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Elizabeth Kerr says ‘playing house’ can be a trap for hopeful homeowners

Elizabeth Kerr says ‘playing house’ can be a trap for hopeful homeowners

By Elizabeth Kerr

Dear Elizabeth,

It just doesn’t seem fair. I’m university-educated in my early 30s, living in Mission Bay with my partner. I work for a recruitment company earning $70k plus bonuses located on the edge of the city. I think my expenses are reasonable and I manage to save about $600-800 per month. BUT no matter which way I look at it, I just can’t see how I’m ever going to afford to buy a property. I should be able to buy a home – I’ve done everything right so far – went to Uni, got a job, kept my expenses low. My partner and I are eager to settle down and start a family but I just can’t see how. Every time I read the news it reminds me that our home ownership dreams are slipping out of our reach because properties keep going up in value. We don’t want to move from Auckland because my partner has finally got the job of their dreams. It is really getting us both down.


Hopeful Homeowner*

Dear Hopeful Homeowner,

You’re a bit whiny and I don’t really believe you when you say you want to buy a property. If you did you’d have figured out a way to save a hell of a lot more of that fabulous salary of yours than a mere $800 a month. (My calculations tell me that before you even earn any bonuses your take-home pay after tax, student loans and kiwisaver is about $900.00 per week).

I can tell from your budget (a word I use loosely in reference to that super-spendy spreadsheet you sent me) that you are clearly living a lifestyle that is inappropriate. Embrace being radically different. Radically different doesn’t just mean using a cheaper brand of toothpaste – it means overhauling your entire lifestyle and editing it to what is absolutely necessary for you. I know you think your expenses are reasonable because it’s not like you’re dripping in designer brands and driving a late model Porsche, but you have fallen into a few spendy traps that aren’t helping you here.

The Playing House Trap

Playing house is what little kids do to keep themselves busy. They set up a house with a sheet, decorate it with their favourite things, host tea parties with their teddy’s and it can keep them amused for ages. When adults play this game they rent a place, buy nice modern furniture, host their friends over to stay in their spare bedrooms and it too will keep them amused for ages. So much so they forget to save a house deposit and then wake up day all disappointed in themselves.

My laws of money dictate that you don’t get to buy a house if you’re already “playing house”. If you’re fully set up inside a rental then it’s likely you are spending money on all that involves and not on saving as much.That spare room you have for the once in a year visit from the parents is all good and handy for when you’re in the dog-box with the other half, but it’s no good for helping to save for a deposit. Give up ‘playing house’ and you will start to see some real savings action.

My suggestion is to sell everything but the bare necessities and your basic bedroom furniture and move into a share flat reducing your rent from $450 per week to just $180 per week.That increases your savings from $800 per month to $1880.00 per month. Cha-ching!

But we couldn’t live with other people. It’s far too small. I have too much stuff”. All those things all might be true. But your stuff does not have any feelings. Your couch will not haunt you if you sell it to some smoking crazy cat owners. Yes, you will have to embrace flatmates and sharing a bathroom - it's not cosy coupledom - but this is what people do when they are serious savers. Just keep your eye on the home ownership prize and it won't feel so traumatic.

Petrol and Parking Trap

Wowsers – driving to work and parking each day is costing you a fortune!!! Here’s a thought. Sell the car! If you move into a share house within walking/biking distance of your work you won’t need it.Ta-da - that’s an extra $660 per month in petrol and parking gone and its better for your body. You’re now saving $2450 per month and the money you get from your car goes straight into your deposit stash. That’s over 60% of your take home income saved. Booyah!!! On the rare odd occasion when you really need a vehicle to visit the olds in Cambridge then just hire one for the weekend. It still works out to be cheaper.

I hear you when you say increasing property prices are worrying. But first home buyers are still out there buying their first homes. The road for them to get there was not always paved with parents money; and more likely bloody hard work combined with some financial creativity and extreme frugality over a reasonable long period of time. Quite possibly they are now committed to eating toast for the next six months whilst trawling Trade Me for furniture bargains, but I bet no one can wipe the smile and satisfaction off their faces!!!

I sense that another reason you can’t get your deposit together is that you imagine this new house of yours is going to be your dream home where your 2.5 kids and designer dog will run around in your perfectly manicured grass with the sprinkler on.   Achieving that as your first home is ambitious. It would be more practical to focus on a starter home that suits you right where you are now. Remember a big house can be a big prison as well. The last thing you want to do is save so hard to get the house of your dreams and then find that your lifestyle is still under the pump because you’ve brought too much house and now can’t afford to pursue your other life goals.  

No one ever said it was easy getting their deposit together. But numbers can’t be distorted. Work super hard to get every bonus you’re entitled to and then get vampire on your expenses. Trim back your grocery budget, get creative with cheaper cuts of meat and vege, eat the same foods every week and invite colleagues to bring you their leftovers and offer to babysit their children. Your version of “TGIF Happy Hour” just became “Netflix me”. “Lets catch up for coffee…” just became “…I’ve brought my plunger, I’ll make us one here”; and when it’s your birthday there should be no confusion that you’d really appreciate store vouchers for life’s essentials and cash.  

In closing, Hopeful Homeowner* - I haven’t had to look very hard to find you an extra $2450 per month to save, so I’m sure you can find more if you put your own mind to it.  

