What are the prospects like for existing homeowners wanting to upgrade?

Property / analysis

Moving up the property ladder is still affordable for most existing home owners

26th Jun 23, 12:32pm by Greg Ninness

interest.co.nz Home Loan Affordability Report
May 2023

The Home Loan Affordability Report usually looks at how aspiring first home buyers are faring in the market. But this month there was very little movement either one way or the other in the main affordability measures for first home buyers. So we have done something different and looked at affordability for people who already own their own home and want to make the move up onto the second rung of the property ladder.

However we haven't abandoned first home buyers completely. The first two tables below give the latest regional affordability measures for first home buyers.

To gauge how affordable it is for people to move up a rung on the property ladder, we have assumed our current first home owners bought their home 10 years ago (May 2013), at what was then the Real Estate Institute of New Zealand's lower quartile selling price.

They sell that home at the current lower quartile price and use the proceeds left once the mortgage has been repaid in full and agent's commission has been deducted, as the deposit for a home purchased at the REINZ's current median selling price.

Essentially this means they are moving up the property ladder from a lower quartile-priced home to a median-priced home after 10 years in their first home.

The first thing to note in this exercise is the huge increase in house prices that has occurred over the last 10 years. The national lower quartile selling price increased from $275,000 in May 2013 to $580,000 in May 2023. That gives a capital gain of $305,000, which is more than the owners' would have originally paid for it. And that's after allowing for the decline in prices since the lower quartile price peaked at $670,000 in November 2021.

We estimate that if the home was sold at the current lower quartile price of $580,000 and the owners had originally purchased it with a 10% deposit, they would have about $359,000 once the mortgage was repaid and the agent's commission was paid. They could use this as a deposit on their new median-priced home.

If they had originally purchased their home with a 20% deposit, they would have $381,000 to put towards a deposit.

Unfortunately the price of the home they are looking to buy would also have appreciated substantially over the last 10 years.

Between May 2013 and May 2023 the REINZ's national median price doubled, increasing from $390,000 to $780,000.

If the second rung buyers had a deposit of between $359,000 and $381,000 (depending on whether they purchased their first home with a 10% or 20% deposit), they would need to take out a mortgage for between $399,000 and $421,000 to get into a median-priced home, even with their reasonably high level of equity.

The mortgage payments (two year fixed) on that would work out to between $582 and $614 a week. And assuming the couple both had jobs that were paying the median rates of pay for people aged 35-39, the mortgage payments would eat up somewhere between 26% to 28% of their after-tax pay each week.

That puts those transactions squarely into affordable territory, meaning the first home buyers of 10 years ago remain well placed to move on up the property ladder now and into a more expensive home.

In the examples given above they would have enough equity from the sale of their first home to make a deposit of around 50% on a home at the current median price, and the mortgage payments would eat up between a quarter and a third of their after tax pay if they were both earning average rates of pay.

So the question many such buyers will face is not whether they can afford to trade up, because clearly they can. It's rather whether they want to take on a new mortgage that's likely to be around $400,000. That of course, will depend very much on their individual motivations and circumstances.

That concern would probably be heightened in main centres where prices are higher.

Doing the same exercise and using Auckland prices, shows second rung buyers would need to take on a mortgage of between $487,000 and $520,000 to move up to a median-priced home. Their mortgage payments work out at between $710 to $758 a week, chewing up just under a third of the after-tax pay rates used in our example.

Although that's still affordable, taking on that much debt may not be something people would want to do in times of economic uncertainty.

However with residential property investors tending to stay on the sidelines because of the poor returns being available from residential property and many first home buyers being shut out of the market by the combination of high prices and high interest rates, second rung buyers are likely to increasingly dominate the market.

The second set of tables below show the regional variations in the affordability figures for second rung in the examples given above.

They show the only place where moving up the property ladder is squarely in unaffordable territory is Queenstown.

However Queenstown is a unique market in this country with quite different drivers to the rest of Aotearoa, so the Queenstown figures are very much an outlier.

The comment stream in this article is now closed.

Affordability Tables for First Home Buyers:

Home Loan Affordability for Typical First Home Buyers with a 10% Deposit
for a home purchased at the REINZ's lower quartile selling price in each region/district
May 2023
	Region	Amount required for a 10% deposit	Years to save a 10% deposit	Size of mortgage with a 10% deposit	Weekly payments on a 90% mortgage	Median weekly after-tax pay	Affordability: mortgage payments as % of after-tax pay
	Northland	$54,600	3.0	$491,400	$809	$1,842	43.9%
	Auckland	$80,000	4.1	$720,000	$1,185	$1,995	59.4%
	Waikato	$61,200	3.2	$550,800	$906	$1,929	47.0%
	Bay of Plenty	$61,000	3.3	$549,000	$903	$1,886	47.9%
	Hawkes Bay	$54,000	2.9	$486,000	$800	$1,874	42.7%
	Taranaki	$41,500	2.2	$373,500	$615	$1,896	32.4%
	Manawatu/Whanganui	$42,000	2.3	$378,000	$622	$1,896	32.8%
	Wellington	$64,500	3.2	$580,500	$955	$2,055	46.5%
	Nelson/Marlborough	$61,500	3.3	$553,500	$911	$1,878	48.5%
	Canterbury/Westland	$52,500	2.7	$472,500	$777	$1,936	40.1%
	Otago	$48,500	2.6	$436,500	$718	$1,869	38.4%
	Southland	$35,700	1.9	$321,300	$529	$1,976	26.8%
	All of Aotearoa	$58,000	3.0	$522,000	$859	$1,959	43.8%

