House affordability
March 28th, 2007 at 6:52 am by David FarrarOuch. The latest figures show that if on the average income, 75% of your take home pay would need to go on mortgage repayments. The recommended level is 40%.
I purchased in 2001, luckily before some of the big increases. To pay it off early I’ve been contributing well over half my take home pay. I am looking forward to an increase in my standard of living when it is all finished!
In Auckland it is even worse. There on average you need to out 93% of your after tax income into the mortgage. And in Queenstown it is 105%.
The report calls for a big increase in the housing supply as the only way to fix the problem.
Related posts:
- Home Affordability Get Worse
- Interest Rates and Housing Affordability
- Housing Affordability
- Household incomes
March 28th, 2007 at 9:11 am
Can’t afford a house?
Vote:Get another job.
March 28th, 2007 at 9:19 am
it became a no-brainer over the last few years for “investors” to grab investment properties, & in the smug spirit of fred above, become nouveau riche by holding lots of houses, plus younger generations to ransom…
Vote:March 28th, 2007 at 9:20 am
it became a no-brainer over the last few years for “investors” to grab investment properties, & in the smug spirit of fred above, become nouveau riche by holding lots of houses, plus younger generations to ransom…
Vote:March 28th, 2007 at 9:22 am
Sorry – instantly suspicious of a study that mixes averages (mean) and medians throughout; and also mixes take home pay of wage earners and salary earners. Without highlighting the massive differences in each of these measures.
Of course they also ignore that a huge proportion of the current demand is fuelled through investment, which makes their conclusions suspect as well.
It is especially interesting given that we had a briefing from Westpac’s chief economist showing that the increase in tax level from 33pc to 39pc has contributed at least 20% to the median house price from an investment fundamentals perspective.
(Realising that a 20% increase in price leads to a leveraged increase in mortgage servicing).
I would see that the key way to make housing affordable is to tell people that they should only buy what they can afford. While you have beneficiaries living in $1 million houses then of course everyone expects it to be their right to live in Orakei. Building more state houses in Palmerston North isn’t going to help that…
Vote:March 28th, 2007 at 9:28 am
There needs to be more high density housing within suburbs close to central Auckland and Wellington, and in areas close to suburb town centres -within walking distance to pubs and supermarkets, and on major bus/ rail links.
Vote:The modern lifestyle doesnt call for the 1/4 acre section, unless you have sprogged a few kids. How many inner city houses with a front and back yard are wasted on flatting singles/couples who would be just as happy or happier in an apartment (without the need to mow the lawns)?
There does need to be a concerted effort to reduce the urban sprawl from further eating up valuable farmland.
March 28th, 2007 at 9:34 am
as the owner a a couple of investment properties, plus my own home, i understand very wel the drivers for the rapid increase in prices over the past few years. The biggest driver has been to legally limit my tax liability. Property investment provides a useful vehicle for doing this. The longer term goal will be also to provide a retirement fund, and then hopefully something for each of my three children.
But it is not necessarily a good investment. the net returns (but before tax) on some properties is less that 4.5% based on the rental income less expenses against the value of the asset.
The tax structures do not allow people to save and the banks are too generous / free with their lending criteria.
Vote:March 28th, 2007 at 9:53 am
Stick with it leah….eventually someone will be forced to subsidise your life.
Vote:After all, this is is NZ
March 28th, 2007 at 10:13 am
the peeps who did the research advocate “a big increase in the housing supply”.
funny that. a quick visit to their home page reveals three ads for finance companies.
Vote:March 28th, 2007 at 10:29 am
An increase in the housing supply might be useful if there was any evidence of actual overcrowding in terms of dwelling occupation. However increasing supply doesn’t honestly make a lot of sense unless there’s real demand from home occupiers to fill the new properties.
