New Zealand housing market (particularly Auckland)

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#2087720 11-Sep-2018 18:54

quickymart: ...

Leads me to ask another question: will my boys ever be able to buy a house when they grow up, or is it a case of they haven't got a hope in hell, if things continue on their current path?

Or you could build a legacy and provide for them? Have a family business, use the infinite banking concept (IBC), start multiple streams of income and eventually, if you have to, loan them the money yourself so that they don't have to go to a traditional money lender.

Please keep this GZ community vibrant by contributing in a constructive & respectful manner.

Starlith

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#2087733 11-Sep-2018 19:19

MileHighKiwi:
quickymart:

So with Auckland house prices (or house prices in general), are they just going to keep rising forever, or will the eventually plateau and stop, or will they even decrease much? When I look at it from the outside, all of this has really mostly happened over the last 5-10 years, yet I keep hearing talk about "this is all a bubble".'

Leads me to ask another question: will my boys ever be able to buy a house when they grow up, or is it a case of they haven't got a hope in hell, if things continue on their current path?

Would you like the lotto numbers next? Lol ;) seriously, the time to buy is always now. Have a read of this analysis and look at the graphs to help answer your question.

https://www.nbr.co.nz/opinion/property-price-trends-new-analysis

Over time prices only go one way. There are periods where prices plateau and you get occasional downturns but you should never think you can wait for house prices to fall dramatically. Ain't gona happen.

Reminds me of a real estate agency when I was growing up; they had an image of an old man in the window, walking stick and all, with the words "the young man who waited for prices to come down".

Save hard, sacrifice luxuries and get on the ladder however you can because you're either in the game or you're not. Two incomes are almost essential, especially in the main cities. Have good jobs or be working towards them. Guide your boys into decent careers, e.g trades...that way the have the skills to fix up houses and make profit.

Also depends on how much risk you want to take on in comparison to what you have in the bank and what you are buying. For me I consider anything in the $350k+ range to be very scary if I don't have over half of it already paid down. Thats why me and my partner haven't bought in yet but are considering moving out of Wellington and changing jobs to get on the ladder. Recent rent rises in comparative to our income have made us realise that we are wasting our time and money which ultimately affects our happiness outside of work so we're on the lookout for new jobs and location.

alasta

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#2087781 11-Sep-2018 19:54

Starlith:

Also depends on how much risk you want to take on in comparison to what you have in the bank and what you are buying. For me I consider anything in the $350k+ range to be very scary if I don't have over half of it already paid down. Thats why me and my partner haven't bought in yet but are considering moving out of Wellington and changing jobs to get on the ladder. Recent rent rises in comparative to our income have made us realise that we are wasting our time and money which ultimately affects our happiness outside of work so we're on the lookout for new jobs and location.

I hate to say it, but as someone who lives in Wellington I probably wouldn't stay here if I felt that I were struggling to get ahead financially. It feels like the cost of housing here has really skyrocketed over the last two or three years.

It's strange to think that it wasn't that long ago that John Key was telling us that Wellington was 'dying'!

Starlith

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#2087802 11-Sep-2018 20:41

alasta:

I hate to say it, but as someone who lives in Wellington I probably wouldn't stay here if I felt that I were struggling to get ahead financially. It feels like the cost of housing here has really skyrocketed over the last two or three years.

It's strange to think that it wasn't that long ago that John Key was telling us that Wellington was 'dying'!

I was only here to complete my degree and I should have been done early next year but unforeseen circumstances have prolonged that. I've decided its not worth the stress and added pressure of living in Wellington and the rent rise was the last straw. Decided I could just transfer/cross credit uni to do part-time and just use my work experience to find a job elsewhere like I've done in Wellington. Wellington just isn't worth it anymore, nice compact city but its not working for us as we planned. I'm more excited about getting out with more opportunities on the horizon around other parts of the country even though I'm 2/3 of the way through my degree.

MikeAqua

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#2088000 12-Sep-2018 09:07

alasta:

It's strange to think that it wasn't that long ago that John Key was telling us that Wellington was 'dying'!

Wellington's problem is if you took tax/rate payers money out of it, there would be a withered husk of a city left.

It lacks a substantial real-economy.

Still a nice place to live though (apart from the weather).

Mike

1101

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#2088058 12-Sep-2018 09:53

quickymart:

Leads me to ask another question: will my boys ever be able to buy a house when they grow up, or is it a case of they haven't got a hope in hell, if things continue on their current path?