	City/District
	Whangarei	$58,500	3.0	$526,500	$866	$1,962	44.1%
	Rodney	$94,000	4.8	$846,000	$1,392	$1,995	69.8%
	Auckland North Shore	$90,300	4.6	$812,700	$1,337	$1,995	67.0%
	Auckland West	$78,300	4.0	$704,700	$1,159	$1,995	58.1%
	Auckland Central	$82,500	4.2	$742,500	$1,222	$1,995	61.2%
	Auckland Manukau	$76,500	3.9	$688,500	$1,133	$1,995	56.8%
	Papakura	$73,700	3.8	$663,300	$1,091	$1,995	54.7%
	Franklin	$75,600	3.9	$680,400	$1,120	$1,995	56.1%
	Hamilton	$63,500	3.4	$571,500	$940	$1,922	48.9%
	Tauranga	$72,000	3.9	$648,000	$1,066	$1,867	57.1%
	Rotorua	$50,500	2.7	$454,500	$748	$1,915	39.0%
	Gisborne	$53,000	3.2	$477,000	$785	$1,688	46.5%
	Napier	$55,500	3.0	$499,500	$822	$1,881	43.7%
	Hastings	$55,000	3.0	$495,000	$814	$1,874	43.5%
	Wairarapa	$40,000	2.5	$360,000	$592	$1,597	37.1%
	New Plymouth	$51,000	2.8	$459,000	$755	$1,868	40.4%
	Whanganui	$35,900	2.1	$323,100	$532	$1,761	30.2%
	Palmerston North	$50,000	2.5	$450,000	$740	$2,009	36.9%
	Kapiti Coast	$65,750	3.7	$591,750	$974	$1,832	53.2%
	Porirua	$65,000	3.4	$585,000	$963	$1,947	49.4%
	Wellington Hutt	$60,500	3.1	$544,500	$896	$1,998	44.8%
	Wellington City	$70,000	3.1	$630,000	$1,037	$2,332	44.4%
	Nelson	$61,500	3.3	$553,500	$911	$1,878	48.5%
	Christchurch	$52,000	2.7	$468,000	$770	$1,929	39.9%
	Timaru	$40,000	2.3	$360,000	$592	$1,773	33.4%
	Queenstown	$91,000	5.0	$819,000	$1,348	$1,869	72.1%
	Dunedin	$46,500	2.7	$418,500	$689	$1,755	39.2%
	Invercargill	$35,900	2.0	$323,100	$532	$1,888	28.2%
	Notes: Calculations based on buying a home at the REINZ's lower quartile selling price in each region/district. Mortgage interest rate used is the average of the two year fixed rates offered by the major banks, with a loading for a low equity loan on a 30 year term. Weekly income is based on the combined, median, after-tax pay for couples aged 25-29, if both work full time. Years to save is based on saving 20% of after-tax pay each week.

Home Loan Affordability for Typical First Home Buyers with a 20% Deposit
for a home purchased at the REINZ's lower quartile selling price in each region/district
May 2023
	Region	Amount required for a 20% deposit	Years to save a 20% deposit	Size of mortgage with a 20% deposit	Weekly payments on an 80% mortgage	Median weekly after-tax pay	Affordability: mortgage payments as % of after-tax pay
	Northland	$109,200	5.9	$436,800	$637	$1,842	34.6%
	Auckland	$160,000	8.0	$640,000	$934	$1,995	46.8%
	Waikato	$122,400	6.3	$489,600	$714	$1,929	37.0%
	Bay of Plenty	$122,000	6.5	$488,000	$712	$1,886	37.7%
	Hawke's Bay	$108,000	5.8	$432,000	$630	$1,874	33.6%
	Taranaki	$83,000	4.3	$332,000	$484	$1,896	25.5%
	Manawatu/Whanganui	$84,000	4.4	$336,000	$490	$1,896	25.8%
	Wellington	$129,000	6.3	$516,000	$753	$2,055	36.6%
	Nelson/Marlborough	$123,000	6.5	$492,000	$718	$1,878	38.2%
	Canterbury/Westland	$105,000	5.4	$420,000	$613	$1,936	31.6%
	Bay of Plenty	$122,000	6.5	$488,000	$712	$1,886	37.7%
	Otago	$97,000	5.2	$388,000	$566	$1,869	30.3%
	Southland	$71,400	3.6	$285,600	$417	$1,976	21.1%
	All of Aotearoa	$116,000	5.9	$464,000	$677	$1,959	34.6%

	City/District
	Whangarei	$117,000	5.9	$468,000	$683	$1,962	34.8%
	Rodney	$188,000	9.4	$752,000	$1,097	$1,995	55.0%
	Auckland North Shore	$180,600	9.0	$722,400	$1,054	$1,995	52.8%
	Auckland West	$156,600	7.8	$626,400	$914	$1,995	45.8%
	Auckland Central	$165,000	8.2	$660,000	$963	$1,995	48.3%
	Auckland Manukau	$153,000	7.6	$612,000	$893	$1,995	44.8%
	Papakura	$147,400	7.4	$589,600	$860	$1,995	43.1%
	Franklin	$151,200	7.5	$604,800	$882	$1,995	44.2%
	Hamilton	$127,000	6.6	$508,000	$741	$1,922	38.6%
	Tauranga	$144,000	7.7	$576,000	$840	$1,867	45.0%
	Rotorua	$101,000	5.2	$404,000	$589	$1,915	30.8%
	Gisborne	$106,000	6.3	$424,000	$618	$1,688	36.6%
	Napier	$111,000	5.9	$444,000	$648	$1,881	34.4%
	Hastings	$110,000	5.9	$440,000	$642	$1,874	34.2%
	Wairarapa	$80,000	5.0	$320,000	$467	$1,597	29.2%
	New Plymouth	$102,000	5.4	$408,000	$595	$1,868	31.9%
	Whanganui	$71,800	4.1	$287,200	$419	$1,761	23.8%
	Palmerston North	$100,000	4.9	$400,000	$583	$2,009	29.0%
	Kapiti Coast	$131,500	7.2	$526,000	$767	$1,832	41.9%
	Porirua	$130,000	6.7	$520,000	$759	$1,947	39.0%
	Wellington Hutt	$121,000	6.0	$484,000	$706	$1,998	35.3%
	Wellington City	$140,000	6.0	$560,000	$817	$2,332	35.0%
	Nelson	$123,000	6.5	$492,000	$718	$1,878	38.2%
	Christchurch	$104,000	5.3	$416,000	$607	$1,929	31.5%
	Timaru	$80,000	4.5	$320,000	$467	$1,773	26.3%
	Queenstown	$182,000	9.7	$728,000	$1,062	$1,869	56.8%
	Dunedin	$93,000	5.3	$372,000	$543	$1,755	30.9%
	Invercargill	$71,800	3.8	$287,200	$419	$1,888	22.2%
	Notes: Calculations based on buying a home at the REINZ's lower quartile selling price in each region/district. Mortgage interest rate used is the average of the two year fixed rates offered by the major banks, with a 30 year term. Weekly income is based on the combined, median, after-tax pay for couples aged 25-29, if both work full time. Years to save is based on saving 20% of after-tax pay each week.

