Home Loan Affordability Reports show people should have no trouble moving on to the second rung of the property ladder, but first home buyers will struggle in Auckland and Queenstown

"Property ladder". Ladders sometimes collapse and you fall off the roof.

I see Mission Bay had a 100% increase in the median price in the last year. Can someone please cut the grass at 102 Kohimarama Road! The multi million dollar house is still derelict. The house is rotting away and in summer the Cow Parsley is knee high.

I had a look at my local affordability report. It's interesting but I have one major quibbles.

Somehow the young couple (neither of whom have a student loan or pay Kiwisaver deductions apparently) managed to earn the 2016 median income 4 years ago and save 20% of it for those 4 years to generate $59,100 for a deposit. I suspect such admirable savings discipline is pretty damn rare amongst 25-29 year olds.

Somebody told me once that a bubble about to burst is a bit like an elevator. The door is open, the occupants are expecting to go up, they are shouting to to the people outside the lift "hurry , hope in, there is still room." Then the door closes and they plummet to the basement.

The bit about a dual income couple 35-39 are clearly would have no kids. I also would like to stop talking about the property ladder. It's not a ladder it's a place to live. For FHB most will end up staying in their first home for quite some time as they will no be able to afford to move for many years. Moving to a higher quality or larger dwelling is costly.

We've had enough and are emigrating shortly. Our economy has become perilously unbalanced and unstable. Frankly, I don't want to be local when the Antipodean Mega-Bubble pops. Seems like a catastrophe best to get some distance from, whether you own Antipodean shares/housing/bonds or not.

Here's some food for thought:
If/when house prices crash, who here thinks that recent immigrants/students/work visas will stick around to pay down the hopelessly underwater mortgages that our banks so prudently granted them? Who here thinks that they will instead skip the country (and the mortgage)? I would do the same, and so would/will anyone with the ability to jump jurisdictions and save their financial lives. Our banks are going to acquire a fair amount of housing inventory. Who's buying? Crickets.

I will watch with great interest from safety afar.

Move up the ladder, that is a laugh. With the metrics I am seeing now with greater clarity, it is a climb towards disaster.

Please read all the reports and not just Auckland.
Believe it or not the property market is not just Auckland, but by most of the comments on here you would think that it was!
Seriously most people outside of Auckland don't really care if people are paying too much for their homes, but
are being penalised due too Aucklands issues.
Look at Christchurchs report and you will see that you can buy far better homes than Auckland have for half the expense, and is a far more liveable city.
The median price quoted though is on the light side though due to many of the "as is where is" prices that are included.
A median type home in an average suburb would be close to $500k.
Good article though Greg.

Keep on drinking that debt kool-aid.

It is important that people do though as it allows first home buyers to buy at the lower end of the market. The supply of houses does not match the needs of people buying. All the new houses I've seen lately have been expensive large homes. This isn't doing anything for first home buyers.

As long as the next one borrows more money than the previous one.. yes, I guess there's a "ladder".
More than "ladder" I'd call it pyramid scheme, but ok.

I went to( by chance) my first Auckland auction on site last Sunday. Ellerslie , ok street , 120 sqm home, 2 at a squeeze /3 bed , no garage but space for one car offroad. On multi shared site , usable land about 220 , room to swing detailed cat in front. Newly decorated in Bunnings/spotlight decor .Majority of residents in street elderly,all living in similar homes.Would suit couple 1/ possibly2 young children , although no one resembling those traits present. Selling for a little under 1.1 million .

I've been looking at Napier property lately. Napier has one of the best lifestyles in the country and housing is still reasonably affordable for first homes buyers. Rentals can still be purchased with excellent yields for investors. Auckland is reaching a housing crisis but most other parts of nz like Napier still offer good opportunities.

The property ladder works - I started that late in life, 16 years ago, and it looks great from here !! --- the ladder did not collapse and will not collapse!

It is obvious and a FACT to all those who are serious about getting on it , that it is still affordable ... Just like any LADDER , you cannot start from the middle or the Top - you need to start from the bottom if you don't have the dough.

Anyone claiming the opposite, either doesn't have a clue of what it is about, has no proper income or saving attitude so he's just jealous of people who do and can ... or just commenting for the sake of pushing a contrarian argument like a drunk in a bar who makes no sense at all ....
Almost half of properties sold in Auckland are still under 600-650K ... and Yes , that is unaffordable for a single average income -

I like to think of the housing market at the moment like this:

Property has made the shift to be a common investment vehicle (over and above that of the personal home). This means we should expect it to behave as an investment.

We can contrast what's happening in Auckland to what might happen on the stock market. Housing investments have two sources of return, capital appreciation, and rental returns. This is much the same as a share in Air NZ, its price on any given day will be a function of the expected future share price and the expected future profits of it's airline business.

What we have seen in the property market is a price appreciation based on the expected future capital appreciation. Rental returns (yield) has fallen relative to prices. In order for this to continue people must believe that the capital appreciation will continue. Anything different will mean either rental returns need to increase dramatically or house prices need to fall. I know which one is easier.

I don't buy that the housing shortage is as bad as everyone is making out as I think we would have seen a much larger rental return led price appreciation otherwise.

In essence prices have overshot their fundamental value (rental returns) and are now being driven by speculation on capital appreciation. Investor money flows to where the best return is therefore it's just a matter of time until the music stops and prices have a demand correction. Nobody wants to catch a falling knife.