And if anyone reading this today knows someone else who is saving for a house deposit, how about flicking them this column with some encouragement to keep at it and offering to drop them over a meal. They are probably well sick of 2min noodles and mince already.

* Hopeful Homeowner is a fictional email loosely based on the many email requests and my responses on this topic.

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Both our kids had a rule when renting and saving for a deposit - only rent what you could afford to live in assuming you had the necessary deposit - based on market prices and mortgage interest at the (then) current rate. Both are early 30s as well, both have kids and both have purchased homes (one bought the rental from their landlord) - not in Auckland though.

The best part of that plan is, neither have mortgaged themselves to the hilt as they got used to living in locations and properties that were within their reach at that particular time in their lives.


Elizabeth - wouldn't wiser advice to a FHB be to avoid even considering buying into the Auckland housing market all together?

I think its fair to say they wont get the same bang for buck as they would elsewhere, but all things being equal they don't have to avoid it altogether.


Congratulations on avoiding the fundamental problem and congratulations on being yet another person who encourages people to participate in this ponzi schema.

Here's my answer as a fellow millennial:

Dear hopeful homeowner,

Wait. Just wait!!
Your life's goal is not to be a home owner, at least it shouldn't be that. Do not fall into the idea that it all depends on you and that you have to save by flatting with 30 years old, not having kids yet, or by not getting comfy at your rental property in a lovely neighbourhood to be able to pay the deposit for a mortgage on an overpriced asset so that banks and the people at the top of this ponzi scheme can cash up capital gains at the expenses of your present, but especially future, work (the only true value).

You have the health and the youth. There is more in life than home ownership. Owning a house is nice, you don't depend on landlords, you are "free" to do whatever you want with your house, plant trees and see them growing if you want to do so. But we're talking about a bubble market, one of the most unaffordable markets in the developed world, and by accepting this problem and simply believing that "all depends on you" in the most pure Calvinistic dogma, you're just becoming part of the problem. The freedom of owning a house becomes slavery when you have to do so by borrowing a large amount of money in times where the law of diminishing returns is obvious.

Refuse to sell your future to a bank and greedy speculators. Gather with others and DEMAND what is yours instead asking for tips on how to adapt better to a sick society. And what is yours is the right to work for yourself and not to feed the parasites that keep trying to convince you that "things are just supposed to be like this so go with the flow".

Demand your piece of land to build your house, your right to have a future and to give a future to the next generations. It's a house! a place where to live, it shouldn't be a tool for speculation.
But overall, refuse to join this madness and WAIT.

A home is not always a tool for speculation. However agree with your thoughts on being slaves to large mortgages. Would you like to advise where they could demand their piece of land to build withing Auckland and how that would be a cheaper option than an inner city apartment for example?

Additionally, what if their life goal is to be a home owner in Auckland. What if that is really what they absolutely want to do.

The millennials have got to the stage where they would prefer to "live life" rather than stay in and hopefully one day own a property. I can understand why they are taking that approach as property has just become unaffordable.

between that or debt slavery.. can you blame us?

Muntijaqui - how many years do you think it should be to pay back say an average mortgage on a home?

house prices no more than 3,5 years the annual household income. That has been always the general rule when discriminating sub-prime. And a bank should never lend more than 3 times the household income to buy a property.

The number of years to pay it would depend on interests and the borrower's choice. I wouldn't get indebted for more than 15 years, but I don't think we should focus on the number of years to pay a mortgage but rather on the total amount of borrowed money compared to our income.

Otherwise we would end up celebrating "affordability improvements" just because interest rates fall even further despite total prices increasing, like we're doing now. As if interest rates falling wouldn't be an indicator that the productive economy is not a healthy one!!

It's always better borrowing and buying cheap with expensive interest rates than borrowing and buying expensive with low interest rates as the inflation is the borrower's best friend.

Increasing prices with low inflation, low interest rates and flat salaries increase? It's a no no to purchase with borrowed money.

You're not a home owner are you?

see Mountjaqui, you are not an homeowner so shut up. Go back playing with your toys. Sums up NZ thinking

Ian64 - care to enlighten the readers with why someone should have to shut up if they're not a home owner?

ask Elizabeth mate, she said it

Nice comment Ian - would appear you simply threw some toys for Mountjaqui to play with. Good job.

Whoa.... lets all put the toys down. My bad.... i should have fleshed that comment out a bit more.

When was the last time one could buy property cheap with expensive interest rates ? Hasn't property always been a challenge one way or another?


Very bleak reading. The kiwi dream is well and truly dead in Auckland. Living in a share flat is great when you're young, but impractical for so many reasons as you get older. This poor sod also wants to start a family, i was surprised you didn't suggest she freeze her eggs and keep earning whille she is in the prime of her career. She should start a family while she can. Forget about buying in Auckland for now. Keep renting, but make plans to leave Auckland if things don't change in the near future.

Children are expensive these days. People should write up a budget and see if they can afford to have children at all as they are now a major financial risk.

Its ok , don't need them as foreigners will replace the lost children.

foreigners prop up house prices AND replace the kids we can't afford because prices are too high. They can do our work too, till we have delegated ourselves into blissful obsolescence.

Interesting, so it was common in our parents generation, even for the class drop-kicks, to have kids and own their own home in their 20s....

