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The removal of LVR restrictions on new mortgage lending probably won't be much help to first home buyers in high priced areas like Auckland, Bay of Plenty, Wellington and Nelson

The removal of LVR restrictions on new mortgage lending probably won't be much help to first home buyers in high priced areas like Auckland, Bay of Plenty, Wellington and Nelson

By Greg Ninness

House prices at the bottom end of the market declined in most parts of the country in April compared to March, as New Zealanders locked down to ward off COVID-19. Combined with ongoing falls in mortgage interest rates, the lower prices brought the goal of home ownership a step closer for aspiring first home buyers, assuming they haven't joined the lengthening unemployment queue.

The Real Estate Institute of New Zealand recorded falls in lower quartile selling prices between March and April in seven regions (Northland, Auckland, Waikato, Bay of Plenty, Canterbury, Otago and Southland), while the national lower quartile price declined from the record high $480,000 set in March to $462,000 in April.

Going against the trend lower quartile prices rose in Taranaki, Wellington and Nelson/Marlborough in April, with all three regions sitting on record highs. Lower quartile prices were unchanged between March and April in Hawke's Bay and Manawatu/Whanganui.

Prospective first home buyers would also have bene helped by ongoing falls in mortgage interest rates, with the average of the two year fixed rates offered by the major banks dropping to 3.30% in April, according to’s Home Loan Affordability Reports.

That was down from 3.97% in April last year and 4.55% in April 2018.

The prevailing low interest rates kept mortgage payments on lower quartile homes affordable for first home buyers on average incomes throughout the country.

According to the Home Loan Affordability Reports, lower quartile prices in April ranged from $265,000 in Southland to $728,000 in Auckland.

That means the mortgage payments on a lower quartile-priced home in Southland would be $214.13 a week (assuming a 30 year term), which is just 13.0% of the median take home pay of couples aged 25-29 in the region assuming both work full time.

In Auckland, where house prices are highest, the mortgage payments on a lower quartile-priced home would be $588.25 a week, which is just over a third (34.3%) of the median take home pay of couples aged 25-29 in the region, also assuming both work full time.

That suggests that a mortgage for a lower-quartile priced home in Auckland should be affordable for young couples earning average rates of pay. However they would still face a major obstacle to getting their feet across the threshold of their own home – raising the deposit.

The affordability calculations above assume they would have a 20% deposit and in Auckland, housing prices are so high that would meaning raising $145,000 for the deposit on a home at the region’s lower quartile price of $728,000.

For a couple earning the median after-tax pay of $1714 a week (for 25-29 year olds) between them, who were able to set aside 20% of their take home pay every week to save for a deposit, it would take them eight years (before allowing for inflation or any interest on their savings) to accumulate a 20% deposit on an affordable home in Auckland.

Understandably, that might make the dream of home ownership seem like the impossible dream for many. The problem is not confined to Auckland either.

House prices have risen so much throughout the country over the last few years that there are now four regions where a 20% deposit on a lower quartile-priced home would be $100,000 or more – Auckland $145,000, Bay of Plenty $100,000, Wellington $117,000 and Nelson/Marlborough $118,200, which would make it extremely challenging for first home buyers on average incomes in those regions to save a deposit.

The Reserve Bank’s recent decision to scrap loan-to-valuation ratio (LVR) restrictions on new mortgage lending by banks was no doubt seen as a lifeline by many hopeful first home buyers struggling to save a 20% deposit. Unfortunately they may be disappointed. That’s because buying a home with less than a 20% deposit has a two pronged effect on mortgage payments.

The buyer has a bigger mortgage, which increases their payments, but they will also almost certainly be hit with much higher mortgage interest rates than buyers with a 20% deposit.

Most people are familiar with the low mortgage rates banks advertise to attract new business. What is less obvious is that these are usually “special” rates that are generally reserved for lower risk borrowers, typically with a minimum 20% deposit. Borrowers with less than a 20% deposit usually have to settle for mortgages with “standard” interest rates which are generally higher than the “specials” advertised by banks.

On top of that, banks usually add on a low equity premium to the mortgage interest rates they charge borrowers with less than a 20% deposit, pushing up their mortgage payments even further. The effect of this can be seen in the tables below, which compare the estimated mortgage payments for borrowers buying homes at the lower quartile prices in all regions with 20% and 10% deposits.

In Auckland, the mortgage payments on a home purchased at the lower quartile price of $728,000 with a 20% deposit ($145,600) would be around $588 a week, which would be 34.3% of the take home pay of typical first home buyers earning median rates of pay.