Affordability Tables for Second Rung Buyers:

Affordability for First Home Owners Moving up the Property Ladder and Buying Their Next Home at the Current Median Price

Assuming they bought their first home at the lower quartile price 10 years ago with a 10% deposit

May 2023
	Region	Current median house price	Total equity/ deposit	Deposit % on median priced home	Mortgage required	Weekly mortgage payments	Median take home pay	Affordability: Mortgage payments as % of take home pay
	Northland	$715,000	$359,557	50.3%	$355,443	$518	$2,052	25.3%
	Auckland	$995,000	$475,332	47.8%	$519,668	$758	$2,333	32.5%
	Waikato	$740,000	$421,421	56.9%	$318,579	$465	$2,156	21.6%
	Bay of Plenty	$790,000	$391,358	49.5%	$398,642	$581	$1,727	33.7%
	Hawkes Bay	$660,000	$366,189	55.5%	$293,811	$429	$2,024	21.2%
	Taranaki	$534,000	$237,527	44.5%	$296,473	$432	$2,059	21.0%
	Manawatu/Whanganui	$528,000	$287,473	54.4%	$240,527	$351	$2,059	17.0%
	Wellington	$795,000	$410,154	51.6%	$384,846	$561	$2,442	23.0%
	Nelson/Marlborough	$770,000	$365,493	47.5%	$404,507	$590	$1,980	29.8%
	Canterbury/Westland	$650,000	$302,026	46.5%	$347,974	$508	$2,098	24.2%
	Otago	$670,000	$321,883	48.0%	$348,117	$508	$2,046	24.8%
	Southland	$433,000	$242,206	55.9%	$190,794	$278	$2,005	13.9%
	New Zealand	$780,000	$358,755	46.0%	$421,245	$614	$2,204	27.9%

	District
	Whangarei	$719,500	$406,692	56.5%	$312,808	$456	$2,185	20.9%
	Rodney	$1,150,000	$585,588	50.9%	$564,412	$823	$2,333	35.3%
	Auckland North Shore	$1,140,000	$486,311	42.7%	$653,689	$954	$2,333	40.9%
	Auckland West	$928,000	$469,157	50.6%	$458,843	$669	$2,333	28.7%
	Auckland Central	$1,022,500	$481,920	47.1%	$540,580	$789	$2,333	33.8%
	Auckland Manukau	$945,000	$478,823	50.7%	$466,177	$680	$2,333	29.2%
	Papakura	$829,000	$479,935	57.9%	$349,065	$509	$2,333	21.8%
	Franklin	$940,000	$499,366	53.1%	$440,634	$643	$2,333	27.6%
	Hamilton	$775,000	$414,387	53.5%	$360,613	$526	$2,148	24.5%
	Tauranga	$861,000	$469,741	54.6%	$391,259	$571	$2,087	27.4%
	Rotorua	$600,000	$352,144	58.7%	$247,856	$362	$2,140	16.9%
	Gisborne	$600,000	$372,615	62.1%	$227,385	$332	$1,887	17.6%
	Napier	$665,000	$355,090	53.4%	$309,910	$452	$2,032	22.3%
	Hastings	$695,000	$366,925	52.8%	$328,075	$479	$2,024	23.6%
	Wairarapa	$440,000	$258,126	58.7%	$181,874	$265	$1,685	15.7%
	New Plymouth	$606,342	$298,512	49.2%	$307,830	$449	$2,029	22.1%
	Whanganui	$460,000	$250,347	54.4%	$209,653	$306	$1,913	16.0%
	Palmerston North	$620,000	$319,552	51.5%	$300,448	$438	$2,181	20.1%
	Kapiti Coast	$817,500	$437,196	53.5%	$380,304	$555	$2,177	25.5%
	Porirua	$810,000	$396,711	49.0%	$413,289	$603	$2,315	26.0%
	Wellington Hutt	$780,000	$397,494	51.0%	$382,506	$558	$2,375	23.5%
	Wellington City	$875,000	$396,003	45.3%	$478,997	$699	$2,778	25.1%
	Nelson	$770,000	$365,493	47.5%	$404,507	$590	$1,980	29.8%
	Christchurch	$630,000	$282,587	44.9%	$347,413	$507	$2,090	24.2%
	Timaru	$520,000	$239,858	46.1%	$280,142	$409	$1,923	21.3%
	Queenstown	$1,272,000	$593,173	46.6%	$678,827	$990	$2,046	48.4%
	Dunedin	$565,000	$307,698	54.5%	$257,302	$375	$1,922	19.5%
	Invercargill	$445,000	$245,962	55.3%	$199,038	$290	$1,917	15.1%
	Notes: The calculations in this table assume a couple purchased their first home 10 years ago for the lower quartile price at the time (May 2013) with a 10% deposit. They then sell that home at the current (May 2023) lower quartile price and use the net proceeds from that to buy their next home at the current median price. All mortgage calculations are based on the interest rate being the prevailing average of the two year fixed rates offered by the major banks and a 30 year term, with a loading on the original mortgage for a low equity loan. The equity/deposit calculation is the money that would be left over from the sale once the mortgage has been repaid in full, with an additional allowance for real estate agent's commission. The affordability measure is based on the median, after-tax wages for 35-39 year olds and assumes both work full time.

Affordability for First Home Owners Moving up the Property Ladder and Buying Their Next Home at the Current Median Price

	Assuming their bought their first home at the lower quartile price 10 years ago with a 20% deposit
May 2023
	Region	Current median house price	Total equity/ deposit	Deposit % on median priced home	Mortgage required	Weekly mortgage payments	Median after-tax pay	Affordability: Mortgage payments as % of after-tax pay
	Northland	$715,000	$378,150	52.9%	$336,850	$491	$2,052	24.0%
	Auckland	$995,000	$508,295	51.1%	$486,705	$710	$2,333	30.4%
	Waikato	$740,000	$440,216	59.5%	$299,784	$437	$2,156	20.3%
	Bay of Plenty	$790,000	$413,280	52.3%	$376,720	$550	$1,727	31.8%
	Hawkes Bay	$660,000	$383,402	58.1%	$276,598	$403	$2,024	19.9%
	Taranaki	$534,000	$255,632	47.9%	$278,368	$406	$2,059	19.7%
	Manawatu/Whanganui	$528,000	$300,565	56.9%	$227,435	$332	$2,059	16.1%
	Wellington	$795,000	$433,739	54.6%	$361,261	$527	$2,442	21.6%
	Nelson/Marlborough	$770,000	$390,825	50.8%	$379,175	$553	$1,980	27.9%
	Canterbury/Westland	$650,000	$324,759	50.0%	$325,241	$474	$2,098	22.6%
	Otago	$670,000	$338,121	50.5%	$331,879	$484	$2,046	23.7%
	Southland	$433,000	$253,572	58.6%	$179,428	$262	$2,005	13.1%
	All of Aotearoa	$780,000	$381,082	48.9%	$398,918	$582	$2,204	26.4%