The majority of the rises in prices since 2003 have not been attributable to population growth or other actual rises in demand for housing. It’s been driven by a bunch of factors, including as mentioned above the use of property as a mechanism to avoid taxation. The effect of this being that those who can afford to buy houses to reduce their tax burden do so, at the expense of those who’re down the ladder.
Increasing the supply of housing dramatically without an underlying demand for housing isn’t actually going to do much other than create a lot of empty properties while simultaneously making large quantities of investment properties economically unfeasible for their owners. Hello market crash, lots of vacant properties and broke middle-class people who’ve been dumb enough to listen to the tax avoidance/get-rich-quick shouting that’s been going on around the property market in the last five years.
What really needs to be done to take the heat out of the market is to reduce and to some degree remove the various financial incentives that owning multiple properties provide. If the goal is for occupiers to be able to own their houses then that doesn’t require lots more houses right now – it just needs less investment ownership, which would help take the heat out of the sales market while making renting a bit dearer.
Vote:March 28th, 2007 at 10:36 am
err.. – What really needs to be done to take the heat out of the market is to reduce and to some degree remove the various financial incentives that owning multiple properties provide.
Or you could introduce the same taxes (but also the same deductions) on the first home. Counter-intuitive on first glance I know, but just think about it a little.
Vote:March 28th, 2007 at 10:53 am
There is no housing shortage, that’s a lie from investors who have bought up rural land around the major cities and want to see it re-zoned residental.
Vote:Housing prices are being driven by people like our friend above who earns so much that taking a loss on a rental property acts as a tax shelter. Of course, the investment only makes sense when house prices rise faster than inflation. The equity-rich baby boomers have bought into property as a safe investment and tax shelter, driving up prices and encouraging more people like themselves to join in – prices conitnue to rise without any effect from the investor. But you can’t make money just from rent and tax write-offs you need continued capital increase, which means you’ve got a bubble (the logic of investment is dependent on continued speculator investment, not underlying value).
Its bad for the economy becuase more and more money is tied up in housing when it could be invested in producitve capital, it draws in foreign credit, pushing up interest rates, and continued growth is reliaent on the wealth effect generated by a price bubble. And its socially bad: the bulk of New Zealanders, of course, earn nothing like the amount needed to buy or play the investment game. Studies show individuals and communites suffer when people rent rather than own because their lives are less stable and they have less investment in the health of their community.
What is needed to action to undermine the logic of specualtive propterty investment, a mortgage levy (which would in effect be an isolated interest rate on mortgages) would be useful, as would a more effective capital gains tax – these policies could be made fiscally neutral with income tax cuts But both moves a politically untenable.
March 28th, 2007 at 10:54 am
iiq374, I’m not entirely sure how that’d work. Most investors I know run their investments under a LAQC, which would be rather hard to justify as a part in the mechanism of owning your house. A rental property does actually conduct some legitimate business, providing a service to customers and incurring real expenses in the process. If the IRD start letting people claim their household financial arrangements as actual business activity then that strikes me as the start of a world of tax headaches and complexities that’d take years to sort out.
But yes, some tax incentives for owning a home that don’t also apply to investment properties would certainly help. However that’s unlikely on its own to actually reduce the number of properties held by investors at the moment – so there’d need to be some mild disincentives there too to thin out some of the less competent landlords in the market right now.
Vote:March 28th, 2007 at 11:01 am
Ahh, the beauty of the free market in action. Centralise resources and turn 70 percent of the population into the equivalent of surfs in their own country. You’ve got to laugh at the concept of democracy as espoused by the right.
Vote:March 28th, 2007 at 11:09 am
PJ, they’re only surfs in West Auckland. Elsewhere they’d be serfs…
Vote:March 28th, 2007 at 11:12 am
which would be rather hard to justify as a part in the mechanism of owning your house
Actually perfectly justifiable as long as you pay the LAQC (or Trust…) rental income.
At this point the family home attracts the same 39% discount off headline interest rate that the investment property does and people are back on a (semi) equal footing.
