way as running an auction costs a fair bit so someone is coming out well from the deal.... sale or no sale. They must be creaming it. Just have to read the realestate forums (well, one of them, I only venture on trademe ones) and they always tell people selling to avoid auctions. Much like avoiding rent to own situations. I'm not that clued up on auctions though, but some of the people that say avoid are property investors. So have a lot more experience under their belt. Wow that got OT...

My guess is that you have to get in straight away and offer them an attractive price if you really want the place. I ended up in multi offer situations and just walked away from them as much like your situation, others were willing to pay more than it was worth to me. I paid what I think was a fair price for the land I wanted in the end though, no auction, no mulit offer. Granted it was partly due to no one else seeing the potential a section that looked like a dump and a huge tree in the middle had.

[BZG Wagon]

Nearly everything is either Price by Negotiation or Auction.

Auctions suck for two reasons:
1) You're tempted to wait for it if it's a nicer house (this can sometimes take up to a month). So you miss out on other stuff (we're doing that right now - auction is in two weeks and we're sitting on our 'plan b').
2) Spending $300 on a building inspection every time a house comes up to auction becomes a quick way to blow your deposit.

All houses we've looked at by negotiation and even with a list price, the real estate agent has called everyone else who's looked at the house and suddenly it becomes a multi-offer situation and they wait a week before presenting offers (we've only been the first offer once).

I guess that's the nature of demand exceeding supply. Bar the last few months (it got exhausting) we've been looking at places every night. I think most of our problem is we're concerntrating on only two areas where we want to live (close to family, friends, work etc).

I wish I could cruise out one or two weekends, look at 5 or 6 different houses and buy the one I most like, that fits within my budget.

All I want to do is

[Bling]

Only thing I can suggest is looking slightly further afield. Or just sit it out and hope that demand drops. Eventually, it might, I wouldn't count on it too much though in Auckland. Sounds worse than when I was looking!! I looked for months too, out most weekends to look at open homes. But it certainly sounds like you're up against it.

[duddley]

BZG have you tried looking in Henderson/ western heights. You can get a pretty nice mondern place out here within your budget.

[GTsedan]

I think most of our problem is we're concerntrating on only two areas where we want to live (close to family, friends, work etc).

Where abouts in Auckland is that? Might shed some light on the situation, if its 'Auckland City' then I understand your plight...