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  Reply # 1450723 15-Dec-2015 12:14
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Geese: Must be gutting to be a first home buyer struggling away for years to save up a 20% deposit, to nearly get there, and then overnight (October 1) be many tens of thousands short now it has increased to 30% deposit.

 

 

If you can't afford a 30% deposit then how are you supposed to afford the debt servicing on the other 70%?

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  Reply # 1450724 15-Dec-2015 12:16
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nathan: that's a very interesting point.  No govt. is going to get re-elected by promising to remove equity from homeowners

its going to be interesting to see how all this ends up.  Its a bit sad that older generation will watch their kids/grand kids grow up over Skype because they had to leave NZ and move to a higher wage economy/cheaper housing


The government should have never allowed the Bubble to get to the size it is. They were far too slow to react. Someone is going to have to wear the losses. It will possibly occur over a long period with zero house value growth for the next 10-20 years. Some houses though in more central Auckland are possibly worth their value, in terms of the land being valuable to build apartments in.

 
 
 
 


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  Reply # 1450727 15-Dec-2015 12:24
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alasta:
Geese: Must be gutting to be a first home buyer struggling away for years to save up a 20% deposit, to nearly get there, and then overnight (October 1) be many tens of thousands short now it has increased to 30% deposit.


If you can't afford a 30% deposit then how are you supposed to afford the debt servicing on the other 70%?


They can becuase interest rates keep dropping, and will have a two income family. But the problem will come when interest rates start rising. That is when people will start hurting, and when we may see some distressed sales. So I can't see interest rates rising too much for the next few years. The deposit just means more protection for the banks, as then their is less risk of them having lent out more money,than the house is worth. So requiring people put together a higher deposit is really only helping the banks.

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  Reply # 1450731 15-Dec-2015 12:39
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I lived in the UK when their housing bubble burst and I have 2 observations from that.  Firstly there were a lot of people with 95% or 100% mortgages and no deposit so as soon as the value of the house decreased they were effectively paying mortgages that were higher than the value.  As interest rates at the time were over 10% there were some serious issues.  This is unlikely to happen in NZ where most people have a 10%/20% or 30% deposit.

Secondly, people who had a 10% or 20% deposit in their property and didn't have to move house simply stayed put for a few years until the market came up again.  I had a friend who was on a 95% mortgage and was fine paying it as her salary hadn't decreased, but when she got offered a new job in a totally different area it became an issue as she couldn't sell for what she'd paid for it.  In the end the bank assisted her by letting her sell for a lower price and adding the outstanding debt to her new mortgage in a different area.

As someone else mentioned, the banks will assist where they can rather than end up with large numbers of mortgagee sales where they struggle to get their money back.

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  Reply # 1450732 15-Dec-2015 12:40
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alasta: If you can't afford a 30% deposit then how are you supposed to afford the debt servicing on the other 70%?


Who said can't afford it?

It takes years (25 years is typical first home buyer mortgage?) to pay off a house, so therefore surely for those without a silver spoon, it will also take years to save a 20% deposit. To increase deposit 10% doesn't suddenly change it to unaffordable (forever), but obviously sets it out of reach for some time (years) while saving the additional deposit. All I'm saying is it must suck to work so hard and make plans and have such a huge set back.

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  Reply # 1450744 15-Dec-2015 13:02
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Geese:
tdgeek: Volumes dropped by a large amount, prices, not as much, but are down. I'd take this as the prices are still very high but are stalled due to being too high to afford. This was the cap. Demand is there but at these prices, nah, can't afford it.


Must be gutting to be a first home buyer struggling away for years to save up a 20% deposit, to nearly get there, and then overnight (October 1) be many tens of thousands short now it has increased to 30% deposit.


Or the house increases by 100k over the year, need another 20, do that, need another 10 and so on

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  Reply # 1450747 15-Dec-2015 13:10
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tdgeek: Or the house increases by 100k over the year, need another 20, do that, need another 10 and so on


Thats what killed off my earlier attempt (2005) at buying a house. I was seeing houses come up for sale at $160k (and promptly selling) which 6 months earlier were selling at $110k. My income wasn't high enough then to save an additional $10k in 6 months on top of rent and everything else, even though I was considered to be on an alright income for my age. It didn't take long for my 20% to become 15%, then 10% over following few years.

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  Reply # 1450748 15-Dec-2015 13:10
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mattwnz:
nathan: that's a very interesting point.  No govt. is going to get re-elected by promising to remove equity from homeowners

its going to be interesting to see how all this ends up.  Its a bit sad that older generation will watch their kids/grand kids grow up over Skype because they had to leave NZ and move to a higher wage economy/cheaper housing


The government should have never allowed the Bubble to get to the size it is. They were far too slow to react. Someone is going to have to wear the losses. It will possibly occur over a long period with zero house value growth for the next 10-20 years. Some houses though in more central Auckland are possibly worth their value, in terms of the land being valuable to build apartments in.


No way, prices are going to continue climbing. People have been saying they are going to crash for several decades now, been the odd temporary slow down, but it always goes up. 

Even in the GFC prices held pretty well. 

The question people have to ask, do they want to be wage slaves or let their capital do the work. 