Part of the reason for the escalating prices especially in the first home market is that buyers are determined to buy a home despite directly competing with someone who has around a 39% cost discount to them. Given that most first home buyers end up paying around the cost of the house in interest… (I’m hoping I don’t actually need to finish this and you follow the direction).
Vote:March 28th, 2007 at 11:14 am
oops and haha – nice one err
Vote:March 28th, 2007 at 11:25 am
thanks for the vote of confidence fred – all we can do is stick with it!! another no-brainer for you!
Vote:my husband and i both work full time (& earn above average), plus we run a business (which i wish we had more time for)… you’d think we’d be able to buy a house. we wouldn’t mind a small one with only one bedroom, but we do want a garden even a tiny one!
hey, we’ll get there.
March 28th, 2007 at 11:25 am
What hasn’t been mentioned above is that when the investor gets around to selling his property IRD claws back the depreciation that has been claimed against that property. It is counted as income in the year of sale and you have to pay tax on it at whatever your maximum tax rate is. It is not a free lunch.
I find people who moan about others getting ahead are basically lazy and jealous. Too busy maoning and not busy enough trying. When I brought my first house in 1980 I was at University full time and worked two jobs to pay it off in two and a half years. People want lifestyle without effort. Sure, houses are expensive, but people don’t have to buy in central Wellington, they can move to Wainui or someplace cheap to start with, and forgo the cars, clothes and expensive electronic toys that most people have/want. It is amazing how easy it is to save money, even on a modest income, if you are prepared to sacrafice a few luxuries.
Vote:March 28th, 2007 at 11:35 am
brian – get a free education did you?
Vote:while your work ethic is admirable, please note that times have changed since 1980.
if you had those same jobs today how much would you have to earn to pay off the same house, in today’s market, in two and a half years?
wake up & smell the coffee that times have changed.
the whole point of this post is that repayments are 75% of the average wage. this is a fact – not a plea from the lazy, jealous people that you know.
my other question: if we work in miramar, how could we live in wainui & still forEgo a car? i use public transport every day but with an added distance that isn’t sustainable.
i guess you count tertiary education as a luxury as well, since it now costs money.
March 28th, 2007 at 11:39 am
Brian – Depreciation point is saliant, but only if you claimed it. Whereas claiming the straight expenses makes it far less likely for a claw back.
The other point that is missed is if you do opt into saying the property *has* been bought for capital gain then sure you get hit for a bill on capital appreciation – but you also get the IRD to underwrite 39% of your loss in the event of depreciation…
Your point about not having to buy in central xxx is another one I have repeatedly tried to make. Even now with Auckland properties you can get 3 bdrm on 700 sqm for $278,000 within Auckland city boundaries (IE not Manukau). It’s not actually that expensive if you are willing to buy where you can afford, rather than saying I need a harbour view…
Vote:March 28th, 2007 at 11:42 am
Brian, the problem with people buying a significant distance from where they work is that it is a serious drain on transport infrastructure and just plain productivity for the region. The more time people spend in unproductive traffic queues the less New Zealand is worth economically and culturally. Plus it just generates new things to throw public money at, like commuter arterial roads and an expanded public transport network.
If the housing is there then it should be legitimately affordable, in the sense that people who can get a good job in the locality should be able to buy within reasonable walking or public transport range. You may have worked multiple jobs to purchase your house in 2.5 years, but I’d like to see you attempt that today – quite simply, the environment you had to work with was easier than it would be should you find yourself in the same situation today. That is what is being discussed, not the idea that people should just be given housing without any effort. It’s just about giving people the opportunity to do what you were able to, which arguably no longer exists for any other than the extremely lucky.
Vote:March 28th, 2007 at 11:47 am
As was reported earlier in the year, the rise in housing prices is mainly due to a shortage of available land, an avoidable problem.
