Is it reasonable to expect to buy a home after one year working?

January 25th, 2013 at 12:31 pm by David Farrar

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Meet Sharissa Naidoo.

, 25, and her partner have been renting together for four years and say they are desperate to buy their first home.
“The concern is if we’re wanting to start a family and move into a house that’s more than one bedroom, we can’t afford that,” Naidoo said.

Naidoo recently graduated with a Masters Degree in Sociology.  

She is now sick of renting and expects the net taxpayer (you) to underwrite a home for her to live in with her “partner” (hate that word) of four years.
 
All of this, not even one year after her graduation ceremony in May 2012.
I think it is a good think Naidoo is wanting to buy a house, and unlike Cactus think there is room in NZ for BA and even MAs :-)
But it is a valid point that someone who has been in the workforce for presumably just eight months, is not a good example of housing unaffordability. It is a step up from having the Labour Party Vice-President as the poster child for though!
Even in the good old days, it took several years of dedicated savings to get your deposit big enough. Hell I didn’t buy my first apartment until I was 33!
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39 Responses to “Is it reasonable to expect to buy a home after one year working?”

  1. RRM (9,667 comments) says:

    Even in the good old days, it took several years of dedicated savings to get your deposit big enough. Hell I didn’t buy my first apartment until I was 33!

    And now there is this thing called “Kiwisaver” that makes saving a deposit easier than ever… ;-)

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  2. pq (728 comments) says:

    Hidden due to low comment rating. Click here to see.

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  3. kowtow (7,955 comments) says:

    This is TVNZ acting as an anti govt ,pro Green Party platform.Even TVNZ may have used the socialist gender/orientation neutral term “partner”,rather than wife. I don’t know ,but it wouldn’t surprise me. TVNZ is now an activist organisation and my money does not belong there.

    If Naidoo wanted so desperately to own a home then she should not have studied sociology (probably carrying massive debt)and not work for Amnesty (probably doesn’t pay much).

    Get a real job,a real income and then a home the old fashioned way. Work for it.

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  4. Manolo (13,517 comments) says:

    Masters Degree in Sociology? Enough said.

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  5. thedavincimode (6,590 comments) says:

    I’m sure that all the people who saved into their thirties before they had kids and bought an entry level home that was furnished with beer crates and without Sky TV will be pleased to buy this dopey [deleted by DPF and warning about reuse] and her pointless sociology degree a home.

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  6. thedavincimode (6,590 comments) says:

    pq

    I’m starting to get the impression that you are seriously fucked in the head or that you at least need to take your head out of Winnie’s arse and breath a while.

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  7. cha (3,856 comments) says:

    For us it was beer crates, a tea chest and the for sale sign.

    Obligatory.

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  8. BlairM (2,307 comments) says:

    I would pile on in with everyone else, but unfortunately I’m in the awkward position of having dated Sherry for a couple of months back in 2007, and she is an incredibly lovely woman. Sorry.

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  9. rg (201 comments) says:

    Everyone thinks the Govt should do something to help people buy a house. The real answer is for the Govt to do less. A couple wanting to save for their first home pre children are hit by massive taxation to support the Govt’s socialist policies. A new home in a new subdivision at say $450k has about $130,000 of local and central govt costs including fees, consents and GST.

    It is no wonder it is so hard for these young people to get a head with a greedy socialsist govt with its hand continually in their pockets.

    The Govt should do less, and let everypne keep a bit more of their own money. Problem solved.

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  10. Peter (1,673 comments) says:

    I bought my first house when I was 32 back in 2001. Didn’t ‘urt me none….

    Now I have two houses.

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  11. thedavincimode (6,590 comments) says:

    Blair M

    In that case, my heartfelt thanks for not getting her up the duff.

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  12. thedavincimode (6,590 comments) says:

    rg

    As much as anything it’s the Councils with their hands in new buyers’ pockets with the costs they dump on developments.

    The other great inequity is that fact that they pick winners and losers by designating areas for future subdivision. They create a supply shortfall through development restrictions, and exacerbate cost pressure by generations of land-bankers.

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  13. scrubone (3,090 comments) says:

    Actually, having done the sums on how long we took to save for a house, I’m not entirely sure I disagree.

    With a solid savings habit after 8 months of working (DINK) you should be able to salt away several thousand. A few years back, that would have been enough to get you out and starting to look.

