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mudguard
1408 posts

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  #2904206 20-Apr-2022 10:28
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I've mentioned it before but there are few factors in play, obviously house pricing. I think everyone can agree that buying your first home has never been easy. But it has certainly got worse. I'm now 40 and have just bought. Friends of mine on lower incomes than other friends have basically chosen kids over buying a house (at this stage), most have got married in their thirties rather than twenties. Virtually all of us had student loans of some kind, which is now 12% of your pay packet each week/month until it's paid off. So chuck in 8% Kiwisaver and Student Loan repayments, then there's 20% gone right there. 

 

 

 

So I can't realistically see anything changing in the near future. I get frustrated reading articles on line how some 18 or 20 year old bought their first house, and they never really go into the nuts and bolts of it. Oh I worked part time since I was sixteen and saved hard and didn't go out, oh and my parents gave me $50K to help out with my deposit and go guarantor... 


quickymart
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  #2904215 20-Apr-2022 10:52
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MikeAqua:

 

In my social circle the OE seemed to makes a big difference too. Some people did the OE smart - got good jobs, came back with money, partner and highly marketable professional experience.  Those people and the people who didn't do OEs got on with it - good jobs, houses, families etc.   

 

I watched some of my mates really struggle.  They'd come back to NZ after several years partying abroad and desperately seek a partner because tick-tock, tick-tock.  Then get married, then try and buy a house and have kids at the same time.  Some of them needed IVF, which is brutally expensive.   Seeing the strain of all that ... no thanks.

 

 

I think that's where I fell over too, rather than buying a house when I had no kids and a reasonable-ish income (plus prices were lower) I didn't, because I guess I thought house prices would always be fairly reasonable. Then I got a partner and we broke up, I did an OE or two in America and later on I had kids, but by that point (around 2012) I simply didn't have the money to buy a place. Now I make a lore more than I did in 2012 but the prices are ridiculous.


GV27
4201 posts

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  #2904245 20-Apr-2022 11:12
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I was a little relieved when we found out we were expecting, we earn OK money but we work bloody hard for it and it would have been easy to keep getting swept up in work and getting on top of our massive mortgage until it may have been too late. Best mistake I ever made tbh. 

 

But to labour the point about demographics, I was five years older than my father was when they had me as their first. I would have loved to have started earlier and had more than I will end up with, but I had to get to a certain point in my career before I'd consider it. In the end it only changed our timeline by six months or so, but if finances had allowed, who's to say how much earlier we could have started? 




quickymart
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  #2904574 20-Apr-2022 21:14
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https://www.oneroof.co.nz/news/41281

 

I think, in the perfect world (and this is purely for my own personal situation, everyone is different) we would have "normal" house prices no higher than, say, $350,000 anywhere in the country (I'm not referring to 7 bedroom mansions or anything like this), and mortgage interest rates no higher than 3-4%. This is just my opinion though, and I'm not sure if this is remotely do-able, or if the economy would totally collapse if this is the case (or anything else would happen). Just my wish list/2c/opinion.

 

But does this sort of scenario happen anywhere in the world? Has it even happened in New Zealand historically? Or is it always a trade-off of sorts: high house prices-low mortgage interest rates OR low house prices-insane mortgage interest rates? Never a happy medium?


alasta
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  #2904579 20-Apr-2022 21:38
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Low interest rates inflate asset prices as a matter of economic fundamentals. 

 

House prices are ultimately driven by market rents, cost of capital and property related expenses. Those things are, in turn, driven by other underlying factors. 


quickymart
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  #2904594 20-Apr-2022 22:39
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Mmm. Feels like a bit of a rock-and-a-hard-place situation for home buyers, really.


itey
447 posts

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  #2904639 21-Apr-2022 08:17
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Definitely going to be in for some interesting times ahead. 

 

We bought our first home last year in November in the peak of things, but I stress tested us to 10% so all good for us but would mean return to student lifestyle. 

 

People forget about student loans - so many young people have student loans and the loan repayments are the icing on the cake. I had a $100k student loan and am now down to $50k (my course fees were $15k/yr for 6yrs). I think a student loan writeoff might be another way to help ease the potential future repayment difficulties as that would give households 12% more to their repayments to prevent defaulting.




quickymart
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  #2908096 29-Apr-2022 08:10
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https://www.stuff.co.nz/life-style/homed/real-estate/128479317/cooling-housing-market-will-leave-no-region-untouched

 

Here's hoping. How low will it go? I doubt a return to pre-pandemic levels, but you never know.