The 3rd Annual Demographia International Housing Affordability Survey 2007 (470Kb PDF) reports:
In recent decades, the Median Multiple has been remarkably similar among the nations surveyed, with median house prices being generally 3.0 or less times median household incomes. This historic affordability relationship continues in many housing markets of the United States and Canada. However, the Median Multiple has escalated sharply in Australia, Ireland, New Zealand and the United Kingdom and in some markets of Canada and the United States.
Is this rise in house prices avoidable ? Well some major growing cities still have affordable housing:
Dallas-Fort Worth, Atlanta and Houston are rated affordable. Atlanta, Dallas-Fort Worth and Houston, with average annual growth rates of more than two percent annually have been among the fastest growing urban areas in the high-income world . . .
There is also evidence the reason is a shortage of land:
. . . There is virtually no evidence that the housing industry was incapable of meeting the supply. Indeed, William Lewis, founder of the McKinsey Global Institute found the Australian home building industry to be among the most efficient in the world.
In fact, the evidence shows that virtually all of the increase in housing prices has been due to the second factor — a shortage of land. Land prices have skyrocketed, while the price of building houses has risen only modestly in real terms. From 1993 to 2006, 88 percent of the combined cost of new houses and land has been attributable to inflation of land prices and only 12 percent to inflation in house building costs The land price inflation is so great that none of the 90 categories surveyed for the Consumer Price Index rose as steeply. The land price escalation was more than double the increase in petrol costs.
Some time ago city councils across Australasia changed their zones rules to “fight sprawl” and we now reap the “benefit” of this “Smart Growth” policy.
The answer is for councils to release moer land onto the market for housing to meet the demand. Current restrictions on growing cities make no more sense not buying a bigger pair of pants when you are getting bigger.
Vote:March 28th, 2007 at 11:53 am
Leah –
Sorry I still have to agree somewhat with Brian on this; Unless you have an extremely specialised skill set then where you work is also part of your choice.
I could work (almost) anywhere in the country, that I (and my wife) choose to work in Auckland is our problem and I therefore can’t complain about Auckland housing prices.
I would suggest for yourself the same probably applies?
Vote:March 28th, 2007 at 12:00 pm
Tony, that’s bullshit and you know it. Auckland is straining under the weight of its existing commuter burden and doesn’t look like being able to solve its existing infrastructure problems for years, if not decades. More sprawl isn’t going to help matters at all. Ditto for Wellington – both cities have significant geographical impediments to unlimited urban sprawl as they occupy terrain that is either surrounded by water or prohibitively steep hills. The only way they can effectively grow outwards is by expanding into areas so remote from their central business districts that allowing unchecked growth there would be a transportation nightmare.
But that aside, the assertion that the current price rises are demand-driven in terms of actual need for housing isn’t something that’s even close to proven in NZ. We’re not living packed ten to a house and with a massive homelessness problem due to lack of built houses. The housing is there, it’s just not affordable to the people who work reasonably near it. To suggest that need-driven demand for housing is behind the massive rises in sale price in the last five years is ludicrous. That would need an influx of millions of people, which hasn’t happened.
Vote:March 28th, 2007 at 12:03 pm
Hard to tell on a blog leah….so many NZ leftards claim the right to live at other people’s expense.
Two on above average wages (preferably with skills to sell) and a small developing business would be in their own new house with an investment property in virtually any place in Aust away from the large cities.
QLD coast has a couple of thousand kms of real estate in places you can afford.
The answer is out there.
Vote:March 28th, 2007 at 12:13 pm
Fred, “Two on above average wages and a small developing business” doesn’t mean shit for the majority of New Zealanders. You might as well be pointing out that Bill Gates can afford a perfectly nice house, it’s true but rather irrelevant if you’re trying to talk about demographic trends in home ownership.
Vote:March 28th, 2007 at 12:14 pm
you’re right about that jig374 & what i presented was an example only, ie, an eg.