If they only had a 10% deposit, the amount they would need to borrow would increase from $582,400 to $655,200 and their interest rates would increase from around 3.30% to about 4.50% (at April’s average rates) pushing their mortgage payments up from $588 to $766 a week. That means buyers with a 10% deposit would have to find an extra $178 a week for mortgage payments compared to buyers with a 20% deposit for the same property.

That would push the proportion of take home pay typical first home buyers in Auckland would have to set aside for their mortgage every week from 34.3% with a 20% deposit, to 44.7% with a 10% deposit.

From a bank’s perspective, the risk profiles of a borrower with 20% equity and mortgage payments equivalent to 34.3% of take home pay, compared to one with 10% equity and mortgage payments of 44.7% of take home pay, are worlds apart, especially when that is set against the uncertainty created by a soft housing market and weak employment prospects.

The difference is probably enough to all but rule out low equity loans to first home buyers on average incomes in Auckland, and they are unlikely to be a major feature of home lending in other areas where house prices are high, such as the Bay of Plenty and Wellington.

Ironically, the areas where the numbers might stack up for low equity loans are regions where house prices are so low that they shouldn’t be necessary, because in those areas typical first home buyers should be able to save a 20% deposit in a reasonable amount of time. So don’t expect to see a significant increase in low LVR lending by banks just because the Reserve Bank has scrapped LVR restrictions.

For hopeful first home buyers on average incomes in highly priced areas such as Auckland, the Bay of Plenty, Wellington and Nelson/Marlborough, the challenges of achieving home ownership are as big now as they were when LVR mortgage lending restrictions were in place.

The full Home Loan Affordability Reports for all New Zealand cities and regions are available here.

The comment steam on this story is now closed.

Home Loan Affordability with a 20% Deposit
For a Home Purchased at the Lower Quartile Price in Each Region 
  20% Deposit $ Amount of mortgage needed $  Average weekly mortgage payments $ Median after-tax pay $ Mortgage payments as a % of take home pay
Northland       76,000         304,000 $307.05         1,590.09 19.3%
Auckland    145,600         582,400 $588.25         1,713.80 34.3%
Waikato       85,000         340,000 $343.41         1,652.13 20.8%
Hawke's Bay       79,800         319,200 $322.41         1,577.76 20.4%
Manawatu/Wanganui       59,000         236,000 $238.37         1,605.00 14.9%
Taranaki       71,800         287,200 $290.08         1,605.00 18.1%
Wellington    117,000         468,000 $472.70         1,737.64 27.2%
Nelson/Marlborough    118,200         472,800 $477.55         1,622.18 29.4%
Canterbury/Westland       74,600         298,400 $301.40         1,700.09 17.7%
Bay of Plenty    100,000         400,000 $404.02         1,580.88 25.6%
Otago       66,000         264,000 $266.65         1,601.68 16.6%
Southland       53,000         212,000 $214.13         1,648.22 13.0%
New Zealand       92,400         369,600 $373.31         1,681.87 22.2%
Sources: REINZ monthly lower quartile selling prices; Mortgage payments based on's survey of bank mortgage rates; Median pay rates are for 25-29 year old couples working full time, based on Statistics NZ's Linked Employer-Employee Data Series
Home Loan Affordability with a 10% Deposit
For a Home Purchased at the Lower Quartile Price in Each Region 
  10% Deposit $ Amount of mortgage needed $  Average weekly mortgage payments $ Median after-tax pay $ Mortgage payments as a % of take home pay
Northland       38,000         342,000 $399.62         1,590.09 25.1%
Auckland       72,800         655,200 $765.59         1,713.80 44.7%
Waikato       42,500         382,500 $446.94         1,652.13 27.1%
Hawke's Bay       39,900         359,100 $419.60         1,577.76 26.6%
Manawatu/Wanganui       29,500         265,500 $310.23         1,605.00 19.3%
Taranaki       35,900         323,100 $377.54         1,605.00 23.5%
Wellington       58,500         526,500 $615.20         1,737.64 35.4%
Nelson/Marlborough       59,100         531,900 $621.51         1,622.18 38.3%
Canterbury/Westland       37,300         335,700 $392.26         1,700.09 23.1%
Bay of Plenty       50,000         450,000 $525.82         1,580.88 33.3%
Otago       33,000         297,000 $347.04         1,601.68 21.7%
Southland       26,500         238,500 $278.68         1,648.22 16.9%
New Zealand       46,200         415,800 $485.85         1,681.87 28.9%
Sources: REINZ monthly lower quartile selling prices; Mortgage payments based on's survey of bank mortgage rates; Median pay rates are for 25-29 year old couples working full time, based on Statistics NZ's Linked Employer-Employee Data Series

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The banks are now not only factoring in your ongoing job security but a 20% fall in house prices. They can tolerate your equity being wiped out but anymore than a 20% fall begins to affect their business and make no mistake its a business not a charity.