	District
	Whangarei	$719,500	$424,229	59.0%	$295,271	$431	$2,185	19.7%
	Rodney	$1,150,000	$621,311	54.0%	$528,689	$771	$2,333	33.1%
	Auckland North Shore	$1,140,000	$529,098	46.4%	$610,902	$891	$2,333	38.2%
	Auckland West	$928,000	$500,983	54.0%	$427,017	$623	$2,333	26.7%
	Auckland Central	$1,022,500	$516,831	50.5%	$505,669	$738	$2,333	31.6%
	Auckland Manukau	$945,000	$507,645	53.7%	$437,355	$638	$2,333	27.3%
	Papakura	$829,000	$505,632	61.0%	$323,368	$472	$2,333	20.2%
	Franklin	$940,000	$524,941	55.8%	$415,059	$605	$2,333	26.0%
	Hamilton	$775,000	$436,430	56.3%	$338,570	$494	$2,148	23.0%
	Tauranga	$861,000	$494,748	57.5%	$366,252	$534	$2,087	25.6%
	Rotorua	$600,000	$367,164	61.2%	$232,836	$340	$2,140	15.9%
	Gisborne	$600,000	$388,041	64.7%	$211,959	$309	$1,887	16.4%
	Napier	$665,000	$375,144	56.4%	$289,856	$423	$2,032	20.8%
	Hastings	$695,000	$385,128	55.4%	$309,872	$452	$2,024	22.3%
	Wairarapa	$440,000	$272,334	61.9%	$167,666	$245	$1,685	14.5%
	New Plymouth	$606,342	$320,027	52.8%	$286,315	$418	$2,029	20.6%
	Whanganui	$460,000	$261,023	56.7%	$198,977	$290	$1,913	15.2%
	Palmerston North	$620,000	$337,657	54.5%	$282,343	$412	$2,181	18.9%
	Kapiti Coast	$817,500	$459,117	56.2%	$358,383	$523	$2,177	24.0%
	Porirua	$810,000	$422,326	52.1%	$387,674	$565	$2,315	24.4%
	Wellington Hutt	$780,000	$418,197	53.6%	$361,803	$528	$2,375	22.2%
	Wellington City	$875,000	$427,059	48.8%	$447,941	$653	$2,778	23.5%
	Nelson	$770,000	$390,825	50.8%	$379,175	$553	$1,980	27.9%
	Christchurch	$630,000	$306,944	48.7%	$323,056	$471	$2,090	22.5%
	Timaru	$520,000	$256,096	49.2%	$263,904	$385	$1,923	20.0%
	Queenstown	$1,272,000	$624,837	49.1%	$647,163	$944	$2,046	46.1%
	Dunedin	$565,000	$323,368	57.2%	$241,632	$352	$1,922	18.3%
	Invercargill	$445,000	$257,126	57.8%	$187,874	$274	$1,917	14.3%
	Notes: The calculations in this table assume a couple purchased their first home 10 years ago for the lower quartile price at the time (May 2013) with a 20% deposit. They then sell that home at the current (May 2023) lower quartile price and use the net proceeds from that to buy their next home at the current median price. All mortgage calculations are based on the interest rate being the prevailing average of the two year fixed rates offered by the major banks and a 30 year term. The equity/deposit calculation is the money that would be left over from the sale once the mortgage has been repaid in full, with an additional allowance for real estate agent's commission. The affordability measure is based on the median, after-tax wages for 35-39 year olds and assumes both work full time.

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93 Comments

by J.C. | 26th Jun 23, 12:55pm 1687740902

Climbing the property ladder. Consider it a patriotic duty for your country. You're not just fulfilling aspirations, but helping out your fellow man, woman, and other identities.

by printer8 | 26th Jun 23, 1:54pm 1687744456

Bit of a silly sarcastic comment - your negativity or envy towards homeownership screams out loudly.

Changes in the family - not only likely more children but also older and bigger - as well as ability to afford a more comfortable home are sound pragmatic and common reasons for trading homes.

Get over it.

by Flying high | 26th Jun 23, 1:58pm 1687744698

Tenants are entitled to their opinions printer. Its just that with JC if its not Bitcoin its a hype bubble

by J.C. | 26th Jun 23, 2:03pm 1687745019

Tenants are entitled to their opinions printer. Its just that with JC if its not Bitcoin its a hype bubble

The ol' rat poison is a juxtaposition.

by J.C. | 26th Jun 23, 2:02pm 1687744950

Bit of a silly sarcastic comment - your negativity or envy towards homeownership screams out loudly.

Definitely not sarcasm. In fact, I fully support people buying houses. And the economy relies on steady turnover of houses. Heavily.

by Pa1nter | 26th Jun 23, 2:14pm 1687745645

But if you can't buy a house

Pop down a hundy or two on butt-coin

Tell your friends too

It's less of a pyramid, and more an evil rhombus.

by J.C. | 26th Jun 23, 2:35pm 1687746932

But if you can't buy a house

Pop down a hundy or two on butt-coin

No deposit mortgages are likely to be ancient history my friend.

by Crazy Horse | 26th Jun 23, 4:27pm 1687753623

Get over it !! ......well get over this - 59.4% of net income !!! for Auckland for an FHB with a 10% deposit !

There was a phrase going round in the mid 2010's about those with very "vested interests" in the PPP about "pulling up the ladder", which was what was happening, as prices were steadily increasing and more and more FHB's were finding the prices out of reach.

Those same people are now saying "look, look, prices have come down!" - well they have come down alright and these people are watching their capital reduce day by day.

BUT these same people what every fool out there to jump to their tune and BUY at even these STILL CRAZY prices !! because if some mug doesn't, their wealth will slowly dissipate away...while with inflation, that dollar is losing value day by day.

With the way the financial world (and it's not, sorry to say just NZ residential property - as much as you want it to be! ) is going now, I would watch these greedy vendors "sweat it out" who are trying to cash out of this mess. They of course know what's happening, so all the spruikers can baffle you with BS all they like, so be PROPERLY INFORMED

The shoes on the other foot peeps - remember every written offer has to be presented to the vendor !

Now get to that "home of your dreams" - make an offer and let 'em sweat !

by Flying high | 26th Jun 23, 6:51pm 1687762310

Write on

CH Are you also nz gecko, similar style and points.

by Crazy Horse | 27th Jun 23, 11:30am 1687822212

There is only one (1) CRAZY HORSE ! .....yeee haaaa pardner !!!

by Cur8or | 26th Jun 23, 12:58pm 1687741127

This is pure madness. First off, don't use a real estate agent. Second, wait 5 more years.

by Yvil | 26th Jun 23, 2:52pm 1687747956

No one knows what will happen in 5 years, not you, not me, not anyone, except that we are all 5 years closer to death. Some people are doers, others are waiters...

by Averageman | 26th Jun 23, 3:02pm 1687748525

Some are more in debt...some are not.