Vote:my husband & i are resourceful & multi-skilled, & could work anywhere.
as it happens, we’re very happy in our current jobs, which are specialised. we have both been in our jobs for a decent period of time, making positive progress, getting promoted, pay rises etc. our jobs are definitely what we ARE happy about.
it would definitely reduce career & income progress for both of us to start looking for jobs in provincial / cheaper areas.
i know you’re just talking about a theory here & theoretically, it’s sound.
but we already work in the suburbs, not town centres, that until several years ago were very affordable to buy in.
our incomes have gone up but not exponentially at the same rate as the housing market. the neighbourhood where we work is now CHOCKA full of rental properties. such as the house we live in!
if you’re suggesting (for us) a rural drift, or an even-more OUTER lying suburb again, it’s not a good option in our situation.
March 28th, 2007 at 1:17 pm
Brian,
If owning your own home is simply a matter of choice then why have ownership rate slipped from 77% in the late 1970s to the present rate of around 50%? is it just that 27% more of NZ’s adult population now choose not to own a home? Somehow I don’t think so.
I expect that this squeezing out of the housing market of ordinary new zealanders has been driven primarily by 2 things.
1) from 1991 to present NZ wage growth has been the slowest in the OECD while our economic growth has sat at the top of the OECD. This means that wealth has been become concentated in fewer and fewer hands. Consequently very rich people have more money to invest in housing while ordinary working people have comparitively less.
2)in the mid 1980s the labour party relaxed controls on overseas investment – meaning that wealthy foriegn investors found (and still find) it much easier to purchase property in New Zealand – thus increasing demand and therefor price.
Vote:March 28th, 2007 at 1:25 pm
I can;t beleive how busy i have been lately with people wanting to buy their first home.
the people i help get into a home tend to see the first home as a step into the game. they will buy a 2 bedroom unit when they would have liked a 3 bedroom house, they will buy a suburb or two further out from where they enjoyed flatting, and maybe the place needs a little bit of work.
or they get a flatmate or two and have them subsidise the place a little bit.
My first home buyers are not buying in flash parts of miramar or jville, or kelburn. they are buying in wainui, the back of newlands, odd parts of karori, chartwell, and other suburbs that are not as expensive.
if you want a 304 bedroom place, you can either pay 4-500K in churton park or you can get it for 260K in wainui.
too many people want to find the ‘right’ house now, rahter than ‘a’ house. those people are the ones complaining and epxecting a handout. those who save their 5% and just get in the game, do fine if my clients are anythign to go by.
Also iiq74, re depreciation, if you don;t specifically state to the IRD that you are not claiming it, then you are considered to be claiming it even if you don;t list it on your return. you would be a mug imho to not claim depreciation, you just need to be well aware that its a loan from the government against the future sale. if you are usingg the rebate to pay the rental loan, rather than lifestyle, you should not get caught out.
AL
Vote:March 28th, 2007 at 1:32 pm
Al – you would be a mug imho to not claim depreciation
I agree – I was just pointing out that the IRD won’t claim back something you never claimed.
Vote:I also think you are a mug if you don’t currently use an LAQC or Trust structure to buy your first home – but apparently that makes the majority of NZ mugs. Hmmm – about 41.1% of NZ I guess…
March 28th, 2007 at 1:41 pm
based on the number of people who tell me they are going to wait for the market to drop and for prices to come down before they buy, when they have no idea of the actual historical trend in wellington property prices, and get all of their facts from the media, i would think 41% would be generous
i know historical trends don;t always indicate the future, but most people don;t even know what the past has been. hell in the 80s lower hutt was more valuable than oriental bay, until someone worked out living near the beach and city was better than the hutt
AL
Vote:March 28th, 2007 at 1:49 pm
Alas, there are some who will rent all their lives,.
It’s the majority in Europe.
No need to ….a skill for sale gets you a house in Aust.
2 income+ small business in no way necessary.
