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  # 1224841 29-Jan-2015 18:02
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ajobbins:
networkn:

Sorry but what evidence do you have to support claims that people are only buying houses using existing equity? No-one I know buying houses right now is doing this, unless they are "upgrading" to a bigger place, but ultimately the same rules apply, 
if they couldn't afford it, they couldn't afford it, simple. 


Property investors do this all the time. They don't front up real cash to buy their next investment property, and if they have 3 houses worth $333,000 each last year that each grew by 10% (Which, buy the way, is less than the average in Auckland last year), that's an extra $99,000 in "equity" they have on paper they can use as a deposit on the next investment property, or a 20% deposit on a $495,000 house.

As long as the rent they can get at least can cover the interest on the loan and any maintenance etc, they can just sit on interest only and wait for the value to increase. Rince and repeat. I know a number of people who have done exactly this.


And your point? Ultimately houses are still selling like hotcakes, so they are affordable, and if they aren't affordable to you, then try another area, city, district or suburb. Problem is everyone wants a 5 bedroom house with a view of the water and half an acre of green grass.

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  # 1224844 29-Jan-2015 18:04
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joker97: i don't understand how if you need a 20% deposit (say 700k house, slightly below the average house price) that's 140,000 ....   how many couples earning 35k a year x2 have 140k in their bank?


Perhaps the people being paid 35K a year shouldn't be considering buying at all, or if they are, may wish to consider upskilling or making themselves worth more to their employers?

As has been mentioned, no matter how good the economy not everyone will be able to buy a house. It's a privilege usually earned by hard work and sacrifice. 

 
 
 
 


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  # 1224849 29-Jan-2015 18:19
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networkn:

And your point? Ultimately houses are still selling like hotcakes, so they are affordable, and if they aren't affordable to you, then try another area, city, district or suburb. Problem is everyone wants a 5 bedroom house with a view of the water and half an acre of green grass.


The point is, that when you're able to buy with money that only exists on paper, and that (for the time being) that paper value keeps increasing without you having to do anything, 'affordability' doesn't really come into for the group of people that can leverage that. It only effects those who need cold hard cash to get into the market, like first home buyers. The more locked out of the market they are, the better for the speculators and the bigger the 'bubble' gets.

Add to the fact that investors have a loophole out of paying taxes on those gains, and the cycle perpetuates itself. 

It's called speculation




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  # 1224962 29-Jan-2015 21:17
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richms: The problem is that they are all still building stupid low density housing. We were going to get the options for higher density in Auckland in the new plans but all the old whiners were out in force saying they dont want to have towering apartments everywhere and that they dont want to live in an apartment.

Only way we can get decent services like public transport that doesnt suck, more harbour crossings and things that make a big city nice to live in is to actually build like a big city, not a really large spreadout small town with each house on its own stupid bit of land you have to maintain with no density to support the services that people want.


They are building what people want to buy. Personally, I have no interest in living in a shoebox apartment. I like having a small lawn, courtyard, a place to grow veggies, a fence for privacy, and a garage of my own. That would be doubly so if I had small children. I'm prepared to pay (meaningfully) more to get what I want. That's kind of how free markets set price.

Have you ever considered becoming a central planner?  It sounds like your dream job "No, No, those stupid people shouldn't be allowed to buy what they want. We need rules so that they can only buy what I think they ought to want to buy. And would want to buy if they weren't so stupid". And in your spare time you could loiter in supermarkets accosting and upbraiding people for what they choose to put in their trollies.

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  # 1225422 30-Jan-2015 14:56
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JimmyH: They are building what people want to buy. Personally, I have no interest in living in a shoebox apartment. I like having a small lawn, courtyard, a place to grow veggies, a fence for privacy, and a garage of my own. That would be doubly so if I had small children. I'm prepared to pay (meaningfully) more to get what I want. That's kind of how free markets set price.


I'm not sure how true that is. No one WANTS to live in a shoebox, they are building what people can afford to buy. Contrary to popular opinion, most first home buyers aren't out looking for a 7-bedroom house in Parnell, but will look to take something they can afford.

Not sure if it's still the same, but last time I talked to a bank about borrowing for an apartment, they wanted a significantly higher deposit (no less than 25%) as they are perceived as a greater risk and don't tend to rise in value as much as houses as you don't own the land (the bit that really appreciates).




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  # 1225658 30-Jan-2015 20:56
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I would actually quite happily live in an apartment. The problem is that they are only putting them in the CBD, and only stupidly small ones at that.

The new plans would have allowed for them more around the city, allowing other pockets of higher density living to happen so that then places would have enough population to be worth putting in services that big citys have like regular 24hr public transport and shops etc.

There is a mindset among people that apartments have to be cheap, small and aweful because that is what most of the city ones are, since they are targetting foregn buyers who are used to that.




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  # 1225683 30-Jan-2015 21:57
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It just cannot be good for society that young people will have a 40 year mortgage, paying twice the price for a house, paying it off just in time to retire then die.


This comment was posted very early on in this thread.  Somehow I get the impression the person who posted this thinks a 40 year mortgage is something new.  It was around many years ago, so it's not just a issue that has only affected the young generation of today.  Check out the state advances loans of years gone by and see how long they went for. People back then were also paying 1/3 of their salary in rent for a State House.  

Part of the problem is we all have (well a good percentage of the population) have become used to having the latest toys and want the flash house with all the mod cons. We don't wan't to start off without the the nice things in life or go without the $5 coffee on the way to work, or not go out for dinner regularly.  It's amazing how the money we spend on these things adds up and how that money could easily grow the deposit for a modest house.




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  # 1225773 31-Jan-2015 10:01
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Another point that hadn't come up is what the banks do when you're a little bit older buying a house. If you're 40+ then they will limit the length of the mortgage.

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  # 1225897 31-Jan-2015 14:27
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When I was growing up in the 80s and early 90s my parents had two cars, a VCR, a CD player, an SLR camera, a microwave, a dishwasher and a home computer and were still perfectly financially secure. The same was true of all my friends' parents.

I'm not moaning because I'm happy with my standard of living and I'm not in the market for a house but I'm just giving a bit of a reality check here.

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  # 1225928 31-Jan-2015 15:16
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alasta: When I was growing up in the 80s and early 90s my parents had two cars, a VCR, a CD player, an SLR camera, a microwave, a dishwasher and a home computer and were still perfectly financially secure. The same was true of all my friends' parents.

I'm not moaning because I'm happy with my standard of living and I'm not in the market for a house but I'm just giving a bit of a reality check here.


Same with mine. They had two cars (One a V8) and both made probably at or below the average wage but were able to save for and buy a house with a 20% deposit in their early 20's whilst paying rent.

The reality is that that since then our living costs have gone up significantly as a proportion to our income, and house prices as a proportion of our income are also significantly higher.

My parents didn't (need to) go to Uni, but if they did, they wouldn't have paid for it. These days, you need a degree for just about any job, and for most of us that means paying back a student loan at the time my parents were starting to pay off their mortgage.




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  # 1226073 31-Jan-2015 22:55
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These days, you need a degree for just about any job,


Errr, actually no you don't.  There's plenty of good paying jobs that don't require a degree.

In fact that's part of the problem today, all these people racing off to uni to get qualifications that aren't required for the job they end up doing. I know of uni graduates that "can't" get a job because they're looking for jobs that don't exist or see some jobs as being below their status.






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