It will be either
buy a house, at a stupidly high price, that will put them forever on the verge of bankrupcy
or rent at a cost that will put them on the verge of bankrupcy & require govt handouts just to help pay the rent

Even now we have families living in cars & friends garages for the luckier ones . Thats going to become more 'normalised' as things get worse.

My generic small 3 bedroom house on the outskirts of Ak cost $77k. It now has a GV of $1M . So think ahead another 30 years .
Paying that sort of money for small generic homes is insane.

Get rid of the dream of a nice house on its own section, and start building up & highly condensed . Then things may get cheaper .

alasta

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#2088091 12-Sep-2018 10:51

MikeAqua:

alasta:

It's strange to think that it wasn't that long ago that John Key was telling us that Wellington was 'dying'!

Wellington's problem is if you took tax/rate payers money out of it, there would be a withered husk of a city left.

It lacks a substantial real-economy.

Still a nice place to live though (apart from the weather).

I think that was true 15 or 20 years ago, but not so much now. We have TradeMe, Xero, Infratil, and a significant presence with the big banks and telcos. I spent 12 years working in jobs with lesser known corporates.

There are a good job opportunities in Wellington but it's still very difficult to get ahead financially if you didn't buy property before the most recent boom.

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MikeAqua

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#2089210 12-Sep-2018 12:12

alasta:

I think that was true 15 or 20 years ago, but not so much now. We have TradeMe, Xero, Infratil, and a significant presence with the big banks and telcos. I spent 12 years working in jobs with lesser known corporates.

There are a good job opportunities in Wellington but it's still very difficult to get ahead financially if you didn't buy property before the most recent boom.

Hypothetically: If you shifted govt away from Wellington, what do you think would happen?

Banks do not generate value, they simply clip the ticket on value created by others. The term 'real-economy' refers to organisations and people who grow, extract, make or create something.

It's true that there is reasonable sized creative sector in Wellington.

Mike

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#2089692 13-Sep-2018 08:30

There would have to be a Christchurch-sized tragedy in Auckland for housing prices there to drop significantly enough for long enough that people could afford them.

Despite the claims to the contrary Labour will never be able to increase supply enough to cope with just basic growth. I firmly believe that the major development zones that are planned in the city will be slums within a decade of completion. There is already too much cost cutting happening; when it is down to brass tacks the cutting will go further and I think a lot of people are going to invest in a three quarter million mistake.

trig42

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#2089704 13-Sep-2018 08:52

UHD:

There would have to be a Christchurch-sized tragedy in Auckland for housing prices there to drop significantly enough for long enough that people could afford them.

Despite the claims to the contrary Labour will never be able to increase supply enough to cope with just basic growth. I firmly believe that the major development zones that are planned in the city will be slums within a decade of completion. There is already too much cost cutting happening; when it is down to brass tacks the cutting will go further and I think a lot of people are going to invest in a three quarter million mistake.

If there was a Christchurch sized disaster in Auckland, the prices of houses would go up even more. Everywhere.

Even less supply in Auckland, tens of thousands displaced. Where are they going to go? Nowhere else in NZ could absorb them without demand massively outstripping supply.

trig42

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#2089708 13-Sep-2018 08:56

1101:

It will be either
buy a house, at a stupidly high price, that will put them forever on the verge of bankrupcy
or rent at a cost that will put them on the verge of bankrupcy & require govt handouts just to help pay the rent

Even now we have families living in cars & friends garages for the luckier ones . Thats going to become more 'normalised' as things get worse.

My generic small 3 bedroom house on the outskirts of Ak cost $77k. It now has a GV of $1M . So think ahead another 30 years .
Paying that sort of money for small generic homes is insane.

Get rid of the dream of a nice house on its own section, and start building up & highly condensed . Then things may get cheaper .

What will that generic $1m house be worth another 30 years from now? You could take a guess, and say $3m. I'd bet it will be even more than that.

I guess it is relative, and we have to hope that the ratio between incomes and house prices doesn't get any worse.

I remember when we bought out first house 20 years ago, we thought houses were bloody expensive then, and we bought for $170,000. That same house (which we sold 10 years ago for $360,000) sold two years ago for $800,000.

kryptonjohn

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#2089729 13-Sep-2018 09:42

Have owned 3 houses in Akl now (just one at a time) and every one I thought was insanely expensive at the time of purchase, and every one ended up being worth a multiple of what we paid. Always selling and then buying in the same market though, so the appreciation on these is effectively meaningless to me.

Apart from getting started on the bottom rung of the ladder, you really only "win" in this market if you are buying multiple investment houses. Not when you are operating a family home. In other words, get started even if it's a rat-hole in a crappy part of town.