Now our generation is being told that we have unreasonable expectations if we are tertiary educated and want kids and a home before we're 40.


How is getting older and living in a share flat impractical?

Trying to find older share flats is actually quite hard? When I came to Wgtn 20 years ago the vast majority of the flatting was by < 30s.

Could this be more to do with older people preferring their own space rather than sharing?

well why cant one older person start a trend? rent a flat and advertised for other like minded and older flatmates? If you really want something you will find a way to make it true.

For one, your correspondent indicated they wished to start a family soon. Don't see much hope of her finding a flatshare situation for her, her partner and a child. But i was mainly referring to how much more relaxing it is to have your own personal space especially if you are working hard in your career. Everyone has flatmate from hell stories and at age 30 you'd think someone with a good job wouldn't need to do this, except in this egalitarian and prosperous country we call NZ

when I was a student I always was a boarder with a family. A family can always take in a boarder to lessen the costs of their flat.

It isn't impractical, it is just nicer. In general Older -> Wealthier -> Can Afford Not To Share.

You failed to mention that other great share money saving idea, 'Hot Bedding', which is now happening in Auckland.

I did you're quite right - thanks for bringing that up. I also failed to talk about sharing rooms with good friends. Wasn't it quite typical for nurses and teachers to all share rooms together to save money?

Housing is a pretty bad investment when inflation is low, largely due to the mortgage principal not being devalued by inflation. It means that a mortgage in the current environment is just a large debt.

People would be better off learning how to invest in the low inflation or potentially inflationary environment we live in right now. That would also be a better way to build up a house deposit.

You need to work out inflation over the course of your mortgage not just present inflation. Most forms of investment have a risk reward ratio that informed investors need to be comfortable with.

As a direct counterexample to your position, someone who bought a house in Q1 2009 would have seen their asset appreciate by over 50% (housing inflation having run at roughly 6.4%)
whilst general inflation has only averaged 1.6% over that period ( ). They could potentially sell the house and have more money than someone who instead opted to invest in bonds/term deposits. Given the recent spectacular drops in most stock markets I'm not even going to bother considering those.

With a house you can always opt to live in it if the price drops / rentals go out of fashion. I for one see more and more people opting to live large while in their early twenties and then waiting till their forties to own property. This to my mind equates to renting not going out of fashion any time soon. Besides even if you own a house you should always rent. It is madness to live in a house you own long term.

I bought my first house at 39. I spent a long time pulling together enough money to have a 20% deposit and have money to spare for cash flow. It's very difficult to get a decent deposit together so you don't pay brutal interest rates.

People in their twenties see housing as unattainable and in a lot of cases they are going to have to save for 8-12 years to have a deposit. Unfortunately most have student loan payments draining their income so money that could be saved is instead needed for debt servicing.

Renting has a lot of benefits and none of the obligations that ownership has. That includes mobility, as most young people know they are likely to relocate for work so renting is highly advantageous.

There are better things to do with investment money than to put it into purchasing a 1930s-40s house that has mostly rotted away, and has never had any maintenance carried out.

Think outside the box. I bought a property outside of Auckland for $9000 deposit, put it on rent and 5 years on it has $50k equity in it which could be much more if I get a valuation done. Saving is not the only way to save for a deposit.

Spectacular drops in the stock market? Anyone buying the NZX50 in Q1 2009 would have more than doubled their money by today. Anyone buying the S&P500 in the US would have tripled their money. Even buying the FTSE100 in the UK would be a 70% gain. And all this after their 'spectacular drops'. The only advantage housing has is easy leverage, which can swing both ways.

Maybe you should bother considering the stock market?

Could you please cite references for your figures. My research indicates that your figures are off by as much as 50% even if we allow for all dividends from those indexes to be reinvested.

Additionally you have cherry picked indexes where I've used the 6.4% annual nation wide house price inflation as opposed to the much higher Auckland rate. For example, today the SSE composite index is less than half what it was in on 1-1-2008.

Depends on when you pick your start. 1st of January 2009 S&P500 would be ~doubling, minimum in March 2009 close to tripling. If we go with your methodology, cast your eyes along the 25 year annualized return column on your link and see average annual S&P500 increase is slightly north of 10%, and has been for decades. I was ignoring dividends, apart from the NZX index which includes them (the capital index gives a return of ~60%).

In a way I'm cherry picking, but I thought the home market and two of the largest global markets would be reasonable to share. How about this take a look at historical data, suggests a 64% increase in world share markets since 1st January 2009. Even the Aussie market (ASX300) has grown more than 30% in the same time frame, despite being savaged recently.

I really don't see any evidence for you to ignore the stock market as an investment option when you are prepared to consider term deposits and bonds. They've been quite kind to me, although of course with high reward comes high risk, as property investors occasionally find out too.

I would have to fully agree with you have to be able to inflate away from debt.

More important than the debt is the income that will pay the debt down and there is no to low inflation in wages according to the stats.......can the Government keep up the WFF and other accommodation supplements and social payments which are acting as a subsidy on housing for much longer? Government and mortgage debt blowouts together can be a dangerous combination.

It's also a risky time to get into debt when there are a lot of warning signs internationally which could impact on NZ over the next 5-10 years. Fact is if you lose your job paying a mortgage gets to be rather difficult. For some reason people hold on too long and I see many mortgagee sales popping up.

