Real estate, post level 4

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#2870489 17-Feb-2022 17:41

mattwnz:

alasta:

It's really unfortunate how the housing situation is driving a wedge between generations. I wonder how many millennials are looking forward to the death of their parents because they need the inheritance?

There are a lot of things wrecking our social cohesion at the moment and this is just another one to add to the pile.

The thing is that often people will get an inheritance later in life when it isn't needed as much. Often money like that will help people far earlier in life and is one reason I suspect that many parents are helping their children buy a house.

Wonder how long it will be before NZ gets inheritance tax like the UK, which will further affect younger generations. Someone has to pay for all this printed money and money given away during the last 2 years. Homeowners who purchased house 2 years ago have benefited with huge capital gains, but house prices potentially could now drop or flatline for some time due to rising interest rates etc.

I really hope my parents leave me nothing. They worked their proverbial butts off to ensure my sister and I had a good upbringing and access to a solid education which has set us both up to be relatively successful. Certainly not rich but comfortable. I hope they spend every penny they have in their savings before they go. I only ask that they don't leave me any debts.

mudguard

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#2870490 17-Feb-2022 17:42

Another interesting aspect for housing in the regions are those who have worked remotely having been based in Auckland, moving to other towns. I have three sets of friends who have all left Auckland in the past year and bought in the regions. But the difference is, they still earn "Auckland" salaries so have purchased homes that are just under, or just over seven figures in the regions. So I'm not sure what that does to locals trying to buy. Perhaps salaries will even out around the place.

Senecio

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#2870493 17-Feb-2022 17:48

mudguard:

Another interesting aspect for housing in the regions are those who have worked remotely having been based in Auckland, moving to other towns. I have three sets of friends who have all left Auckland in the past year and bought in the regions. But the difference is, they still earn "Auckland" salaries so have purchased homes that are just under, or just over seven figures in the regions. So I'm not sure what that does to locals trying to buy. Perhaps salaries will even out around the place.

I'm in active discussions with my manager about doing exactly this. My role is not one that you would typically associate with being able to be performed remotely, yet like everyone else I've proven that it can be done. My wife and I have nothing tying us to Auckland except work and its clear that work is not the barrier that it used to be.

mudguard

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#2870510 17-Feb-2022 18:11

Senecio:

I hope they spend every penny they have in their savings before they go. I only ask that they don't leave me any debts.

I think they could only really leave funeral expenses?

Senecio

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#2870540 17-Feb-2022 18:39

mudguard:

Senecio:

I hope they spend every penny they have in their savings before they go. I only ask that they don't leave me any debts.

I think they could only really leave funeral expenses?

You haven't met my parents! They could find a way.

tdgeek

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#2870573 17-Feb-2022 20:19

GV27:

You can write it off as a 'little rant' all you want. It doesn't change the fact that I'm right. The spike in house prices of this much in such a short period of time is totally unprecedented in modern economic times.

I appreciate it has been difficult for people historically, but objective stats and plunging ownership rates show that is harder now.

There is this desire from some to bake in difficulty in such things simply because it was not easy for them and therefore everyone else should have to struggle more than they did just to get by and it just isn't the way forward.

That has one end-game and no one ends up winning.

Sorry, but Im surprised you have taken it this far.

The price to salary multiplier has been degrading for a LONG time. Its not a short period. It was recognised by the two major political parties 20 years ago. Covid in Jan 2020, and the subsequent QE has exacerbated the long existing problem. NZ has done well with Covid, to the extent that the economy has been "ok", unemployment is low, so that with the QE induced low interest rates has created this perfect storm that adds onto the existing already bad house price situation well before the "short time"

The way I see it, its unlucky. No, Im not being flippant. Its a 20 year problem. Not dealt both, as votes can be gained elsewhere. When it was dealt with its too late, then Covid and the QE and 2.69% interest rates.

quickymart

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#2870635 17-Feb-2022 22:09

I have some colleagues who are looking at leaving Auckland too - we've proved with the lockdowns we can all work remotely, and they're eyeing up places not in Auckland that are much cheaper, but they would retain the pay they get here. They would probably be considered to be doing "quite well" (financially) in smaller places. I envy them, if I didn't have kids I would do the same in a heartbeat too.