The banks are now not only factoring in your ongoing job security but a 20% fall in house prices. They can tolerate your equity being wiped out but anymore than a 20% fall begins to affect their business and make no mistake its a business not a charity.

And then what? Your story makes sense when the banks know they can dump the customer and the property can be offloaded to a new punter. The banks are probably starting to become more aware of the reality, which is something that they're woefully underprepared for (like most).


It has been a long time since NZ saw a lot of mortgagee sales, but I'm sure we'll start to see that.

Maybe the RBNZ will buy MBS like they do in the states.

"The banks are now not only factoring in your ongoing job security but a 20% fall in house prices"

Do you have any reference or source for that statement?


I don't know about -20%, but they are certainly publicly saying -10 to -15%, which is significant. Not sure the bank analysts would be *allowed* to say more than -15%, even if they think so.


This is Australia (a canary in the housing mine for NZ) but of course we are different!

We've just gone to get our pre-approval renewed. Nothing change about our job situation, no change to income. We can easily afford the mortgage we're applying for (only 20% of our income). We've had to reapply and they won't let us go any higher than what we've currently asked for, even though it's not even close to a stretch for us.

plenty ways to maintain property prices in NZ.

National knows how.


I don't think anybody can maintain property prices in NZ.
It is going to go down. What matters are when and how much.

You must be a newbie, Interest is littered with comments like these over the last many years

And out of all the pandemics we have encountered over that time, this is by Far the most not greatest.
Donald Trump.

Yawn. You still really think that prices are going to hold up?
You really are deluded / desperate.

Sadly he's both deluded and desperate since his motel business is going down the pan.



Yep, open the floodgates on foreign buying once again, even though it is the Govts job to put the people first, not a foreign power. This will clearly be put to test in the campaign, and you can make your choices. Vote Nat to advance foreign interests via through selling out the next generation sovereignty to foreign interests, and driving debt enslavement via foreign bank profit for those forced to compete.

It will be that simple. Tick your box accordingly.

Yep, open the floodgates on foreign buying once again

Nonsense. This is simply a dream (that is being entertained across the world) that opening the gate to China is going to start the party again. Good luck with that. If there is any country that is making headway in that regard, even during these times, it's Thailand, which is basically offloading as much as possible the 100,000+ new apartments built in Bangkok alone to China. It's a firesale. NZ can't handle a firesale.

Not particularly relevant but here is an interesting piece re China and property investment. A real eye opener and gives an interesting perspective on their lack of ethics and the sorts of problems bubbling away in their economy.

Wow. Plenty of stories of new Chinese owners in NZ avoiding Chines builders here. You get what you pay for I guess.

There are two new duplexes down the road from me, built by Chinese. Buildings are complete, then drainage arrives (manholes, stormwater sump etc), rock breakers, now they are thrusting pipe as well - such a well managed job, not.
What do 20T rock breakers do to foundations, gib etc.... It is an absolute blood bath.

Helping the foundations to settle :)

Cha bu duo.

Watched a spec house built by a Chinese company a few years ago.
Levelled up the ground with an excavator. Absolutely no compaction of the ground to provide adequate bearing strength before building the house. The foundation over the raised ground will crack as the ground settles.


The point is, most people don't want to maintain property prices. Most people don't want National.

Well Nationals only policy is to sell NZ out to China.

Which is not a great policy since the whole world hates China at the moment

also they are taking in to account many people are only working on 75+ % of there normal wage, many many companies have cut wages at this time to get though


FHBs would be nuts to buy now, and anyone starting to buIld for that matter. If there was ever a time for building costs to go down, and housing prices to drop by at least 15% (likely a lot more in places, like Queenstown), the next couple of years is it.
I just got a building estimate, initiated before COVID and it already seems ridiculously high given the unfolding situation. I’m waiting...

First home buyers should be buying now In the right places.
Loan repayments are less than rents very often and you have the security and pride of ownership.
Currently in Queenstown and hadn’t been here for years but certainly still appears to be plenty of money in the building game.