People need to stop obsessing over housing, especially when about 40% can't afford a house and in the near future about 66% won't be able to afford a house.

Agriculture woes will filter through to the rest of the economy it is just how long it will take 12 to 18 months maybe longer and what other industries will offset the income loss......

The bureaucracy and all its burdens has to go.......housing should never be a controlled provision mandated by the State.

Where did the 40% stat come from?

I'm been a while since I read the statistic but I think I picked it up from Credit Suisse report. Feel free to correct me if I've made a mistake.

Owning a house via a trust (ie. not personally being a home owner) does not equate to being unable to afford housing. Please cite your sources.

This isn't a wikipedia entry and can be treated as a discussion. The latest figures I can pull up says 35.2% do not own their own home in 2013.

Given that I'm talking rough figures that's close enough.

If you want to be pedantic there are also people with substantial investments that choose to rent because it makes more sense than home ownership.

I am lucky. I have good property assets that have obviously appreciated well the years.. I personally would like to see a correction in prices purely to help the Millennials to get onto the ladder and have a similar quality of life that I have had the pleasure of having.
The older generation need to help the youngsters or else it will cause social unrest in the longer term.

You can always sell your assets for what you believe them to be worth and if the price is low enough it will affect the valuations of other houses in your region making houses more affordable. I'm a millennial and would be more than happy to purchase real estate assets from you at prices that would lower valuations in your area :)

same here. Feel free to embrace yourself as an agent in the market instead seeing the market as something external.

You will still need a deposit. So my response to hopeful homeowner still applies.

If he offers the property for sale at a price that would significantly drop valuations in the area I will come up with the deposit, even if I have to crowd fund it ;P. But hopefully the bank will just be nice and not want any more money down :)

P.S. Because the sale price of the property would presumably be so far below the bank's valuation of it that you would have more than 30% equity from the get go.

How would you like to see older generations help the youngsters coming through?

Some older will, many older and that is quite a few cannot.

How much travelling has she done? What kind of lifestyle has she had in her twenties? Has she ever got stuck in and saved hard for a number of years and built up a deposit like the boomers used to. Sorry I need more facts before I show any sympathy for her. The word "entitlement " comes to mind.

How long did you live in a share flat situation? Did you and your partner both have to work fulltime to support your young family? Did you get a job straight out of school without needing a tertiary education? Sorry, i need a bit more information to determine if you are a boomer. Seriously, surely you don't put all time low ownership down to travel/coffee/phones. Have some empathy and objectivity, rather than using someone elses difficult situation as a chance to boast about your boomer heroics

Nice post (from a cash and equity rich Gen Xer who knows credit-driven bubbles and generational entitlement when he sees it)

Penguin - you seem to be one of only a few who can look past their self-centered greed and see the greater good for society. What a visionary!

What sort of options would you like to see for FHB in Auckland?

Not so concerned for options right now Elizabeth as current conditions don't really make it an even playing field. But wouldn't it be great to see some ethically based leadership that would benefit all of society!

There was Colin Craig, then people crucified him....

I bought my first house at 24'ish in the mid 1990's, 260k for a standalone weatherboard house on the sandringham / mt eden border-- seemed good deal at the time. Partner and I paid it off in around 3 years or so but sold it in the late 1990's. Guessing the same house is probably worth a million bucks plus now, salaries have not moved up much since then. Pretty much young people are frozen out of that market which was so easy in the 1990's.

I never have been surprised by the sheer number of educated, but essentially dopey people. If you cannot see the sales spin for the lovely neutral tones, which have magically transformed that postage stamp of dirt into a gleaming jewel then you are just so much cannon fodder, you have my pity.

Though I would not attempt it, I am reliably advised that skinning a cat can be done any number of ways. Most successful is having others pay for as much of your purchase(s) as possible with the view that eventually you can cash it up and indulge your fantasy at low or no further cost.

For example, find a place where many people rent, for all the reasons that they do so. Buy an unbreakable house which you can rent out for close to the repayments and let it pay for itself. If you can manage it to achieve about 7% nett then you can sell in about 10 years and keep almost all what you get from the sale. Be aware that it is not a doddle, you have to engage, that this is your well earned income for taking the risk and providing the management and upkeep.
Meantime you could take the staged approach, rent just what space you need where you need it and save. Don't clutter, everything you buy you have to move. Have a family but know that 3-4 kids can share 1 room just fine until the oldest is about 8.

The sales spin does need to be addressed Spinach....too many people falling for it.

I know RE Agents who have strategies of not taking on written offers unless the offer is near the price they are "valuing" the property" yet RE Agents say it is the market that decided the price.......they try to get a price out of the person using a strategy that is "verbally confirming an interest" at which point they want the potential buyer to verbally disclose the price they would offer and any "subject to" clauses. Once the potential buyer has divulged a price the RE Agent will either accept the verbal offer and commit the price to paper or decline the verbal offer on behalf of their clients when their client (vendor) never actually gets to see anything in writing. This activity to my mind is bordering on price rigging.

Most RE Agents are not qualified valuers, they are also not qualified Financial Advisers yet much of what comes out of their mouth actually falls into those categories and they get away with it. I would advise anyone who has to have contact with any RE Agent to actually record all conversations.

I have seen RE Agents verbally dish out information on prices for an area where they were pushing a value up on an attached unit on cross lease title by telling the prospective buyers the sold prices of stand-alone houses in the same area......