Oh yeah, for Hulun’s info, my surplus income is for fishing not for the use of others to buy houses….
Vote:March 28th, 2007 at 2:37 pm
tony
i said above that the producers of this resarch have vested interest.
your chums at demographia are far from impartial either.
http://wellurban.blogspot.com/2007/01/cheerleaders-for-sprawl.html
in particular check the link to an earlier post on the same site.
err.. is right your info is bullshit.
Vote:March 28th, 2007 at 4:57 pm
Heh, I bought in Dunedin 4 years ago and pay 22% of my takehome pay. Less than I was paying for a single room in a flat in Auckland. Mind you my heating bills are about the same (20% of takehome pay), so I guess that brings it up to 40%.
Vote:March 28th, 2007 at 5:08 pm
Looks like you timed it about perfectly there Andrew!
http://www.landlords.co.nz/housing-statistics/?graphsubmitted=true&frommonth=1&fromyear=1994&tomonth=3&toyear=2007&allareas%5B%5D=123&graphstyle=combo&submit=Show+Graph
Vote:March 28th, 2007 at 5:59 pm
err, yes, 6 months later the QV was 3 times what I paid.
Vote:March 28th, 2007 at 6:06 pm
“Stick with it leah….eventually someone will be forced to subsidise your life.
After all, this is is NZ”
I imagine tenants or first home buyers subsidies yours?
Vote:March 28th, 2007 at 6:17 pm
The banks know that individuals will work 3 jobs and do whatever else they must to pay a mortgage.
How many do that to maintain a share portfollio?
The banks know that the investment the population understands best is residential housing.
As long as you avoid any whiff of sub prime it’s the safest bet in banking.
Nature is trying to tell you young investors something.
Vote:March 28th, 2007 at 6:28 pm
Oh Horace… Honey…”subsidies”(sic)?.. errr no.
I use “subsidise” in the sense of a welfare mendicant who extorts money from me via govt coercion. I then involuntarily “subsidise” them.
You use “subsidise” to mean a freely contracted and voluntary exchange of money in return for rent of a house, commercial property etc.
See your verbal IQ problem now?
Vote:March 28th, 2007 at 6:41 pm
I work with people who are fresh into the workforce and earning money that I wasn’t making until well into my late 30s. many of them don’t want to buy a house. They see the whole home ownership thing as a burden or anchor that may prevent them from looking at opportunities to travel or work in other places.
As far as the person above who said that people would have to live a long way from where the work is … hell, go to the UK – I did up to three hours commuting a day. Read a lot of books. In the Wellington example, Wainiui is 5 minutes away by car from the major transport hubs in the Hutt valley. Hardly a long commute.
Vote:March 28th, 2007 at 7:53 pm
Errr….too many words in one go is it Horace?
Vote:March 28th, 2007 at 8:25 pm
As a renter, who makes a pretty good living from the property industry, I have split loyalties. On the balance of probability though, the boom is a good thing. I wonder how much of NZ’s growth over the last few years has been solely due to the property industry. It has meant that manufacturing’s decline has gone almost totally unnoticed!
I think these kind of boom events only happen a few times each century, and they have the opportunity to shape a country for decades to come. IMHO the govt here has a clear opportunity to take the reins and guide this growth- for instance by massively expanding infrastructure such as roads, rail, electricity and water.
Why is it in Wellington that the motorways have traffic lights on them? Why is there a goat track to the fastest growing area in the Lower NI (the Wairarapa.) Why are the Wellington trains literally museum pieces? Why does the Kapiti Coast drink bore water when they are near to the rainy Tararuas! Why is SH1 a two lane road for most of its length? Why do Auckland commuters sit in traffic instead of having a modern fast train system when it can be easily done (see: Perth)
Imagine if 19th Century Londoners had put up with mass horse and cart congestion instead of building the Underground. Imagine if the US had decided not to build the Interstate highway system.