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Handle9

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#2870651 17-Feb-2022 23:12

GV27:

The idea that you should have to move city to avoid 'being held back' is exactly the problem I'm talking about.

It shouldn't be borderline impossible for white-collar professionals to afford to live in a city. The 'answer' can't be 'just move somewhere else'.

I agree that is "should" be possible to live in Auckland in a relatively nice relatively accessible area on a normal salary. It isn't. This which will only change very slowly or there will be a massive economic shift.

The other aspect is what to do in the meantime to make your own quality of life better. Expecting things to change soon is unrealistic so you can make yourself miserable, accept that it is what it is or change some aspect of your life. In my experience when I make a plan to change something and drive towards it I feel better and I succeed.

I'm not saying any of it's fair, I'm not saying it's right and I'm certainly not saying it's easy. It's not and it's incredibly difficult to change.

GV27

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#2870663 18-Feb-2022 06:36

Handle9:

I'm not saying any of it's fair, I'm not saying it's right and I'm certainly not saying it's easy. It's not and it's incredibly difficult to change.

I'm in a position, thankfully, where I am not at the point where it's something I consider I have to do. It just involves some shitty choices about family time and working hours, but it's within the confines of 'doable' at the moment thanks to the huge amount of family support we have here, which is ironically is the main reason I don't want to leave.

If we didn't have that then it would be an easy decision.

E: And yes, I agree with the likely outcomes, although the longer we are paralysed by promised solutions that never eventuate, the more likely an external force will come along and then all of a sudden, the reset button won't be hit on our terms - it will be dictated to us by something we as a country have no control over.

quickymart

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#2870673 18-Feb-2022 07:45

And as per Newshub this morning:

https://www.newshub.co.nz/home/money/2022/02/housing-affordability-in-new-zealand-plummets-to-all-time-low.html

8.8. Jesus. I remember hearing people complain when 4X was considered "too much". They'd probably be beside themselves now.

alasta

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#2870696 18-Feb-2022 08:49

The price to income multiplier is not a useful measure because it doesn't factor in cost of capital.

The rent to income multiplier is much more meaningful. If you want to specifically focus on the ability of people to access owner occupied housing then you could use imputed rather than market rents.

engedib

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#2870716 18-Feb-2022 09:31

quickymart:

And as per Newshub this morning:

https://www.newshub.co.nz/home/money/2022/02/housing-affordability-in-new-zealand-plummets-to-all-time-low.html

8.8. Jesus. I remember hearing people complain when 4X was considered "too much". They'd probably be beside themselves now.

It's household gross income, so it's even worse.

I think another bit issue is that the tax brackets have not been adjusted since 2010:

https://www.stuff.co.nz/business/money/300519291/minimum-wage-workers-pushed-near-middle-tax-bracket

So even at the minimal wage people are not really encouraged to do more because all of the extra income will be taxed at 30% + the new unemployment levy.

tdgeek

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#2870881 18-Feb-2022 14:10

alasta:

The price to income multiplier is not a useful measure because it doesn't factor in cost of capital.

The rent to income multiplier is much more meaningful. If you want to specifically focus on the ability of people to access owner occupied housing then you could use imputed rather than market rents.

Agree. The 3X multiplier worked apparently. Interest rates were HIGH. Now, the multiplier is much higher and interest rates are LOW

If people cant pay the prices will drop, if people can pay (due to low interest rates) prices will rise.

I.e. if I was happy to pay $800 a week on a mortgage and it was a nice house, does the price matter? High price low interest, low price high interest, its still 800 a week and the same house. What do people do when buying, do they decide I have a budgett of $xxx,xxx? No, out come the mortgage calculator, not interested in the price ro the interest just the repayments.

Senecio

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#2870922 18-Feb-2022 15:03

Mortgage serviceability isn't the issue for many people. Many people who are renting would actually pay less per week on a mortgage than they do on rent. The issue is being able to save for the deposit whilst paying rent.

alasta

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#2870957 18-Feb-2022 16:07

From a cashflow perspective mortgage serviceability has been quite favourable in recent times, but you need to consider:

A lot of people are taking out mortgages beyond age 35 with repayment terms of 30 years. That is arguably unrealistic as it won't be paid off before retirement.
Interest rates are rapidly rising.
Rates, insurance and maintenance are cash expenses.

I would honestly hate to be servicing a mortgage at 80% of the average house value.

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