I feel sorry for anyone who has to run the RE Agent gauntlet......

I agree with this comment. I too have seen this happen.

I have also seen rental figures be inflated which in turn makes investors feel more confident with paying more for a property, only to find when they own it that no one is actually prepared to rent it at that price. If you're buying as an investment please ask for documented rents for similar properties in the area to support the rental estimate provided by an agency.

Yes , the poor cat can be well skinned. A deposit still "should" be saved.

I'm not disagreeing with the saving of a deposit Elizabeth and you have given your letter writer a good way of saving that deposit up....... avoiding be skinned of the deposit is as important as saving the deposit..

"I live in mission bay"
well there is your first mistake, try outside of Auckland.
"Job of his dreams"
Good, because if you get a house in Auckland you will be paying it off till the day you die.

What if they brought an apartment? Kids the world over grow up in apartments. Not every family needs a quarter acre section.

This is it in a nutshell Elizabeth. I recommend Hopeful Homeowner scrapes together what deposit they can and buys a unit ideally or apartment if they have to. And not in Mission Bay! The idea of your first home purchase in Auckland being a house is wishful thinking. Start small. Lower risk. Build some equity and trade up.

Try and get a mortgage for an apartment. Nope. Not going to happen.

The only place in the country where work is available, home ownership means debt slavery for the rest of your life. University qualified, a roof over your head, and baked beans for every 2nd meal, scratching together an existence. Two hours a day sitting in traffic.

You have got to be kidding. No wonder 1 Million kiwis give NZ the middle finger. The ones with any sense have left ages ago.

I share your doubts.
Always jobs where affordable accomodation is an hours travel away.
In Sydney apartments are owned by asset rich home owners who rent them, possibly to their children.
Circular Key being an exception of course....

Where would they be taking that apartment???? Oh, bought.... Yes definitely an option for them to look at. However considering they could live in absolute happiness outside of an Auckland post code on half their incomes, with an amazing lifestyle to boot whilst not being shackled to debt till kingdom come.

not necessarily.... what about the dream job?

Dreams change with a good incentive. The dream would turn into a nightmare as soon as they lay awake at nights sweating about their mortgage. When a 1% increase in rates increases their mortgage payments by thousands of dollars. City rates, water rates, insurance payments, school fees, everything increases faster than their pay. Instead of looking for the perfect house in their preferred place, try finding the near perfect job in a more affordable housing area.

In Hamilton young couples appear to be buying in the not so nice areas ,then 3 or 4 years later moving on to the newer suburbs leaving areas like Melville,Frankton and Dinsdale full of rentals.

Buy a cash flow neutral/positive rental out of Auckland and just work on paying off the mortgage.

I am seriously considering going back and taking my family back to Spain in a few years if the situation in NZ doesn't change (not only in Auckland, in Tauranga where I live the bubble is obvious).. and taking my NZD funds there, of course. Those won't go to speculators or banks pockets here.

Modern 3-bedroom apartments around 80m2 in coastal cities for $90,000 NZD.

And for the same price as an average bungalow in Auckland I can get a stunning solid stone house with 2,2 hectarea land just outside a coastal big city.

(this one still overpriced though, has been in the market for more than 2 years)

Young people in NZ shouldn't be that worried about retirement. You can always save and buy a lovely house in a safe developed country with quality public universal healthcare if you don't mind moving overseas.

That sounds like a lovely lifestyle design right there.

With respect, no one is stopping you from leaving. If life is so good in Spain and so bad here why stay?

Machiavelli, if you encourage people to leave NZ, who is going to live in all your rentals?

..and that's why I say that I will wait a couple of years to decide what option tips the scales in its favour. Right now it's on the edge.

So thank you for reminding me the obvious, that no one will stop me when I make that decision :-)

My intention with that comment was to put things in perspective on what the same amount of money could get you somewhere else in a country with similar development, cost of living and salaries (although unemployment have put a lot of pressure in salaries in Spain and are generally lower now)

A lot of kiwis that have taken a financial set back have moved to Spain in the past three years.

"A lot". Please tell us more. I've never heard this before but am intrigued.

Its a relativity game with the cost of living allowing people to claw back equity loss or make their income go further. The majority I'm aware of have ended up chasing the summers, still have a business, interests rentals here and spend the Northern summer over there, come back for NZ summer and family. None have a family link or history with Spain..They like the lifestyle but often just as motivated by the low cost of housing/living

Its a relativity game with the cost of living allowing people to claw back equity loss or make their income go further. The majority I'm aware of have ended up chasing the summers, still have a business, interests rentals here and spend the Northern summer over there, come back for NZ summer and family. None have a family link or history with Spain..They like the lifestyle but often just as motivated by the low cost of housing/living

Well, there are more Kiwis living in Spain than Spaniards living in New Zealand. So in proportion we could properly say "a lot" of them have done so.

I know many with no past relation with Spain like speckless suggests.

A lot of kiwis that have taken a financial set back have moved to Spain in the past three years.

I would welcome the opportunity to discuss with any readers currently chasing summers in Spain. Please email me at

('s an all expenses paid trip for that column right??)

I am thinking of having a look in June, will get back to you. I have a friend there, he married a local and loves it.