This is where NZ is, and a spendup on infrastructure, funded by cuts on bureaucracy and a 25c a litre petrol tax would probably be enough to do it.
Any politicians who vote to do something about the shocking state of our infrastructure would get my vote… I and many others would be prepared to pay for it (and work a lot of the jobs too.)
This is not a problem, it is an opportunity IMHO.
Vote:March 28th, 2007 at 8:27 pm
Ok…
Horace is another dumbarse mendicant who firmly believes I owe him a living.
Fornicate and travel dude.
Vote:March 28th, 2007 at 8:58 pm
Horace is another dumbarse mendicant who firmly believes I owe him a living.
You may be right. A long time ago I remember Sir Robert Muldoon remarking that “Bob (Jones) has made his money out of inflation, but there wasn’t going to be a lot of inflation anymore”. More recently the Economist wrote that property prices would fall as they were well out of kilter with average disposable income. I though that we lived in an enlightened age where the Reserve Bank had the economy under control and that house prices would climb gradually in line with wages.
As for believing I owe you a living, all I ask for is a fair deal.
A fair deal is not something you are likely to get from the salivating “property people” whose ethos is it’s all about me.
Vote:You don’t create wealth you just aquire it. Someone else ends up carry you on their shoulders.
Horace
March 28th, 2007 at 9:14 pm
More recently the Economist wrote that property prices would fall as they were well out of kilter with average disposable income
We had a fascinating discussion with Westpac’s chief economist where he was showing how all the recent hysteria around house prices being over-valued is likely to be BS. Basically boils down to a few key things (trying to turn 1 1/2 hours into a couple of sentences):
Vote:Rental affordability hasn’t changed
Even with declining rental yields current tax rates and interest rates mean that median house prices are tracking to investment fundamentals (IE they are not over-valued from an investment perspective)
Asset to debt gearing has only moved by 5% (15% –> 20%), with 30% considered the conservative limit, but 35% more likely in a low unemployment environment.
March 28th, 2007 at 9:14 pm
I carry you and your family on my shoulders, you arsehole, and I always have and I always will.
“As for believing I owe you a living, all I ask for is a fair deal”.
Guess that’s a typo….you claim my resources as your own.
A fair deal is the last thing you want….you want privilege beyond your what your ability is worth, perhaps?
Fuck off.
What sort of fairer deal do you want?
You can function in the market like anyone else.
“Horace is another dumbarse mendicant who firmly believes I owe him a living.
You may be right”.
You agree….. Beaudy.
Vote:Let’s see who wins.
March 28th, 2007 at 9:18 pm
Oh yeah….and how specifically do you “carry me”.
Vote:March 29th, 2007 at 6:11 am
Thanks, but I support myself, and have never collected a benefit. What I’m saying is that when people become wealthy through property investing (generalising to the upper end), those people are carried on the shoulders of a lot of other people. Their rewards bear no relation to their efforts. What’s more there is a whole lot of dirty dealing between investors and real estate agents, (ofcourse some people admire the Mafia don’t they?).
Vote:Horace
March 29th, 2007 at 11:33 am
Horace, what exactly are you talking about dirty dealings between real estate agents & investors?
I’d have to say it isn’t property investors driving the market, it’s high demand, high construction & increasing compliance costs.
Any successful property investor knows each purchase must stack up – ie be cash flow positive. So they won’t pay an arm & a leg for a property, or their investment activities will be unsustainable. How does that push up prices? Investors have always been a straw man for the left.
Ultimately the NZ urban property market is becoming more mature, like most other OECD countries. In future even more folk will be renting IMO.
Vote:March 30th, 2007 at 7:18 am
My friend recieved a sample mentoring audio from Dolf DeRoos; the topic was “choosing a real estate agent”. To cut a long story short, he visits about five asking “who is your best agent” the receptitionist replys we don’t have any “best” agents. Finally he finds an agency where the receptionist replies “Fred!”… “and Fred will find you proerties 30% below value”.