TM2, Sounds like you are trying to sell us on it rather than current economic reality. We’ve only just come out of lockdown and a major economic shutdown, these things will take longer to work through! At least need to wait until the end of the year to see how it’s shaking out. The above article is about during lockdown, so pretty meaningless; there was next to no activity. No doubt the govt will keep grant payments going until the election in Sept, but after that... I predict there will be a lot more tendering for small building projects and prices will fall. I feel bad for the construction industry but building costs DO need to fall.

"... In the right places"

That is the key caveat.

Wherever that place is, it's not in New Zealand.

Less than current rents.
And I would say you'd need to at the very least include the rates, insurance, maintenance costs into that calculation. I would say most of Auckland at current house prices when taking rates insurance and maintenance into consideration have a negative yield so from a week to week basis renting is more financially viable. Of course as you say different people value 'ownership' in different ways.

I think The Man 2 is a reincarnation of an old poster in; I am guessing here it's either Chris CJ, or Ex ExAgent.

Sorry to disappoint you!
I am the one and only “The Man”, successful property investor.

"I am the one and only “The Man”"


Thank you for your clarification. I was genuinely wondering about "The Man" since you chose the name "The Man 2".

I became “the man 2” because someone somehow hacked my first name many years ago!!!!

Well, next time maybe a password that isn't "password" ?

You're a secret agent. Dead giveaway.

See, what these first home buyers need to be doing is buying BELOW market value and sticking to upcoming areas. Christchurch is an example that springs to mind.

That's strange.

Your smugness is really starting to sound, how should we say... desperate?

[Please FHBs, please go look at that Bank rate card... how enticing do those rates look??? Amirite?? I know they're low because of the worst economic conditions ever, property is obscenely over-priced, and your equity and/or income could be gone tomorrow, but none of that matters JUST. LOOK. AT. THOSE. RATES.... and consider buying. For the love of God. Please.]

Your envy and jealousy will keep you poor forever. You'll be far better off stopping the bitterness and learning from those more successful than you


If you deem success in life to be based on financial wealth then I feel sorry for you.

I never said success is only determined by finances but you're commenting on the wrong website if finance is not important to you, Interest's moto is

"Helping you make financial decisions"

Poor forever?
More successful than me?

Pray tell who would that be?

Cmat, if you were referring to smugness from “the man” then I will take that as a compliment.
Smugness is due to confidence in what we are invested in and succeeded at!

"you have the security and pride of ownership"— Yeah that security and pride starts to fade a little when all the houses in your neighbourhood decline in value 10, 15, 20%, and you realise you lost your deposit.

There are no "right places" at the moment because they are all going to have 10%+ drops in value at the minimum.

Only fools, the rich and the desperate would buy at the moment.


I agree. Even if they're in a big hurry, it would be best to hold off for a month or two. Wait at least until the sales figures start coming through with hard evidence of price falls. That'll greatly strengthen their bargaining position. And it wouldn't hurt to wait until the first phase of the wage subsidy is over, unemployment stats are updated, etc.

Re: Auckland
i) 20% deposit - debt service ratio of 34%
ii) 10% deposit - debt service ratio of nearly 45%

After allowing for additional costs of ownership (rates, insurance, maintenance, etc), those debt service ratios levels for Auckland don't leave much margin for an unexpected change in circumstances lower household income due to job loss, reduced hours worked for wage earners, or salary cuts.

Nelson / Marlborough area also looks very high.
Wellington also, but there are likely many government paid employees.

At the other end of the spectrum are Southland and Manawatu/Wanganui.

Yes. Bitcoin appears a safer bet than Auckland houses. At least you have control over how much you could lose.

Agreed. Job loss, baby etc - leaves no head room.

All based on a 30 year term as well, so not a lot of room to move if interest rates rise.

"If they only had a 10% deposit, the amount they would need to borrow would increase from $582,400 to $655,200 and their interest rates would increase from around 3.30% to about 4.50% (at April’s average rates) pushing their mortgage payments up from $588 to $766 a week. That means buyers with a 10% deposit would have to find an extra $178 a week for mortgage payments compared to buyers with a 20% deposit for the same property."
A very important figure, never pointed out by people who tell FHB's to just buy a house with 10% deposit.


"Ten-dollar Tauranga" has no decent jobs, stupidly low pay (if there is a job), constant traffic jams, ghost town CBD, crazy high house prices, growing homeless problem and a huge gang crime and drug problem. Who would't want to live there? Well done Tauranga City Council you have got the progress you so desired?

There was a growing number of empty commercial premises in Tauranga BEFORE Covid (I visited in Feb), so it's not going to be pretty.