Spain is relatively cheap, but beware when purchasing to add 10% on for the expenses. Plenty of add-ons to account for.

They know how to charge like a wounded bull...and I do not mean in the Bullring.

Also beware of the hidden costs of not getting the deeds, as there are many instances of illegal builds, with no planning permission, no deeds, whatsoever.

They can tear down your structure, with no recourse..."Buyer Beware". is the motto.

Spain used to be heavenly in the good old youths are somewhat of a problem. 20% plus unfortunately.

It is a concrete jungle in many places, little villages inland are best, commute to the coast, not live on it, unless one actually likes concrete.

Some areas one big plastic greenhouse, you can see from Space.

Finca with a few acres are cheaper than an Awkland cesspool. But check carefully.

Apartments will beat any in this country, but maybe Gerry once again check carefully. Remember Christchurch was not built in a day. Some are crap, some are not.

Can even get a free swimming pool...but water may be times.

France has similar pros and cons. Not all roses, but try a motor home first to see the places you might like to resale can be difficult, so take the hint.

Explore first, buy at leisure.

Motor homes are cheap in Europe, not go for it....Cannot winter here...into a cocked hat.

Concrete jungle? Water scarce? Plastic greenhouses?
Yet full of costly golf clubs..
You're clearly talking about the dry hot south Mediterranean area. Houses are cheaper they built so much that some apartments have decreased 70% since 2007 and many are being sold below its construction cost because otherwise they would be empty forever. Plenty of brits over there.

I would personally avoid that area but it's where mist of the bargains are. As you well said it requires searching carefully.

...and plenty of Brits who have fallen foul of various property investment/ownership scams who are now having their villa's, pools, dreams etc bulldozed

Why be so disrespectful by calling someone asking for sound advice "whiny"? She has made some valid points and observations and you may note the commentary agrees in the most part! Clearly you are one adding to this mess!

As someone in this situation I'm shocked to find out that I'm the whinger and I'M the problem.The housing market isn't wrong, I'M wrong.

I'm sorry if my response offended you personally.

I've never met a whiny person who has some savings and a clear path to their goals mind you.

Well that just suggests you have limited experience in this area across a broad cross section of society. i was also surprised by your approach given you have been the most qualified person to date they have had on this site concerning personal financial planning. I appreciate your not qualified however you have at least shown more life experience in other articles..

Would you have preferred i told them to give up, saving is all too hard, just forget about it, desiring your own roof is a waste ....

(or something to that effect)

Like that was your only other option? Come on, you're not that disingenuous and we're not that stupid.


So... You see no house price bubble in NZ then? You see no real cost of living issues facing this country? You think it's all about just attitude? No corruption or Ponzi schemes or total exploitation of the very thing we all need to feel like a real valued participant in society? I.e a "home"
That your "smug" position in life? Hope you don't mind being called smug? It's sound kind of smug.

So... You see no house price bubble in NZ then? You see no real cost of living issues facing this country? You think it's all about just attitude? No corruption or Ponzi schemes or total exploitation of the very thing we all need to feel like a real valued participant in society? I.e a "home"
That your smug position in life?

This is what I can't understand. Let's say the person flats with others, works 9-5 and then has an extra two jobs on top of that. Eats noodles and walks to work. Has so far managed to save a hell of a lot of money but needs more (double) as the prices keep on rising. Say they have done this for 4 years and face another 4 years of doing the same because they've watched the market explode. What exactly do they do then?? What if after the 4 years they've passed a point where they could maybe have had children as time is no longer on their side. Really, I think you can knuckle down and save but if you are faced with doing so for years and years rather than 1-2 years of hard graft it paints a really grim picture. I might be wrong but I don't think the saver is the only one at fault here.

They leave the country and find somewhere where they can save shedloads. Then, when they realize that the weather is better, the houses are better, transport is better, the lifestyle is better, they question why they want to go back "home". Hence why there is 1/4 of NZ's population living overseas.
Auckland is only livable if you are filthy rich, and you are not going to get that way by living in NZ.
NZ is going to become a retirement village.

How's life in La La land?

We live and rent in Auckland, (very basic nothing special accommodation) and both earn great salaries, we purchased in a cheap rural area - outside of Auckland and spend all of our holiday's/spare time there, the property is now freehold. It is amazing how irrelevant the Auckland property market becomes when you have your own little bit of paradise in a wonderful community. We have a flourishing orchard (which is making us money), rent it out so others can enjoy it (every now and then) and are busy now establishing a "work from home" business which is coming along nicely so we can ditch Auckland for good and start 'living the dream'. Seriously, look elsewhere and see what you can get - Auckland is just not worth it in terms of what you get for your money and there are plenty of other wonderful places to be! Nothing holding you back except 'fear' itself.

Glad everything worked out well for you.
But aren't these rural areas overpriced too?

I've keeping an eye on some rural land/properties because I'd like to do something similar (especially considering that I am a Software developer and should be able to work from anywhere) and I find it very expensive unless you buy in the middle of nowhere.

Property is not the only bubble, and Auckland is not the only bubble territory. Productive land is also overpriced maybe due to exceptionally high but short-termed returns in dairy in the last years.