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  Reply # 1450750 15-Dec-2015 13:16
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mattwnz:
nathan: that's a very interesting point.  No govt. is going to get re-elected by promising to remove equity from homeowners

its going to be interesting to see how all this ends up.  Its a bit sad that older generation will watch their kids/grand kids grow up over Skype because they had to leave NZ and move to a higher wage economy/cheaper housing


The government should have never allowed the Bubble to get to the size it is. They were far too slow to react. Someone is going to have to wear the losses. It will possibly occur over a long period with zero house value growth for the next 10-20 years. Some houses though in more central Auckland are possibly worth their value, in terms of the land being valuable to build apartments in.


What has the Govt done to stop or slow the bubble? What could they do? Should they even artificially try to influence the market? All they could do was to build hundreds of houses every month, but thats not possible. Factors have come together to push up prices, it will correct.  people know the prices are increasing, they know its in the news most nights, they know its a bubble. Knowing all this, and buying, they are part of the problem.

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  Reply # 1450755 15-Dec-2015 13:22
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surfisup1000:
mattwnz:
nathan: that's a very interesting point.  No govt. is going to get re-elected by promising to remove equity from homeowners

its going to be interesting to see how all this ends up.  Its a bit sad that older generation will watch their kids/grand kids grow up over Skype because they had to leave NZ and move to a higher wage economy/cheaper housing


The government should have never allowed the Bubble to get to the size it is. They were far too slow to react. Someone is going to have to wear the losses. It will possibly occur over a long period with zero house value growth for the next 10-20 years. Some houses though in more central Auckland are possibly worth their value, in terms of the land being valuable to build apartments in.


No way, prices are going to continue climbing. People have been saying they are going to crash for several decades now, been the odd temporary slow down, but it always goes up. 

Even in the GFC prices held pretty well. 

The question people have to ask, do they want to be wage slaves or let their capital do the work. 




Agree. Buying stops the effect of future increases. It hedges the cost of accommodation to the day or purchase, unlike rent which is inflation adjusted.
Houses always rise, the doubling in 10 years is what happens. Its not linear, some regions may exceed or fall short.

Painful subject as its ideal for everyone to have their own home, that in itself would reduce demand. Many other benefits. The issue is demand and affordability
How to solve that I have no idea, its like the horse has bolted

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  Reply # 1450898 15-Dec-2015 15:46
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What would happen if the Reserve Bank increased the OCR to say 8% over the next two years? That would have a pretty dramatic effect.
But what would the implications of it be for the rest of the economy?
Or alternatively have aggressive LVR on secondary house purchases.

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  Reply # 1450930 15-Dec-2015 16:30
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nathan: that's a very interesting point.  No govt. is going to get re-elected by promising to remove equity from homeowners

its going to be interesting to see how all this ends up.  Its a bit sad that older generation will watch their kids/grand kids grow up over Skype because they had to leave NZ and move to a higher wage economy/cheaper housing


It happens in reverse. Why do you think people move here?!





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  Reply # 1450933 15-Dec-2015 16:33
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mattwnz:
Geektastic:
tdgeek:
simon14: Overall, house prices in NZ double in value every 10 years. Their may be ups and downs in between, but overall, on average, that's the rule.

correct


Certainly there are exceptions. Our house has not increased in value at all in 8 years. In fact, RV is $50,000 lower now than it was when we bought it.

there are a lot regions in the same position. The worst tend to be the ones which were small fashionable towns to be in, in rural areas, but then became unfashionable. I have seen some really nicely built houses in these types of regions which have literally been on the market for years. They aren't badly priced, but I suspect people are holding on, as they don't want to make a loss, as many people purchased at the top of the market during 2005-2008


I suspect that it is as much a case of having no offers as holding on. Everyone is looking at Auckland because they want to be where their houses go up 25% a year...! They do not consider places outside large centres at the moment, partly because only recently have politicians realised that people would do if they could get to work, which needs decent public transport etc.





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  Reply # 1451076 15-Dec-2015 19:25
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mattwnz:
nathan: that's a very interesting point.  No govt. is going to get re-elected by promising to remove equity from homeowners

its going to be interesting to see how all this ends up.  Its a bit sad that older generation will watch their kids/grand kids grow up over Skype because they had to leave NZ and move to a higher wage economy/cheaper housing


The government should have never allowed the Bubble to get to the size it is. They were far too slow to react. Someone is going to have to wear the losses. It will possibly occur over a long period with zero house value growth for the next 10-20 years. Some houses though in more central Auckland are possibly worth their value, in terms of the land being valuable to build apartments in.


Well both sides of NZ Govt - both the blues but more so the reds let this happen

People feel good getting rich selling houses backwards and forwards to each other.

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  Reply # 1451077 15-Dec-2015 19:29
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Geektastic:
nathan: that's a very interesting point.  No govt. is going to get re-elected by promising to remove equity from homeowners

its going to be interesting to see how all this ends up.  Its a bit sad that older generation will watch their kids/grand kids grow up over Skype because they had to leave NZ and move to a higher wage economy/cheaper housing


It happens in reverse. Why do you think people move here?!


Because NZ immigration policy allows them

You need immigration there in NZ to keep growth ticking over

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