Their lack of infrastructure investment while their population was growing rapidly has turned Tauranga into a worse version of Auckland.

Add in a lot of retired rate payers who want services but low rates.

And only old people services. No sports or much to interest youngns or active oldies. It's all about the nimbies.

I'm looking to move to Tauranga, have been for about a year now. It is now WAY OVER PRICED and I am very aware of the pathetic pay down there so how do people afford $1.5 million dollar houses down there ? Its all been Auckland money moving down there and those people do not need to work, its one big retirement village. The whole of Tauranga is overpriced by at least 30%. There is no way you can pay the mortgage down there on the pay levels there.I have a work from home part time job so its okay for me once the prices fall.

Just curious, why Tauranga?
I can't stand the place. I'd rather be sent to Hamilton.
Bland, terrible traffic, no culture.
Mount is nice, I guess.

Yeah Tauranga sucks - apart from the beautiful weather, where the Kaimai ranges keep a lot of the rain on the Hamilton side. The rich volcanic alluvial soil that can grow anything, the bustling modern shopping centers like Bethlehem. Crystal blue sparkling water in almost every direction.

Mount side of Bayfair 2 streets back from the beach was always under-valued - I imagine it has caught up now though and all the full sites have been infilled.

Who would't want to live there?

A whole lot of old people apparently

Take into consideration :

1 : Loss of Job
2 : Loss of Business
3 : Pay Cut
4 : Drop in business earning
5 : Not to forget to add Council Rate and house Insurance which should be approx $100 per week and in many case, bank may also ask for personal insurance to protect and also advisable, which is another addition to the cost : Moratge + House Insurance + Rates + Personal Insurance.

If hit by any of the above, chance is will be hard to find new job or start new business in near future.

Many company and agencies though not badly affected by corona virus are and will be using this opportunity in next few months to fire employee under the pretext of cost management. Recent is Auckland University sending email that some may lose jobs as a result all employees are in fear of losing job. Though many may not lose job but still with this email/uncertainity uncertainty has been created, many who were planing will now not venture out to buy a million dollar house. Government paying cash/benefit for 12 weeks (not bad as something is better than nothing) but will it give confidence to spend from saving.

In terms of big expenditure / investment, fear of lossing the job plays the same role as actually losing the job.

For FHB as it is raising a deposit is tough and now in this uncertain time where economy is running on Cash from Government, whatever little deposit one has saved has to be preserved for difficult time (unless are cash rich).

Though interest rates will be low for considerable amount of time but still any mortage is for 30 years or 25 years so one has to be careful as economy//financial will get much worse before getting back to normal.

Biggest drawback : All economic signals are indicating depression and in such a situation, possible of further house fall is imminent ( Now even agreed by experts who have vested interest) , if not crash and in such a situation should one buy when house price is still at peak and future fall may eat away your deposit or may even land up on negative equity or Wait.

Hey you forgot to take into condsideration:
1: wage subsidy
2: jobless income subsidy
3: mortgage deferral
4: money printing
5: lower interest rates
6: government spending on infrastructure to creat more jobs

You see to have a real unbiased look at what is going to happen you need to look at both sides.

As I said previously the outcome is a tug-o-war between businesses closing down + job losses vs various subsidies and more money made available at cheaper rates. I though that the chances are tilted on the downside but it seems the goverment is hell bent on doing whatever it can (and I don't agree it's right) to keep us all nice and fluffy

For how loong....

Most of the reasons you highlighted are symptoms of the depression looming So wait and watch.

Points 4-5 are valid, points 1-3 less so, as they are temporary measures. Sadly many people who lose their jobs will find it hard getting new ones.
I wouldn't count on 6, given this government's track record.

Yavil you must be living in cloud cuckoo land if you think that a 12 week wage subsidy (and jobless income subsidy which understandably you can't claim at the same time) etc, is enough to hold up house prices especially when major industries such as Tourism has evaporated.

Still bullish ??? must need to offload some more properties.

Do it fast because once the penny drops that you cant just lose $40B out of an economy our size without all hell playing out, the fan is going to get pretty dirty...

"but it seems the goverment is hell bent on doing whatever it can ... to keep us all nice and fluffy"

In economics, this is known as moral hazard.

The entire country on welfare tilts us slightly to the downside?! I've read your comments for many years so I'm well aware of your views but this seems to cross the line into a lack of sanity.

It will be bad. Asset prices will drop.