We headed North, beautiful land, water nearby, etc. You might have to watch and wait to get the right place at the right price, but our patience paid off - we looked for potential (not just in the property itself but in the overall area). I've also found that once in a smaller community work/business opportunities tend to come to you as people get to know you/your skills, etc. Sometimes 'the middle of nowhere' is actually 'the middle of somewhere pretty special' - you just have to scratch the surface ;-)

Thats a great post. Well done!!

Great article Elizabeth, with tough and realistic advice. Many Auckland based "hopeful homeowners" can still buy a lower-quartile property in Auckland if it a top priority for them, and if they adjust their lifestyles accordingly. If people choose to try and get into the Auckland housing market they need to be working hard, saving hard, spending little, and looking seriously at ways to increase their earnings or reduce their spending – e.g. living with flatmates or parents for as long as possible; rarely eating out; buying second hand clothes.
Home ownership in Auckland (or elsewhere) is not a right. If “hopeful homeowners” in Auckland don’t want to live a frugal lifestyle to save as much as possible, that’s their choice. They can choose to buy outside of Auckland instead (or to continue renting in Auckland, and investing their savings in a share fund instead).
I bought into the Auckland market 2.5 years ago (purchasing a 2 bedroom unit) when I was 26 and single, and earning a much lower salary than your correspondent ($47,000 gross) . I saved my deposit by working hard and saving hard throughout high school and University, and by living with my parents (and paying board to them). By living with my parents I was able to save 50% of my net salary each year after University until I had enough deposit to buy a house. Being able to own my own home in Auckland one day has been a goal of mine since I was in High School, and I have done what it takes to achieve it.

ok so you had parent help by paying just board..invalidates you argument big time..happy you achieved you goals but to compared your experience with others shows your lack of awareness.

ok so you had parent help by paying just board..invalidates you argument big time..happy you achieved you goals but to compared your experience with others shows your lack of awareness.

One wayyyyyyy better option than grinding and saving for a deposit ( which usually takes ages ) is to find a job where you can save nearly all your income. Lots of these actually exist. My friend / brother and I all saved our deposits doing it this way. These jobs are ones where food accommodation etc is usually provided.
Examples are Some mining jobs, cruise boat jobs, many travel jobs, oil rigs, fishing boats, a chief on a fishing boat.
Obviously to find jobs like these you have to be proactive and actually seek them out. Not all these jobs would suit everyone, but just saying if you can pull it off it is a great way to avoid the years of saving.

Great attitude. Being proactive ... usually turns up something.

Save up enough to buy a similar house you are renting, buy it and rent it out. You continue renting in the same house. If you think the house you are renting is out of reach to buy, then u are renting something you cannot afford. People who currently live in Mission Bay but want to buy in West Auckland.....why not just rent in West Auckland and save a bigger deposit....

Young people need to understand the importance of the DINK stage (Double Incomes, No Kids).
Also important to note that a high income is only one factor in being able to save good amounts.

In my own case, I am 23 and so is my partner.
I manage a farm and basically earn $640pw + house, power and internet/phone paid for.
She is a teacher and brings home $740pw.

Not huge incomes but then our expenses are tiny, $200pw basically covers our food and entertainment with some to spare.
And my partner needs to run a car to get to work in town which is easily less than $150pw as we decided to buy a basic late model car (with cash) as it does high mileage per year and we don't want hassles and unexpected costs.

If you do the maths we are saving in excess of $1,000pw and I would say we live very comfortably, we buy nice stuff at the supermarket, definetly not $1 a loaf bread.
We don't have sky though, Netflix is only $13pm and has much more stuff that we actually watch.

We also earn extra money where possible, I take my holidays in April so I can work driving tractors for maize harvest season, so I still get paid by my regular employer and earn up to $1,500pw after tax on my side job!

We could easily have enough money for a deposit on an Auckland house by the time we are 25, but residential property doesn't really appeal to me, I am just getting started investing a little in p2p lending after reading some articles on here, will see how that goes.

Good work!


The difference is - When I bought a house in Auckland in about 1992, I paid 123k for it, I was earning 40k, deposit was 25k, so 62.5% of my earnings for one year for a deposit.
To buy the same house today I guess I would need to pay 8- 900k. So a deposit of 180k, or roughly 180% of my earnings for a year.

Based on these facts - Im obviously underpaid and will demand a raise to 300k tommorow (im self employed so Ill give myself a stern talking to in the mirror - or fire an employee)

I dont think people are whiners, I think the market is ridiculous.

THANK YOU!!!!!!!

Average Auckland house prices in 1992 were 240k so using your math, the affordability is about the same

My numbers are right based on what I know, and have experienced, Id like to thank you for pointing out I started out decidedly below average.

Ok. I don't normally comment but I thought I'll do it for this article since I'm probably the most relevant. I'm 27, earning around the same as the "hopeful homeowner" and am currently renting. However, after 4 years saving I've managed to scrimp enough for a deposit on a house on my own for a lower quartile house. How? I saved the bulk of my income, invested in appreciating assets, and reduced my expenses. It's bloody simple! (obviously no family contribution, etc or my circumstances wouldn't be the same). I constantly hear people of my age whine about houses being too expensive for them. Yes they are overpriced, but if you really want something then shut up and work for it... *end rant*

Most sensible response yet! Strangely enough most of the people whom I know of who bought houses in their early twenties did so as a single, you would think that couples had a better chance with their combined income. Perhaps this goes to show the difference in priorities of the people in each category?