    But nowadays you need to fork over so much and take on a huge mortgage. I mean, even the “affordable” houses are over $300,000 in Auckland (supposedly). Even if you can save $30,000 a $270,000 mortgage would be beyond most incomes surly?

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  14. Nigel Kearney (919 comments) says:

    It’s also harder to save because rents have gone up. And rents have gone up because of the government’s changes to tax rules on rental properties. Landlords seek a decent rate of return on their investment, and have adjusted to the new rules by putting up rents.

    Anyway, why not buy the one bedroom if you don’t actually have kids yet? It can always be sold later. Maybe because politicians of both sides are offering special treatment for ‘first home buyers’ and they want to maximise the gain from this by making their first home purchase a big one.

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  15. scrubone (3,090 comments) says:

    Anyway, why not buy the one bedroom if you don’t actually have kids yet? It can always be sold later.

    Because in this case they want the house so they can have kids. The cost of purchasing a house (i.e. the transaction cost) is such that you do need to think ahead a few years if you can.

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  16. Grendel (972 comments) says:

    if this couple had started saving $20 a week from day one of Kiwisaver, they would be 5 years down the track now.
    $20 a week for 5 years is 5K each, so 10K.

    If they had worked part time at Uni over the past 5 years, they should have another 2.5K each from the employer contribution.

    if they have both been working for the past 8 months full time since graduation and earn 100K between them, thats another $1400 ($2000 less .3 tax) from the employer and 2K from them. this is with no growth either.

    thats $18400 a 5% deposit for a $368 000. if they had $1000 growth, they can buy up to $388 000. if they saved any money outside Kiwisaver since they started working they can borrow even more.

    If they earn under 100K between them and stay under 400K in price, then they are both eligible for 5K from the govt as a first home subsidy. this cant be used as the 5%, but it would mean their mortgage is 10K lower.

    so for 5 years of $20 a week, they can buy a house at $368 000, get a 10K discount off the loan, and they will still have about $5500 in their Kiwisavers each from the government kickstart and tax credits. 20K free from the government and a house at a reasonable price.

    and they want more!

    i bought my first house in 2007 having being in the workforce for 5 years, no kiwisaver, had to save $15K in 10 months. we did without stuff we wanted, i sold some of beloved toysoldiers and other stuff to boost the savings and we bought a 210K house we could afford, no garage, its a bottom unit on a crosslease, 2 bdrm, pretty basic. but apparently i need to make way so someone who has been working for 8 months and wants their ‘dream home’

    WTF is this country coming to?

    the good news people is that most of the people i meet in my mortgage broking business who are buying their first home do not have the sense of entitlement this person does. they have saved and they have sacrificed and they certainly dont expect anything to be given to them.

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  17. Spoon (101 comments) says:

    I bought my first home just under a year ago at a very similar age. We’d been to Europe for two months a year earlier (and got married before that) so had essentially started back at $0. My wife and I were both working full time, with our combined wages being a reasonable chunk less than twice the median income. Despite not being massive earners we were putting over $500 per week into savings. By the time we bought the house we had $26k accumulated, which is a tidy 10% deposit in Dunedin in a shade over a year.

    It’s not really that hard. We didn’t live super-frugally (in fact, we had two further overseas holidays in that year, and bought a new car). We just weren’t wasteful, lived in a modest house, and kept an eye on our finances.

    I’m now a sole earner with a 9 month old daughter and a mortgage. Can promise you I’m not saving as much now ;)

    Edit: I graduated at 20 (almost 21), so the fact I got my education straight after I finished school and didn’t mess around may have helped.

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  18. thedavincimode (6,590 comments) says:

    Nigel Kearney 1:50 pm

    It’s also harder to save because rents have gone up. And rents have gone up because of the government’s changes to tax rules on rental properties. Landlords seek a decent rate of return on their investment, and have adjusted to the new rules by putting up rents.

    Translation: The Government stopped the rorts that resulted in other taxpayers subsidising negatively geared rental investment for non-taxable capital gain with WFF and loss attributing companies. Landlords are now stuck with debt levels that are too high without taxpayer subsidies and are putting their rents up to pay the interest bills on their over-geared properties.

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  19. barry (1,317 comments) says:

    A masters degree in sociology – idiot.