GV27
4201 posts

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  #2908099 29-Apr-2022 08:17
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itey:

 

People forget about student loans - so many young people have student loans and the loan repayments are the icing on the cake. I had a $100k student loan and am now down to $50k (my course fees were $15k/yr for 6yrs). I think a student loan writeoff might be another way to help ease the potential future repayment difficulties as that would give households 12% more to their repayments to prevent defaulting.

 

 

Take some comfort in that with me being so close to having paid down my $55K loan completely, it is almost certain they will announce student loan debt forgiveness as soon as I'm done 😁

 

But frankly, it's a great idea. I see no reason that things should be harder for people who follow on from where I am just because they were kind of bullshit for me. 

 

You might have been able to morally justify it before living costs took off, but that's hundreds of dollars a fortnight for many at a time where making ends meet is going to get harder and harder. It's simply no longer fit for purpose, and barely comprehensible in such a low wage economy as NZ. That link between a middle class lifestyle as we knew it and a tertiary education is broken and 12 cents in the dollar at a time like this, or indeed, any time, is verging on usurious. 

 

And that's before you start comparing AU student loan repayments with NZ; they kick in at 2x the income, the recovery % is on a sliding scale depending on your income, it tops out at 130K and even then it only tops out at 10%, which is less than our flat 12% recovery rate. In a country with lower living costs, cheaper housing and higher wages. 


engedib
250 posts

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  #2909760 3-May-2022 17:09
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quickymart:

 

https://www.stuff.co.nz/business/property/128505952/its-a-house-buyers-market-as-real-estate-asking-prices-drop-across-new-zealand

 

How long will it stay a "buyer's market" for, I wonder.

 

 

I don't think it's a buyers market either with increasing home loan rates and higher stress test numbers:

 

https://www.stuff.co.nz/business/128522319/asb-becomes-second-bank-this-week-to-increases-home-loan-stress-test


lxsw20
2897 posts

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  #2909762 3-May-2022 17:29
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Yes, it's my bet we'll see why it's not all sunshine and rainbows now the pricing is heading down. Obviously its heading down for a reason.


tdgeek
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  #2909763 3-May-2022 17:29
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engedib:

 

I don't think it's a buyers market either with increasing home loan rates and higher stress test numbers:

 

https://www.stuff.co.nz/business/128522319/asb-becomes-second-bank-this-week-to-increases-home-loan-stress-test

 

 

Fair call. The masses wanted house price increases stopped. Thats happened. But its still a problem??

 

Let the house prices subside, then evaluate


mattwnz
18639 posts

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  #2909870 3-May-2022 22:54
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As the emergency record low interest rates contributed to the rapid House prices rises, it appears the rising rates are now contributing to House prices falling in places. There is now heaps of supply on the market. I think a big factor is going to be how much the immigration numbers increase over the next year, and years, to keep demand for housing high, whether that is to rent or to own. But certainly House prices have dropped quite a bit in my area. Houses that would have fetched in the 800s in December have dropped back to the 700s partly because some people are getting desperate to sell. Many houses have been on the market for months. I so getting notifications of land especially on my watch list dropping 50k and it still not selling. The money that was flying around last year seems to have dried up too.

MikeAqua
6807 posts

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  #2909975 4-May-2022 09:04
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mattwnz: As the emergency record low interest rates contributed to the rapid House prices rises, it appears the rising rates are now contributing to House prices falling in places. There is now heaps of supply on the market. I think a big factor is going to be how much the immigration numbers increase over the next year, and years, to keep demand for housing high, whether that is to rent or to own. But certainly House prices have dropped quite a bit in my area. Houses that would have fetched in the 800s in December have dropped back to the 700s partly because some people are getting desperate to sell. Many houses have been on the market for months. I so getting notifications of land especially on my watch list dropping 50k and it still not selling. The money that was flying around last year seems to have dried up too.

 

There is a lot of talk about net emigration becoming a thing.  I'm not sure how realistic that is. 

 

It will also be interesting to see the effect of a resurging tourism trade on the rental market.  Properties will be moved from the rental market to the short stay market.  There are plenty of places where you can make more on AirBnB in a few months than renting all year, simply because people can afford to pay more for holiday accommodation than they can for rent.





Mike


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