Watching one property, a little 3 bedroom on Auckland's North Shore, it was listed on the 17th May and up for Auction on the 24th so obviously after a very quick sale. It was passed in on Sunday and now asking for $865,000. It last sold for $715,000 at the end of 2018, so the owners are looking to make $150k / 20% up on 18 months in a flat/falling market. There's a few others out there like this, going to auction as soon as possible. Will be interesting to see what they end up going for.


Auction in one week from listing is rare and indicates that both vendor as well as RE Agents fears deep fall in very near future otherwise why the rush.

That's what I thought as well, or that one/both of the owners had lost their job. Was a bit taken aback by the high asking price. I suppose it's all part of the psychological game.

They used expensive paint.

Could be a previous sale fell through or something like that.


When will these agents learn? I see some horrible practices going on right now, residual from the stupid bull market we've had for 10 years. This is a down market. It's a price war and a beauty content. It's not rocket science.
1. Price aggressively. The only buyers out there right now are looking for bargains.
2. Package it right from Day 1. Make it look good now, and don't list it til it does. People are scanning new listings. Once you get relegated to page 2 your opportunity to be seen hugely declines.
3. Price it right for next month's values. Sellers need to get ahead of the market, and that's heading south. Your seller won't scrape a few extra dollars out of an idiot buyer who 'falls in love with it' when everyone knows we're expecting huge declines.
4. (Very obvious I would have thought) PUT A PRICE ON IT. By neg is just taking the pi$$ in today's economy. You think you'll get a bidding war? The only person bidding on that unsold home right now is your seller.
Agents need to manage their sellers' expectations. From what I see that's happening in about 10% of listings right now. It'll happen eventually of course. Sellers don't like their homes getting no interest and eventually they will notice and give it to another agent who will sell it at the price they should have listed it at n the first place, and you'll be SOL.

No doubt you will see the property section in the Herald (way larger than the news section) pushed by real estate agents that will be telling you to buy these bargains while they last, never mind they are still asking a higher price than this time last year.....go for it. Hurry, hurry.....propertry can only continue to skyrocket etc, etc....

Check out this email I received today from Harcourts (I wish there was a good ROFL emoji on this forum):

"The one question I constantly get asked is "what's the market like" I sent this response to a few potential emailed vendors to explain what it is like, and I thought I'd share it with you guys. This is definitely how the market is at the moment...

To those of you that have been asking me and that are a little unsure, I understand the hesitation. If I was thinking of selling at the moment I would be a little unsure….if I didn’t know what was happening.

I don’t have a crystal ball and I don’t know where we will be in 6, 12, 18 months. However, what we are experiencing right now, is a massive supply and demand situation. Because vendors are feeling the same, most are waiting to see what happens and not listing yet. Meanwhile, buyer activity has increased significantly. With interest rates at an all time low, LTV gone for 12 months, buyers are now out in force, investors are back also and we are receiving massive numbers of enquiries. So, what we have is less competition with houses on the market, but more competition with buyers, which is the ideal selling environment and what enables us to achieve the highest price. The time is definitely NOW! Only last week I sold a property for over $600,000 above cv, impossible the other agents told me. Yet it was done and with more than one offer.!!

It really depends on whether you are ready and it’s the right time for you. If you are ready, I believe taking advantage of this right now, could see us achieve an excellent result.
Call me any time.
Take care

GO GO DAZZER!! He really IS the best!! As evidenced by multiple exclamation points and ALL CAPS!!! (Hey, do you know my friend in ChCh? He reminds me of you...)

Mind you, he's right. If you're a seller, the time is indeed now, because if you leave it a few months you will be taking quite the haircut. This is the last chance before a long and painful decline that could last years. Ouch.

152 Campbell Rd, Greenlane. Owner brought in late 2016 for $2.7, a complete do up, overgrown etc, reasonable slope. Now back on the market with RC for subdivision into three sections. Four house a way a comparable sale in Sept 19, do up, less slope, bigger site, sold a whisker under $2m. Then you add in the Covid effect.

Will they get their money back?

Both freehold. Leasehold are $150-300k.

Both on Campbell Rd? Are both houses on the right side of the road? From memory there are quite a few leasehold sections in that area, could be the difference.

How was that ever worth $2.7m? Nearly 20% over CV, clearly overpaid for it with the prospect of subdividing. Busy Road as well.

"How was that ever worth $2.7m? Nearly 20% over CV, clearly overpaid for it with the prospect of subdividing"

Perhaps the buyer originally wanted to do the infill development of themselves of putting 3 dwellings on the land? And were unable to get development financing? or their projected future sales price of the 3 newly constructed dwellings no longer makes the project financially viable?