With DTi around the corner being more in debt seems silly. If speculative investment can only carry a tiny, compared to the last ten years, level of debt, it is hard to see the values of today being maintained.

by OldSkoolEconomics | 27th Jun 23, 8:10am 1687810258

7HouseLuxon is going to give the housing market one last huge push. He and all his Nat MP mates own so many properties they would be foolish not to.

Because Labour will lose the election Nats will be in power - expect tax cuts for investors, maximised immigration and more... they will prob cut benefits and govt spending to offset the huge gains for the wealthy - so inflation can be managed by stopping the poor people spending on basics so the wealthy can spend on luxuries.

So property might not be a bad investment due to cap gains - if one can afford higher interest rates... at least for a couple more years.

Need shades for the NZ future.

by Juzz | 26th Jun 23, 4:29pm 1687753755

Yeh we do houses will triple in value and bitcoin will go to zero. I've seen it in the tea leaves

by Crazy Horse | 26th Jun 23, 4:38pm 1687754314

Just remember .....there is "good debt" and "bad debt".

by dee_jee_emm | 26th Jun 23, 12:59pm 1687741149

Interesting piece - thanks Greg.

Just a quick question - did you account for any mortgage repayments that would have been made over those 10 years? I imagine they would have knocked a reasonable chunk off the mortgage of their original home, leaving more of a deposit for the next one.

by huttman | 26th Jun 23, 1:05pm 1687741527

we have assumed our current first home owners bought their home 10 years ago (May 2013)

this assumption is a bit out. I think the average time for someone stay in the same property average around 6-7 years, not 10 years.

and after paying 10 years of mortgage, there chunk of principal payment accumulated too, you have to take that into consideration. 10 years mortgage payment should have halved the initial mortgage, many would have paid it off if they have had lump payment.

by DDDDebt | 26th Jun 23, 7:02pm 1687762937

On a 25 year table loan (what the bank wants you to take) you've paid back around 20% principle after 10 years

It's not until year 17 that you've paid off half and are now paying more principle than interest

https://www.interest.co.nz/calculators/full-function-mortgage-calculator

So on the average house purchase in 2013 at $390k, and the average rate at the time 5.75% you've paid off $76k after 10 years

Worth running the numbers - even a .5% increase or decrease makes an impact each way

by Jamin | 26th Jun 23, 7:35pm 1687764947

Your figures seem about right.

remember also that after 17 years inflation would have likely squashed the real value of that debt by about half. So by then you really only owe about a quarter.

by DDDDebt | 27th Jun 23, 5:41am 1687801292

Anyone know of an online calculator that allows you to include projected inflation, changes to interest rates, future lump sums, equity releases, holding costs, maintenance (new roof year 15 etc) along the terms of the loan etc?

Would be worth sharing, thanks.

by Cheetahlegs66 | 27th Jun 23, 10:43am 1687819408

Try moneychimp.com

The calculators on interest repayments, compounding interest etc changed my life. I went from putting most of my spare cash against a mortgage to living incredibly frugally to clear the mortgage. Plot the graphs-principal vs interest repayments. Track, learn and understand.

by kiwimm | 27th Jun 23, 11:15am 1687821320

Good work. I followed a similar path and paid off my 30 year mortgage in 6 years while rates were at record lows.

I paid a total of $90,000 in interest on a $600,000 mortgage ($690,000 total) was about versus $835,000 you would pay on a 30 year mortgage at 6.99% ($1,435,000 total)

by DDDDebt | 27th Jun 23, 2:26pm 1687832794

Thanks Cheetah - I remember MoneyChimp now from years ago. Think it might have been one of the first online tools.

Well done Kiwimm - that's awesome discipline and commitment.

by GV 27 | 26th Jun 23, 1:18pm 1687742327

The biggest driver for 'moving up' is to add bedrooms for a growing family. A couple who bought in 2013 likely has a materially smaller mortgage than a couple who bought five or six years ago - but that couple buying later is more likely to have put off buying a house until they could advance in their career far enough accumulate a deposit.

So then the question becomes "how long in a starter home before family considerations push you into your next one?". I'd suggest that is more likely affected people who bought from 2016-onwards already if they actually want to have more than one child, and the 2013 cohort will skew your information drastically away from being relevant to the market that next-home-buyers are operating in.

by nguturoa | 26th Jun 23, 1:42pm 1687743735

Buy a home.. No need to upgrade but instead put money in to good schooling of kids and make the next generation educated.

Really one only needs a roof and a bed. Rest all is good to have but not a need.

Good proper education is the basic need to ensure we have next generation of decent humans, not ram raiders.

by J.C. | 26th Jun 23, 1:27pm 1687742857

The biggest driver for 'moving up' is to add bedrooms for a growing family.

Yes. But it's also about trade offs. Both bedrooms and kids are future financial commitments. Can you afford either or both?

by GV 27 | 26th Jun 23, 1:44pm 1687743877

Can the country afford to keep making that choice harder and harder for the people they expect to juggle both at once by simply 'working harder'?

by malamah | 26th Jun 23, 1:52pm 1687744365

No, the pool of people who are both career and family orientated enough to both have enough income to get by without assistance, and provide stable and secure homes for our children is diminishing. We're hell bent on importing poverty.

by huttman | 26th Jun 23, 1:46pm 1687743980

or moving to a better location. many people need to move closer to work, schools or hospitals etc. many would start outskirt of city, then moving closer to inner city suburbs.

by ironflagnz | 26th Jun 23, 2:42pm 1687747333

It's what we did last year. Bought first home in 2016 in less than desirable location (to us).

Had two kids since, upgraded last year, maybe a couple years before we could properly afford to as the oldest turned 5 this year and we had school to consider, so wanted to move to where we wanted to be during the school years.

Means a gigantic mortgage during a crap time for it. But hopefully we can continue to earn more, get out of daycares eventually, and have some money back lol.

by Yvil | 26th Jun 23, 3:00pm 1687748447

Well done, I hope you're happy with your new house and I wish you all the best :-)

by ironflagnz | 26th Jun 23, 3:23pm 1687749812

Thank you!

by Yvil | 26th Jun 23, 3:01pm 1687748514

"The biggest driver for 'moving up' is to add bedrooms for a growing family"

That's heck of an assumption, what about moving to a better suburb or a better school zone?

by GV 27 | 27th Jun 23, 6:36am 1687804583

I mean... you still have all the overhead of kids in all those scenarios and the costs that come with them. Factor in 12% p.a. food increases, daycare at $350pw per child and general other inflationary bullshit and you start to see a lot of competition for every dollar of people's net wages.

by Sluggy | 27th Jun 23, 1:00pm 1687827636

Or keeping up with the joneses.

by donny11 | 26th Jun 23, 2:29pm 1687746574

One of the irony's of rising property prices is it actually screws people all ready on the property ladder. As even though the value of there property increases with rising house price to income ratios the price of upgrading also increases. Case in point. Lets say in 1980 the average household income is $100,000. The average house price is $300,000 (3x household income). If you want to upgrade to a second home the price is $600,000, for a final (luxuary home) the price is $900,000. This is all manaegable with enough hard work.