I’m not saying that investors are driving the market, I’ve read that there are a whole lot of things, however I read that “Every dollar of unearned profit in stocks and real estate leaves a hole somewhere.” That is what I meant about others carrying (the benificiaries of asset inflation) on their shoulders.
Vote:April 1st, 2007 at 11:52 am
This whole house affordability thing is getting way too much oxygen. When were houses easy to buy? When during the past was it simple for young people to get a deposit and buy a house?
The problem as I ses it is all about expectations. What on earth makes young people think that they should be able to afford a house, complete with double garage, two bathrooms, spare bed room, central heating and close to town.
The “I’ll whinge because Labour has trained me to expect it on a plate paid for by somebody else generation” have got some real thinking to do on this one. I would suggest that it’s still reasonably affordable to buy a house north of upper hutt if you live in the Wellington region, people have been buying there for years because they couldn’t afford to live on the Terrace.
Why is it suddenly a major problem that young people can’t afford to buy in the central city? This is not new – sure they don’t want to live 40k’s from where they work, but do they want to own some real estate or do they not? What is wrong with the generations old concept of start on the ladder at the bottom and work your way up.
It’s “the world owes me a living – NOW” chickens comming home to roost on the current Govt.
Vote:April 13th, 2007 at 10:23 pm
Here is my take on the situation. I’m recently arrived in NZ from the UK, and am currently renting. We are are our mid 30s, have a new baby, and I earn a good wage – $82K. We also have a large deposit about 190K from the sale of our house in the UK. We don’t want anything fancy: 2 bedrooms house/unit with a small garden in a half decent area where I won’t have to commute hours to work. Can we afford to buy in Auckland – No!
Where rent is cheaper than a mortgage, house prices are very high and rising, as interest rates it is safer to rent.
Still house prices will go down at some point – it has happened before it will happen again – just as the stock market does. It give you an example my fiancee brough her first place in the early 90s for 30K, five years previously it was brought for 60K, and now it is worth 120K.
House prices will go up over the long term despite booms and crashes, but time is running out for us to buy considering our ages.
Rgds.,
Vote:Sunfire.
April 13th, 2007 at 10:24 pm
Here is my take on the situation. I’m recently arrived in NZ from the UK, and am currently renting. We are are our mid 30s, have a new baby, and I earn a good wage – $82K. We also have a large deposit about 190K from the sale of our house in the UK. We don’t want anything fancy: 2 bedrooms house/unit with a small garden in a half decent area where I won’t have to commute hours to work. Can we afford to buy in Auckland – No!
Where rent is cheaper than a mortgage, house prices are very high and rising, as interest rates it is safer to rent.
Still house prices will go down at some point – it has happened before it will happen again – just as the stock market does. It give you an example my fiancee brough her first place in the early 90s for 30K, five years previously it was brought for 60K, and now it is worth 120K.
House prices will go up over the long term despite booms and crashes, but time is running out for us to buy considering our ages.
Rgds.,
Vote:Sunfire.
April 13th, 2007 at 10:25 pm
Here is my take on the situation. I’m recently arrived in NZ from the UK, and am currently renting. We are are our mid 30s, have a new baby, and I earn a good wage – $82K. We also have a large deposit about 190K from the sale of our house in the UK. We don’t want anything fancy: 2 bedrooms house/unit with a small garden in a half decent area where I won’t have to commute hours to work. Can we afford to buy in Auckland – No!
Where rent is cheaper than a mortgage, house prices are very high and rising, as interest rates it is safer to rent.
Still house prices will go down at some point – it has happened before it will happen again – just as the stock market does. It give you an example my fiancee brough her first place in the early 90s for 30K, five years previously it was brought for 60K, and now it is worth 120K.
House prices will go up over the long term despite booms and crashes, but time is running out for us to buy considering our ages.
Rgds.,
Vote:Sunfire.