What does three quarters of a million dollars get you in Auckland's property market at the moment?
At Bayleys auctions last week it would have purchased a two bedroom home unit in Pakuranga, which sold for exactly $750,000.
It was fairly standard fare for this type of property, brick and tile with a single attached garage, open plan living inside and pleasant courtyard and garden area outside.
Not so long ago units such as this would have been a good option for first home buyers, but at $750,000 they would need $150,000 for a 20% deposit and the payments on a $600,000 mortgage would be $1513 a fortnight (at Westpac's Choices three year fixed rate of 5.19% over 30 years).
Rates on the unit were $2032 a year which means on an 80% mortgage the combined mortgage and rate payments would be $1591 a fortnight and that's before allowing for other property-related expenses such as insurance and maintenance.
Although there's very little talk about the possibility of rising mortgage interest rates at the moment, they will go up at some stage and if they increased to 7.19%, which would still not be high by historical standards, that would increase the mortgage payments to $1871 a fortnight and take mortgage and rates payments combined to $1948 a fortnight, which would likely put a property such as this beyond of reach of most young couples.
Other properties auctioned by Bayleys last week included a three bedroom brick and tile house on an 883 square metre section at Avondale which sold for $1.04 million, a two bedroom plus study house at Pt Chevalier that went for $1.15 million, a modern four bedroom house in Hamilton that went for $520,000, and an 80 hectare farm block at Tirau that sold for $4.35 million.
See below for the full results of Bayleys' auctions last week, with photos and details of all properties, including those that didn't sell:
10 Comments
It is not just the young generation that is wondering every day just when the delusion will be exposed for what it is... But I think it just needs to get even more ridiculous before the herd mentality gets broken in sufficient numbers, and then you might see a sudden reversal happen. Or, maybe just a little financial "accident" happens in one of the three big world markets, like a big bank unable to be rescued overnight by a government that will spark an almighty world wide crash. And the resulting pain (financial and otherwise) that will wake everyone up from what seems a long drawn out nightmare. All I can say to any of my friends, get out of debt and save in such a way that you don't have to worry about risk of someone taking your savings to cover their losses. Think counter party risk of ANY kind. Little else you can do until this has played out to the bitter end for many...
Yes, the unintended consequences are something that nobody really knows too much about. But what I envisage is a state of suspended fear on behalf of the powers that be that property prices must be maintained or the guts will be ripped from consumer spending, which is really the greatest threat we face.
Absolute madness, I would love to see some statistics on the inter regional migration to see whether people from regional NZ have stopped moving to Auckland. I know from personal experience that where once I would have considered a move, its now no longer economically viable due to the crazy house price to income ratio.
I saw that in one international measure on cities around the world (quality of life etc) Auckland was criticised for being an ageing city with a relatively old workforce. This is hardly going to help matters as the young will choose to make their way elsewhere. What a shame.
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