You buy your first home for $300,000

Overnight hourse prices triple (to today's absurd rates). Great news! Your house is now worth $900,000! You are almost a millionaire. However there's a catch. Your wife is proggo with baby number 3 and wants a bigger house. Time to upgrade to your second home. Here's the problem. The second home has also tripled in price. What would have cost you an extra $300,000 yesterday ($600,000 - $300,000) now costs you can extra $900,000 ($1,800,000- $1,800,000) However you still only earn $100,000 so you can not afford.

In essence you are now stuck in your first home with a grumpy wife. But don't worry the government will feed you the propaganda that you are in fact richer than yesterday even though you can't afford the second home.

by malamah | 26th Jun 23, 1:55pm 1687744502

Yep - retirees I know are coming to terms to the fact that their house is not worth what they thought it was, and is surprisingly illiquid. Meanwhile have spent 45 years making mortgage payments. I don't have the heart to tell them it was all a facade.

by refactornz | 26th Jun 23, 2:09pm 1687745384

Terrible assumptions and poor math make your example a waste of time donny11. And if your now 70+ yo wife is pregnant then you have bigger problems than being stuck in an old house.

by donny11 | 26th Jun 23, 2:30pm 1687746631

You are right actually Bad math's by me. The cost of an upgrade will jump to $1,800,000 so an extra $900,000. Nevertheless, my point stands people sort of get stuck on the ladder as the price of going from 1st to 2nd home jumps from $300,000 to $900,000. Your first home becoming your last home (assuming you can afford your first home) is becoming normal for my generation irregardless of hard you work.

by Nellbell | 26th Jun 23, 2:27pm 1687746432

Donny, your wage and first house price examples are more like the early 2000s. In 2000 $900,000 would have bought you a farm with a luxury house. By 2010 a luxury home was still only $1,000,000 ( outside Auckland).

Yes $1,000,000 is a lot of money, people need to remember that. Buying a $2,700,000 property was for very highly paid executives, business people or professionals, what has happened in the last ten years is that so much money has been made from trading houses this amount seems ordinary to some.

by Yvil | 26th Jun 23, 3:04pm 1687748698

So, in essence Donny, you completely refute Greg's article above (I hope you have read it) and you propose your own figures as being more relevant to Greg's… I'll stick with Greg's figures, thanks.

by malamah | 26th Jun 23, 2:04pm 1687745049

Something I've been trying to put my finger on each time I've read these reports is the "years to save deposit". I realise this is based on several assumptions, however what would be more representative of FHB in a position to buy in the current market would be "years to _have saved_ a deposit", given that to buy at todays prices on todays incomes, the FHB would have had to have been saving for x years up until this point, and not using todays figures as a starting point. A much more difficult metric to assume, but would mean 2-3 years saving in the 20-25 year income bracket, then 3-5 years saving in the 25-29 year income bracket.

Basically what I'm trying to say is that for a 29 year old FHB to buy today on their own accord they would have had to be saving religiously for about a decade. Since they left school, no tertiary education, no crappy first jobs. Straight into that good earning capacity and strict budgeting for a decade.

by HouseMouse | 26th Jun 23, 5:52pm 1687758730

I have raised this several times before but have got nowhere with it 😂 the editors seem to be holding the line on some pretty heroic assumptions.

by Chairman Moa | 26th Jun 23, 2:22pm 1687746143

I've seen (and heard) quite a few people upgrading or moving up the properties ladder from Auckland to Adelaide, Brisbane, Perth, Gold Coast and some cases, Melbourne.

by Averageman | 26th Jun 23, 2:32pm 1687746756

Hahahaha...gold...Gold Coast. Sell the ponzi and buy value...

by donny11 | 26th Jun 23, 2:56pm 1687748180

Gold Coast is nice. Perfect climate, nice urban design. They are currently extending lightrail to Burleigh Heads. You can get a 3 bedroom apartment for 750k. If you are a young kiwi couple and can get a job there that pays 25% more than here. I say move.

by K.W. | 26th Jun 23, 4:26pm 1687753579

Its where I am considering moving to, after having lived in Melbourne for 13 years. The GC is beautiful, water views from just about everywhere, only an hour out of Brisbane, two airports to choose from, great weather, and everywhere has a swimming pool. What's not to like?

by donny11 | 26th Jun 23, 5:39pm 1687757965

Beer prices

by rolande | 26th Jun 23, 2:33pm 1687746804

I've nearly paid off my mortgage but I'm really not planning on getting another one. It would be nice to have a bigger house, but it literally means another 20 years of work when I could use that time and income for something else. I just don't value more house that much.

In previous years people would do an extension to the house. But I've heard of 7k per square meter in AKL, so to get anything substantial done would require another mortgage.

Maybe one of those outdoor rooms with louvre roof or something will keep family happy and I can save up for that. And or bribe them with a trip to Fiji.

by Yvil | 26th Jun 23, 3:08pm 1687748903

Good on you for almost having paid off your mortgage! Do what makes you happy, if you don't want to move, then don't.

by donny11 | 26th Jun 23, 3:43pm 1687751020

I know some people that did a villa extension that cost 1.2 million. It was beautifully done, no corners cut and included one of those tiny urban pools, However all in all they only added about 60sqm to their house....

I'm in the same boat. Tentatively looking for an upgrade. But for what you pay and what you get by way of upgrade the numbers do not stack up. Better off just spending the "upgrade money" on enjoying life, restaurants, overseas trips, new toys etc. I feel in Auckland you are better off to use the space you have more efficiently than pay for more space. Given the cost of more space (the upgrade).

My latest ploy is to buy a removal truck and park it on the street for extra space. Seams cheaper than upgrading the house. Local government also provides you with free space for you to park your truck. My neighbours will love me.

by rolande | 26th Jun 23, 5:02pm 1687755727

I guess some people put a sign on their truck and then park it on the main road in front of their shop.

by rolande | 26th Jun 23, 9:37pm 1687772222

20k per square metre? I know it's probably high end. But wow.

by starrider | 27th Jun 23, 9:37am 1687815470

$20k per m2 is commonly called a RIPOFF. Unless it was floor to ceiling Italian marble or similar. They would have been better off building a second dwelling or simply buying another home (like a bach or an apartment).