Given that the owners have decided to put the property up for sale (and chosen not to undertake the development project), this has now become a case of land speculation.
1) buy the property,
2) clean up the land, get resource consent
3) sell to a developer at a price which generates a profit from the buyers purchase price.

This is the reason that some properties with large sections of land in suburbs close to the CBD have been purchased at high prices.

Owner occupiers buyers and long term tenant landlord buyers can't even compete with the prices paid by these land speculators / infill developers due to the potential higher sales proceeds from the potential infill development of the land. That is why many owner occupiers are being outbid by infill developers for the same property.

Anyone with experience in residential property development or house construction have any idea of what would the cost of construction be for:
1) removal of existing house and sales proceeds of the house
2) construction of 3 dwellings (townhouses?)

1) removal of existing house to one of the sections
2) construction of 2 additional dwellings

vs sales price of those 3 dwellings?


This is a step in the right direction- but possibly too little, too late.
I was chatting to another Kiwi from Wellington, who had 4 years ago, moved to Perth also. We were absolutely amazed on how cheap things are here- power, food, rent and housing. Work pay is significantly higher than what we had ever experienced (we are both degree holders and professionals)- not to mention the weather. We would both not be looking to go back (even though we miss what family are left over there, and the rugged beauty of our home country)
We were pushed from NZ- to survive. In NZ- the non-rich make half the wages, but face double the costs. Property is not even a dream- our family were expected to save $150k deposit, with after all of the high living costs, $50 per week? This is what happens when you have the highest property prices (and living costs also) in the World- you lose the younger NZer generations who want to be a productive members of NZ society. Its either poverty, or a better life (across the ditch). Btw my wife and I are both uni degree holders with our three children looking to do medicine, veterinary and the younger one, engineering. Our experience back in NZ and its poverty, has made us all realise that we cannot afford to return- this is a real shame as we love NZ.

The reason that the successful property investors are successful is that they do invest!
Sitting on the sidelines forever will give you the same result!
Money borrowed at ten moment under 3% and rental returns of over 6% is a given that you are going to be just fine.
Rates are staying down and property prices are realistic in many places.
The fact that many are scared to offload is a recipe for success if you are prepared to invest wisely.
Good opportunities aplenty!

You'd want to be a landlord for a measly 3% return? Just as well there are people like you out there to provide rentals, on behalf of NZ renters...thank you.
Like the equity markets here and around the world which are being totally propped up and manipulated by most are not buying into anything that is following market fundamentals...same with the property market in NZ. Have at it..I'm in cash for now...waiting on the sidelines......I'm even happy to miss out on low short term wont be long now...
Prospective investors. Please take comments on public forums like this with a grain of salt...and preferably a Margarita to add to the entertainment. (Sorry. I shouldn't be adding to NZs massive alcohol problem).

You need 20% deposit. Thats approximately $150,000. I dont have that. I also dont have rich parents.

I moved the other way from Aussie to New Zealand. You're right that wages are lower for the most part and cost of living is either as comparable or higher. I work in IT and fortunately wages are around the same as Perth, but I guess we are the lucky few. I still appreciate NZ more because of the people and the landscape. Going tramping in the woods at the weekend in the Tararuas, Surfing, skiing in winter. As an aside in Aussie I hated the weather peak summer more than I hate mid winter here. On the economy, I really cant blame National or Labour for not keeping up with the Aussie market.. its been a juggxrnaught over the last 20 years, and has really led the world in growth. Its also a country in the middle of nowhere with a very despirsed population (unlike OZ which is much more urbanised) and so it doesn't benefit from economies of scale.

I guess what I'm saying is each to their own, and that there's plus' and minus' for both.

I agree Irishrocks. We have spent many an hour looking at the positives and negatives of returning back to Perth (and perhaps returning to NZ). Each to their own.

"Work pay is significantly higher than what we had ever experienced (we are both degree holders and professionals)"
"We were pushed from NZ- to survive."
"Our experience back in NZ and its poverty, has made us all realise that we cannot afford to return"


Thank you for sharing your experience - those are some great insights as to why university graduates / professionals are leaving NZ.

Just curious, what industry / profession are you in?

That means that:
i) the industry / profession you work in doesn't pay sufficiently well enough in New Zealand to have a decent standard of living in New Zealand
ii) the cost of living is too high for employees in some industries
iii) combination of above

It has been reported that income growth has been much slower than house price growth for many years, leading to the unaffordability of housing for many.