"Yes they are overpriced"

Great! so you scrimped for 4 years for your "overpriced" home just to get that deposit together so you can continue scrimping for a few decades or more, thus expand the number of collective wishful thinkers who hope that such a bad deal that fully relies on the next bank sucker to borrow more than you and also collect some form of capital gain to make paying back all the 'ANNUAL' bank interest you will be paying actually logical. NIce one.

You want it, you got it. Some of us feel that actually having access to "affordable" homes (not an overpriced asset based on a ponzi model) is in fact a human right even in a world where privatization strips us all of our basic living rights and not to mention is a better outcome for a healthier society for all.
But hey, I guess the GFC was not enough of a wake up call for many, including the author of this article?


By the time I was 27 I had two kids, there is my wealth. I am out the other side now. While most of my contemporaries are stuck in the mortgage trap I am happy renting, and the mobility that goes with it.

God, I wish I could give this more than one 'like'.


Patronising and dismissive much?

Speaking as an old fart, I'm really sick of all this bullcrap propaganda demonising young people who only want to be able to settle down and start a family, and get some reward for all their hard work, by mischaracterising them as whiny brats who want champagne on a beer budget, blah blah blah iPhones blah blah blah. Bullcrap. They're being forced to spend champagne money on stale Lion Red, and have every right to be annoyed at the way they're being ripped off and scapegoated.

Move out of Auckland if you want to buy a house.
If you insist on staying in an Auckland job, buy in Pukekohe or Pokeno.
There are 1000s of NZ homes under $250k.
There are also plenty of decent jobs outside of Auckland.

Bad advice Elizabeth. The writer should quit his job and begin suckling on the state. That is the Kiwi way. See attached article where a family raised three sons in a $2.5m home while being unemployed.

The best of all worlds, 100% free time, free home and a handout every week.

After today's disaster with the Unitary plan the writer has their work cut out for them even if they follow all of the advice given. They'll be living on 2 min noodles, $50,000 in the bank (and growing) but will have nothing to spend it on. What then? Very grim.

I think the biggest fallacy people fall for is that they think they should buy a house they want to live in, I have never done that but bought houses that other people live in, go look in Hamilton for an investment property plenty there in the 300's or just sit and wait and watch the world go by...

You're wrong Elizabeth ;)
Auckland house prices going up by 100k per year, means you need an extra 20k per year just to keep pace with the price rises. You have someone saving up to 30k per year. IF they start saving today, and they are after a house currently worth $600k, it would take 12 years to save up a deposit, due to the ever shifting goal posts. That is if they can even live on $20k per year in Auckland, something I very much doubt.
The advice is all good, and I totally agree, that doesn't make the numbers work though. Auckland house prices have become unnafordable for FHB's, which is one of the reasons that point to it being a speculative bubble.

Excellent article Liz.
Plain simple old fashioned un complicated common sence
A saying my Grandmother used to say over 1/2 century ago
"If u REALLY want something u will get it....just dont waste everyone's time talking about it and not doing anything."
Also.. "For everything thing u get, there is a sacrifice ... be it a few cents to buy a bar of chewing gum or time doing over to afford the chewing gum"
If one is not prepared to offer up the required sacrifices, dont expect to achieve your targets.
And if dont, shut the hell up and stop bitching, because there a others around who are achieving far more with far less.
An example.. a kid on the streets at 15/ 16 decides it not for him...eventually a pregnant wife at 21... communtes 6 weeks on 1 week off 16 to 20 hr days 7 days a week to and from Aussie.. low wage big hrs....couple stints in remote islands in Solomons 3 months at a time. buys 1st very basic home in this period by hes 23......but 28 sold that continued to work, no has a life style block 2 homes on it.. can NOW afford to pay cash for $64 brand new truck couple yrs back...just brought a very nice boat $40+ K family spends trips holidays around the pacific and damn near mortgage free.. BEFORE they are 30...
No hand outs no help no education.. and now runs his own company and staff, working himself off the 'tools'
It called good old fashioned hard work and sacrifice
We have a generation, couple generations of ppl who think that their generation is special and exempt from the only thing that has worked for the last 10,000 yrs plus.
And to boot rather than getting on with it just want to blame and point fingers at everything else ...excuses for not getting their hands dirty.
My heart bleeds.. yeah right.

Its never been easy to buy a house for the past 15 years, if you wanted to get one on your own it was even harder, I know. What I did and friends of mine did was buy and then get in flatmates, sometimes as many as 2 or 3 of them. What this is all about is your ability to compromise. Life is about compromise and making the tough decisions and then sticking with them. Don't want to buy because you think its all a Ponzi scheme ? fine by me but don't keep whining on here about house prices when your 60 and still flatting.

You're a genius Elizabeth!! Always enjoy reading your stuff.
I'm not earning a whole lot at my job (just over the 50k mark) and I'm still saving more than this "hopeful homeowner" example you've given. In terms of expenses, I'd say there are some things I'm not sacrificing, and that's eating out - mostly due to laziness. But I come to find that if I'm ever broke, it's not because I ran out, I just saved too much because it's out of reach, I can't spend it. I think I'm doing okay... If the market doesn't budge, it'll be years before I can afford a house, because on top of that, I'm on my own.

I think that's my biggest issue - Auckland. If only I was working and getting paid this much somewhere smaller... oh well.