That builder would have been laughing all the way to the bank. They probably pocketed a sweet $500k profit for 4 months work.

by interesting1234 | 27th Jun 23, 11:51am 1687823511

Sounds more like the purchasers didn't question the bill appropriately. I know of someone who got itemised quotes in the last year for a reno and grilled each and every quote for excessive crap that was in it, then gone with the most honest and realistic builder. Most of the builders couldn't explain much of what they had put in their quotes, because they were already rorting every other client.

by Esprit | 27th Jun 23, 12:39pm 1687826365

I'd have been mortgage free on my first home last year (bought in 2013) but we borrowed more to build a 115sqm extension turning our 218sqm 2 bedroom place into a 328sqm 4 bedroom family home (I have a 150sqm internal access garage, so that skews the sqm numbers, the house part was a small 2beddy). All up cost was $620k so $5.3k/sqm. That sounds like a lot and ours was of higher-mid-range quality (very nice but not extravagant) but for that we completely relocated the kitchen and renovated, re-clad and double glazed the existing house.

I project managed and did all the plumbing and drainage work and built/installed the kitchen so would have been probably approaching $680-700k. That was 4-5 years ago though so with building inflation you can probably add another $150k-200k to that figure now for the same job.

It did mean probably another 10 years or so of paying a mortgage, but it turned my bachelor pad into a family home we can stay in and raise our family in long term. It also meant I got to keep my garage, which I'd have struggled to find anywhere in central-ish Auckland

by Nellbell | 26th Jun 23, 2:33pm 1687746810

Interesting data Gregg. A bit more proof of the “broken” market. Here in Wairarapa:

lower quartile house price…. $400,000

median house price…. $440,000

Nothing at all is selling except the cheapest houses.

by Nzdan | 26th Jun 23, 3:01pm 1687748471

Have noticed some desperation in the Ray White Wairarapa weekly email rounds. Up until February this year the subject line was "Weekly Listings Update". Now it's "BEST VALUE properties are right here!!!".

The content has also changed. They used to just send an email showing the latest properties. But by early February that had grown from 2 - 3 properties to 12 to 15. The email is now broken into "Latest Listings" and "Last Week's Listings".

by huttman | 26th Jun 23, 4:34pm 1687754060

the killer of the Wairarapa is not the house price but the council rates.

by Nellbell | 26th Jun 23, 6:48pm 1687762105

Totally agree, some amalgamation is needed here for a number of reasons.

by HouseMouse | 26th Jun 23, 5:53pm 1687758795

The slump in the regions is well behind Auckland and Wellington

by IT GUY | 26th Jun 23, 6:03pm 1687759382

Watch Turangi crash

by Averageman | 26th Jun 23, 2:43pm 1687747437

High interest rates and DTi are a great combination. Laughed when reading a recent investor meeting were presented the impact and non of them had never heard of it or understood the impact. Final paragraph..."I will buy now to avoid". No thought that on the rollover of any loan it will apply to the lending.

Some people really need saving from themselves.

https://www.oneroof.co.nz/news/43820

by Yvil | 26th Jun 23, 3:10pm 1687749002

Good on you for being interested in the "investor meetings".

by malamah | 26th Jun 23, 3:21pm 1687749677

Stopped reading after "With the house price slump at its end point".

There's always a logical explanation to an illusionists trickery. In this case, it's that they claim they know something but really have no idea.

Guess the next several months of trending HPI will make it clear whether it's finished or not. My reckon is that it has not.

by Yvil | 26th Jun 23, 2:47pm 1687747652

Hi Greg, what a great idea to assess the affordability of existing home owners to upgrade to a better house, well done!

by Eschaton | 26th Jun 23, 2:54pm 1687748055

You need to factor in the age at which people purchase their first property.

by SND | 26th Jun 23, 3:13pm 1687749232

This is spooky to think even people who bought 10 years ago, who (potentially) made huge capital gains, still need to borrow more than what they paid for their former house, and dedicate more than 25% of their after tax income, just to buy an average house today.

Should we really rejoice at that situation?

by Yvil | 26th Jun 23, 3:19pm 1687749557

Well these home owners could sell and rent and just keep, invest or spend their "deposit of between $359,000 and $381,000 (depending on whether they purchased their first home with a 10% or 20% deposit)". I think that's something to rejoice about !

by malamah | 27th Jun 23, 1:39pm 1687829988

Where does that money come from I wonder.

by Yvil | 26th Jun 23, 3:16pm 1687749362

The national lower quartile selling price increased from $275,000 in May 2013 to $580,000 in May 2023 and that's after allowing for the decline in prices since the lower quartile price peaked at $670,000 in November 2021. Between May 2013 and May 2023 the REINZ's national median price doubled, increasing from $390,000 to $780,000

Sure looks close to a doubling of prices in 10 years, despite the drop over the last 18 months.

by malamah | 26th Jun 23, 3:45pm 1687751151

Meanwhile wages are up ~50% in the same period (loose research here), I'd suggest based on that in a functional market today we'd have the buying power for a lower quartile of around $415k. Perhaps lower if rates persist or go higher. We'd have to wash out all of the cash sloshing about in the private sector first though - seems to be a lot of it out there.

I'm not suggesting I think that's where the housing market will end up. I have no idea. Long ago predicted 50% real decrease, and I stand by that still.

by upquark | 26th Jun 23, 10:02pm 1687773735

This graph suggests close to 50 % off the peak for NZ if we consider UK as a worst case scenario. UK 'real' prices are similar to what they were in 2007. Here is another plot that's informative. It shows % per anum price movement by quarter. This graph rarely goes negative for long.

by Nzdan | 26th Jun 23, 4:32pm 1687753969

True. That's probably due to the 2 year fixed mortgage rate falling from 5.5% to 2.5% over that period.

So now the 2 year average fixed mortgage rate is 6.5%. What do you think will happen?

https://www.interest.co.nz/charts/interest-rates/fixed-mortgage-rates

by Yvil | 26th Jun 23, 4:44pm 1687754644

We're talking about a 10 year period NZDan, interest rates being temporarily at a high of 6.5% will drag prices down further over the short term, but it will have very little relevance over 10 years. In 10 years time, if you look back at an interest rate chart, you will see a short sharp spike in interest rates followed by an equally abrupt drop back down.