    They will need to do what everyone else who has bought a house has done – save a deposit.

    Dont spend all day in the cafe buying $6 coffees, or on the piss all weekend, or taking holidays etc. – because if you do that youll never buy a house.

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  20. lastmanstanding (1,241 comments) says:

    Without wishing to sound like the Monty Python piece a little about the good old days. And what I relate below was the same as many many other couples of the time.
    Early 1970s me still studying at Uni but with 2 part time jobs. Lectures from 8am to 8pm some days. Worked one job all day Saturdays. Girlfriend then fiancee ( thats what we called them in those days) working full time at Social Welfare and taking all the over time on offer including Saturdays.
    Both lived at home with our Mums and Dad and paid board of around 10% gross earnings.
    Over 3 years saved deposit 20% on small new 2 bedroom home unit in Mt Albert. First mortgage 66% ( max allowed) 2nd mortgage for balance.
    We used to go out about 1 or 2 Saturday nights a month careful on the meal/drinks.

    Problem with Gen X/Y Want the grant mansion now instantly and all the toys. Not prepared to knuckle down and do the hard yards.
    BTW daughter/son in law returned from UK/OZ after 5 years and bought a nice modest house in Birkenhead that they are renovating. 90% mortgage both working hard.
    It can be done just needs the effort.

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  21. Rich Prick (1,635 comments) says:

    I think she has a wee dose of Jacinda-itis. And I get the feeling she doesn’t want the taxpayer to help her buy anywhere with “affordable” neighbours either, no, somewhere nice I suspect.

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  22. RightNow (6,844 comments) says:

    Deposits for a house used to be 25%.

    A house that cost $40k in 1980 would have needed a $10k deposit.
    In today’s terms (comparing wage values) that $10k is just over $50k. Harden up and save it, even if it takes 5 years.
    Assuming a $50k deposit and two adults earning reasonable money (average household income is about $80k in NZ) they could buy a house for around $400k, financing a mortgage of $350k at $1000/fortnight over 25 years.

    It really does seem that people just seem to have unrealistic expectations.

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  23. Viking2 (11,283 comments) says:

    Whats over geared DV.
    10% 20% 40% 75% 90% 100% 110%.
    you actually have no idea. Just like you think the business of owning a rental home is not a business therefore shouldn’t be treated like all other business’s.
    Owning a truck gives a pile of depreciation and they can be sold for more than they cost.

    Why don’t you try being in business other than a lawyer where you can claim your $300k Merc under the depreciation rules.
    i.e. its better to own a $300k merc for work than a rental house,when it comes to depreciation.
    Actually if I had enough properties that’s what I would do and claim every cent for the business. would even leave it in the garage at work at night. Financial sense.

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  24. beautox (437 comments) says:

    “dedicated saving” … does not compute…does that mean, like, I don’t spend up to my credit card limit every month?

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  25. dime (9,676 comments) says:

    Generation Y – gimme gimme gimme i want it and i want it NOW!!

    even the mighty Dime worked for 5 years before buying his first house!

    The media love to find these bleating idiots. the story writes itself! bet if she could afford a house already it wouldnt be in the right spot.

    like a lady i know. her kid is looking for a house. has to be in the right suburb though. first home needs to be the dream home.. 12 months later and they are still looking! bad attitude has cost them 50k plus. they will end up where they should have started.. spoiled little Gen Y kids

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  26. Peter (1,673 comments) says:

    She should be careful what she wishes for. She thinks she wants the barrier to entry lowered, but if she were more forward-thinking she would shut up, save hard, and climb that barrier.

    Because if the barrier to entry is significantly lowered, then, as Rich Prick notes, her future neighbors aren’t likely to be diligent, hard working people. They will very likely be….and I mean this in the nicest possible way…..trash.

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  27. thedavincimode (6,590 comments) says:

    Whats over geared DV.

    When your cash outgoings (interest) exceed your cash incomings. You need to read your Dickens.

    you actually have no idea

    About?

    Why don’t you try being in business other than a lawyer

    I have. Still am.

    where you can claim your $300k Merc under the depreciation rules.

    You left out: ” … and pay so much FBT that it will make your eyes water, your sphincter collapse and leave you wondering why you bothered.”

    its better to own a $300k merc for work than a rental house,when it comes to depreciation

    It certainly is. For starters, that $300k Merc is worth about $260K the minute you drive it off the show room floor and onto the road. It doesn’t get any better after that either. I’m not sure why that advances the cause of tax rorts around rental properties though.