I remember reading about how teachers, and policemen were moving out of Auckland to other parts of the country due to the high cost of living relative to income levels. Perhaps your profession / vocation has very limited employment options in other parts of the country, and required you to move internationally.

I have a friend who worked internationally in the UK, Singapore and Sydney in Human Resources for over 25 years. They recently relocated back to NZ to be close to their aging parents. However given their skills, and employment opportunities in that area (combined with the impact of an economic slowdown, and rising unemployment), it seems unlikely that they will find employment in that area in the near term, and may need to find employment in another area. At the moment, whilst looking for job opportunities, they are working for a friend in a vineyard in a different part of the country to the location of their parents.

Hi CN- was a lawyer, but now a Contracts Specialist in Perth. I make significantly more managing Contracts than when I was working as a lawyer in a rural town NZ.

Pushed to survive? Two degree holders (professionals), but couldn't scrape a $150k deposit. Sounds like a Stuff article.

Its the truth. 3 children and an NZ combined income of under $100k- after bills left $50 per week, savings. $150,000 / $50 = 3000 weeks or 57 years.

So you had bills of $1,400 +/- a week? Unbelievable.

Just some Advise- Whats not to believe?

Sounds very melodramatic. If you're both degree-holders earning sub$100k combined perhaps you should have hired a career coach.

"Working in a rural town" might be the key here. Typically lower incomes in rural towns.

Then add the student debt and costs of living away from home for tertiary education for 3-4 years, that could easily put people on the back foot.

Then add the costs of raising 3 children ...

That scenario is plausible.


"Working in a rural town."
"3 children and an NZ combined income of under $100k- after bills left $50 per week, savings"


Thank you.

Really interested in why 2 university graduates are unable to live in NZ and get ahead. This may be why many university graduates leave NZ via the "brain drain"

Just out of curiosity, when you were living in NZ:
i) what percentage of your combined income was rent?
ii) what percentage of your combined income was student loan repayments? Student loans can be quite large if you attended a university away from where your family lives and had to pay for student living costs (and not live rent free at home)
iii) if both of you were working, did you have to pay for daycare for the kids? That can be a huge cost in a household budget if family are not available.
iv) any other big expenses (as % of combined income)?

Hi CN,

Thanks for the response. We have a number of commentators which question my personal view on why my family and I moved to NZ. If they would understand my view, then they may get an insight into the reasons why many, many people have either moved from NZ, or are planning to do so. Calling me 'melodramatic' is a comment reeking of rich privilege. Yet fails to understand the true rationale of the 'brain drain'. Less professional people in NZ equals less people willing to buy property in NZ.

3 years ago- My wife and I have a combine income of $92 k before tax in NZ. My wife could not find any work in field, so had to settle for a part time job. Weekly expenses for 5 family members- $450 rent (modest 3 bedroom house- very cold), $450 food, petrol 2 cars $100 (then all other household costs after that-electricity, phones, internet, school cost/fees, car costs, credit cards etc). Seeing a mortgage broker at the time- he laughed me out of the office as I only had the $50 per week surplus.

In Aust now- we have a combine income of $205k. Costs are significantly lower. We have a surplus of $1000 per week.

This is what NZ is facing. Low wages-highest property prices in the World. Melodramatic my arse.

I lived in Australia for 20 years ,came back to look after aged parents, know exactly what you mean,encountered a lot kiwis over there who said in NZ we lived from hand to mouth ,in oz we earnt more money ,paid in most cases less rent and generally experienced a lower cost of living and a better way of life .

House prices arent going to fall. The degenerate central bankers will see to that. Just wait and see.

Finally someone else who can see that point

The question is not what the central bankers want to do, it's what they are able to do.

Yeah the central bankers cannot fix major unemployment and 20% wage cuts or 4 day working weeks (essentially a 20% pay cut). A few people on here not living in the real world. Many people I know are being directly affected both here and in the UK, the story is the same around the world. We maxed ourselves out on debt and started living paycheck to paycheck with absolutely no reserves. A virus comes along and within 4 weeks the entire economy is toast. All asset prices are going to be impacted by this, the question is now by how much.

This article suggests otherwise.

I think something to consider is just how much rent that Auckland couple are paying and how close they are to the 20% deposit.

If they had just reached the 10% goal, they would still have another 4 years to go, saving at $340 / week, as well as 4 years of $550 / week average rent.

If they took the 10% mortgage, at $766 / week, they would actually be better off $120 / week (although that would get eaten up by rates and services), and have their own home.

Would banks even consider this? That a couples ability to service a loan is better than their ability to save and pay rent?