This will be the case not because I say so, but simply because the world being submerged by immense debt, cannot cope with interest rates at current levels.

by Yvil | 26th Jun 23, 4:52pm 1687755172

It's actually much more likely that house prices in 10 years time will be 5-10 times higher than today, not because they have increased in value, but because money has devalued, meaning that a loaf of bread will probably cost NZD 50. So not really better off in a way, except if you have a mortgage, because your mortgage of say 1 Million today will by then, be no more than your annual salary.

by malamah | 26th Jun 23, 5:32pm 1687757531

If that level of inflation is caused by government spending on productive industry, then that would be great news! 1250% CPI inflation ($4 loaf of bread anyone?) driven by wage increases, ~750% HPI inflation (7.5x). So a real 40% decrease in house prices from here.

by CN - new | 27th Jun 23, 2:52am 1687791169

by Yvil | 26th Jun 23, 4:52pm

Let's put some numbers to this:

10 year returns of the following scenarios:

1) house price in 10 years is 5 times today

House price of 1,000,000 today

House price of 5,000,000 (5x) in 10 years is annual growth of 17.46% p.a

2) house price in 10 years is 10 times today

House price of 1,000,000 today

House price of 10,000,000 (10x) in 10 years is annual growth of 25.89% p.a.

by Solid_Granite | 26th Jun 23, 6:24pm 1687760683

So we'll lower interest rates to avoid any sort of crash or recession?

by Yvil | 26th Jun 23, 8:22pm 1687767754

Countries will have no choice Solid Granite, governments are broke, the USA, NZ and many more cannot repay their debts China is in crisis with huge property developers falling over. Banks are insolvent if they value bonds, commercial and residential properties are their correct valuations of today (and stocks soon). Families will follow soon. I'm sorry it's a terrible picture but it's today's reality.

by Nzdan | 26th Jun 23, 7:16pm 1687763790

Very chance rates could go down again. But how will that support a doubling in 10 years? The last "doubling" happened when interest rates fell to 2.5%. How would house prices double again from then? A $500k mortgage at 2.5% = $2k per month. If you dropped the interest rate to 0.1%, then your repayments would be $1.4k per month. Hardly supportive of another doubling cycle.

Note, it would be disingenuous to call it another "doubling" event if rates fell back to 2.5% and prices doubled, because that would be just unwinding a fall.

by Yvil | 26th Jun 23, 8:17pm 1687767431

See my comment above at 4:52

by Nzdan | 26th Jun 23, 11:54pm 1687780441

Right, I glazed over that comment. So yes, nominal house prices could double in 10 years but everything else including wages will also more or less double, where housing as a means of generating "wealth" over and above say returns in a term deposit is no longer viable so people won't be parking cash in housing.

As you mention, the debt will be inflated away which is a good thing for young borrowers.

by K.W. | 26th Jun 23, 4:45pm 1687754734

But first they have to pass the mortgage servicing test at 10% interest rates. And have enough disposable income to qualify for the mortgage, which is difficult to do when you now have kids to support. Which is why upgraders are disappearing from the market, they are locked in to their existing mortgages because they don't qualify for larger loans.

The calculation also doesnt take into account upgrading the type of home or location. The lower and median prices include apartments, cross lease units, and multi site townhouses, which lower the median price. But someone upgrading from a small flat or townhouse isnt going to want any of those. So what is relevant to them is the price of a free standing 3-4 bedroom home, with a good backyard and a double garage. So I would suggest they would be paying higher than the median price for that kind of dwelling. As for location, well now they have kids they need to be in a good school area, so again they will be paying more than the median price to do so.

by Crazy Horse | 26th Jun 23, 4:47pm 1687754844

All part of the plan K.W. ....drain as much money out of the economy as possible. Then assets, goods and services have to come back to realistic values, as compared with incomes....and the economy can finally grow and expand into other areas ......beside residential housing.

And why do we hear not much about NZ commercial property ....I wonder who is "supporting" that with so many working from home ? I know of companies sub leasing to other parties, but there must be a lot of empty office space

by malamah | 26th Jun 23, 5:26pm 1687757184

Some office conversions in Wellington. Though advertised as "below market rent", if you actually check, they're above the market rent listed on tenancy.co.nz. Wonder who would pay $800pw for a small 2br apartment in an office. I'd rather loan a cool $40k for a converted van and live in that.

by Yvil | 26th Jun 23, 4:51pm 1687755103

"The calculation also doesnt take into account upgrading the type of home or location"

Yes it does KW, Greg makes it very clear that his figures are taken selling a lower quartile house and buyer a (better) average house. In other words, indeed upgrading to a better home or location or possibly a bit of both.

by K.W. | 27th Jun 23, 3:51pm 1687837887

Owning a 2 bedroom apartment in the city and buying a 3 bedroom apartment in the city would be an example of simply moving quartiles. Owning an apartment in the city and buying a 4 bedroom free standing house in a good school area is not simply moving from the lower quartile to the second quartile. That type of property is more likely to be in the third quartile. So no, the example doesnt take account the typical home that an upgrader is looking for, which is a lot more expensive than the second lowest quartile prices.

by HouseMouse | 26th Jun 23, 5:55pm 1687758911

Great comments

by kwbrn | 26th Jun 23, 7:15pm 1687763704

With the current market I think there is a much better chance of making a conditional offer on a new home. Would also suit people who want to move to a new area of move from country or lifestyle to city living.

by starrider | 27th Jun 23, 10:32am 1687818727

I think the current turgid property market is still moving due to folks selling and buying in the same market (as the drops don't really affect people when buying and selling in the same market).

We have been actively looking, going to open homes/viewings etc for the last 8 months. Almost every property we viewed had an accepted offer, that had fallen through due to the buyer not being able to sell their home (expecting Nov '21 prices when selling). Lots of vendors then fixate on that first offer price expecting the same or better, failing to realize that the failed offer was based on fantastical numbers that are no longer achievable.

Of the properties that we have put unsuccessful offers on, or viewed, only about 20% have ended up selling. The rest have been withdrawn or continue to sit on the market. A few switched real estate companies hoping for a different result - yet keeping their expectations beyond the market - they continue to languish.

Inflation is expected to be over 7% at the next release. I think the next inflation number will dictate what will become of the housing market, a higher than expected CPI number will likely result in large scale price drops as the OCR will need to be raised. Alternatively, if the CPI number is less than expectations, we could be looking at elevated housing transactions (but not likely to see any price increases till 2024 at the earliest.

The savvy FHB's will be increasing their downpayment savings, while renting at well below ownership costs (It is still 30%+ cheaper to rent than buy in most cases currently).

by Crayhunter | 27th Jun 23, 12:02pm 1687824150

Few comments about housing vs Bitcoin on here.

I've owned BTC for ten years and every year has outperformed NZ housing and has no counter party risk. I have 3 children and all of them have hardware wallets, they understand how Bitcoin works and they understand that the NZ housing ponzi is a fools errand.

Sooner or later the younger generation are going to switch to the better performing asset, its only a matter of time.