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  28. justinian (21 comments) says:

    Sounds to me that Naidoo is typical of her generation although the sentiment was expressed by Jim Morrison in 1969 – We want the world and we want it…….NOW” (When the Music’s Over – 1969)

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  29. gazzmaniac (2,319 comments) says:

    Generation Y – gimme gimme gimme i want it and i want it NOW!!

    Dime, I'm Gen Y (fuck I hate that term) and I'm not like that.
    I have a house. That I saved up for. It was built in 1995. It's in an area of the Gold Coast that's not rough but certainly nowhere near flash. I chose the area because it isn't where all the kiwis live in overpriced houses, and being on the western side of the M1 it's not close to Southport/Surfers but it's not like I go there very often anyway. It's in a sort of "average" area. The house is well built and pretty tidy, but is a bit rough around some of the edges and could have used a bit of redecorating and updating (which I do when I get bored).
    I could have borrowed a lot more and got house in a "better" or newer area. I could have bought a brand new one too. But I didn't because I don't want too much debt.

    If that makes me a "spoiled little Gen Y kid" then so be it.

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  30. annie (540 comments) says:

    Ms Naidoo doesn’t appear to have yet had anything other than training-wheel jobs. Work in the voluntary sector is admirable, but it certainly doesn’t pay the bills.

    We bought our first crappy little house in an extremely undesirable hilltop Lower Hutt suburb after 4 years of marriage, both of us working in skilled occupations and saving hard. We went out 3 times a year to the movies and dinner (taking half a bottle of wine, our only alcohol for the year) on birthdays and anniversary. We froze for the first couple of years in the house, with a small one-bar heater, no carpet and no insulation, though we did buy an electric blanket.

    This is how you get a house – work and scrimp. And good marks in qualifications attractive to employers are a good place to start. That and 100 ways with mince and cabbage.

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  31. PTM (45 comments) says:

    You might have a bit more to spare even if you grow the cabbage yourself!

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  32. wat dabney (3,724 comments) says:

    If we all just vote Green then Russel will pull a house for each of us out of his arse.

    And a pony.

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  33. emmess (1,398 comments) says:

    Even if you can save $30,000 a $270,000 mortgage would be beyond most incomes surly?

    It shouldn’t be difficult with interest rates below 5%, it’s only about $250 a week minimum payment.
    Watch out if interest rates go up though.
    We all know what sort of policies can cause that.

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  34. Steve (North Shore) (4,524 comments) says:

    What do you do with a degree in Sociology? Should I get one? I mean fuck there are old people at Uni still studying.

    I bought my house when I was 22 years old. I worked hard out. Normal 45 hours, then 4 hours cleaning offices 4 nights per week, then picked up weekend work as well.
    I worked my fucking arse off to get that deposit and then pay off my mortgage. What is it with these young lazy people???
    Get more than one job, do some fucking work and stop fucking grizzling

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  35. Rufus (648 comments) says:

    Let’s all vote Green then. My kid would love a pony. I’d need a 10 acre block to house said pony though, preferably not too far from the city, or it will start costing me $$$ petrol money. But far enough to get rid of the stink of poor people. Free houses all around!

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  36. Colville (2,191 comments) says:

    Rufus. Dont do it. I am about to flee a 3 acre plot. Fuck load of mowing!

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  37. Johnboy (15,602 comments) says:

    Naidoo should have forgone the degree in sociology and worked in her mum and dads dairy for a bit longer.

    She would be a board member at Foodstuffs and own the whole block of shops round the dairy by now! :)

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  38. Henry64 (81 comments) says:

    First home bought in 1987 after working for nearly 7 years. have Mum and Dad to thank for getting me into the savings habit while still at school. A CSB piggy bank was good for storing the spare change and pocket money.

    My income then was way less than half of what I’m earning now and mortgage interest rates were 22.5%.

    I focussed on the home first, kids/a family to come a few years later. No point in trying to do it all at once – that’s just plain stupidity.

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  39. Camryn (551 comments) says:

    lastmanstanding – Your daughter’s first initial wouldn’t happen to be E, would it? If so, I think we’ve met!

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