Saving a 20% deposit for a lower-priced home in Auckland would take from 6.3 years to 8.7 years for typical first home buyers on median incomes

Saving a 20% deposit for a lower-priced home in Auckland would take from 6.3 years to 8.7 years for typical first home buyers on median incomes

By Greg Ninness

Typical first home buyers in Auckland would have to save for an average of more than seven years to get a 20% deposit for their first home, according to's latest Home Loan Affordability Reports.

In Wellington, typical first home buyers could save a 20% deposit in just over four years, and in Canterbury it would take 3.8 years.

The figures show just how far out of reach home ownership is becoming for aspiring first home buyers on average wages in Auckland.

The Home Loan Affordability Reports track the median take home pay of couples aged 25-29 in each region, if both were working full time, and then estimates how much money they would save if they put aside 20% of their after tax pay each week, and earned interest on their savings at the 90 day term deposit rate.

It then calculates how long it would take them to save a 20% deposit for a home at the REINZ's lower quartile selling price in each region (see table below).

Number of years it would take typical First Home Buyers* to save a 20% deposit on a lower quartile-priced home 
Region Years
Northland 4.2
Auckland 7.3
Waikato 4.1
Bay of Plenty 4.8
Hawke's Bay 3.4
Taranaki 3.1
Manawatu/Whanganui 2.2
Wellington 4.1
Nelson/Marlborough 4.4
Canterbury 3.8
Otago 3.0
Southland 2.0
All NZ 4.0

That shows that it would take 7.3 years to save a 20% deposit in Auckland, where the REINZ's lower quartile selling price was $665,000 in May, compared to just two years in Southland, where the lower quartile selling price was just $174,000 in May (see table below for all regions).

Within the Auckland Region the cheapest places to buy a first home were the Papakura and Franklin districts on the city's southern fringes, where the lower quartile prices were $570,000 and $575,000 respectively in May.

That means it would take typical first home buyers 6.3 years to save a 20% deposit for a lower quartile-priced home in Papakura or Franklin.

The most expensive area for first home buyers in Auckland was the North Shore, where it would take 8.7 years for typical first home buyers to save a 20% deposit on a home at the North Shore's lower quartile selling price of $792,500.

According to the Home Loan Affordability Reports ,the median after-tax pay for Auckland couples aged 25-29 is $1590.83 a week.

If they saved 20% of that each week ($318.17) to put towards a deposit, they would have $1272.66 left between them ($636.33 each), from which they would have to pay all of their living expenses including rent, so they wouldn't be living a lavish lifestyle.

That assumes they have no children and do not receive the Working for Families allowance and do not make KiwiSaver contributions or student loan repayments, which would affect their ability to save for a deposit.

Welcome Home Loans

However first home buyers may be eligible for a Welcome Home Loan which would only require a 10% deposit, a scheme which is administered by Housing New Zealand, although the mortgages come from a mainstream bank or other lender.

Separate Home Loan Affordability Reports are available for each of the following regions and cities (click to view).
Northland Region
Whangarei District
Auckland Region
Rodney District
North Shore District
Waitakere District
Central Auckland District
Manukau District
Papakura District
Franklin District
Waikato Region
Hamilton District
Bay of Plenty Region
Tauranga District
Rotorua District
Hawke's Bay Region
Napier District
Hastings District
Gisborne District
Taranaki Region
New Plymouth District
Manawatu/Whanganui Region
Palmerston North District
Whanganui District
Wellington Region
Masterton District
Kapiti District
Porirua District
Hutt Valley District
Wellington City
Nelson/Marlborough Region
Nelson City
Canterbury Region
Christchurch District
Timaru District
Otago Region
Dunedin District
Queenstown-Lakes District
Southland Region
Invercargill District
All New Zealand

To be eligible a couple would need to earn less than $130,000 a year between them (before tax), and in Auckland the maximum price of their property they were purchasing would be $650,000 for a brand new home or $600,000 for an older home.

The gross income of the typical first home buyers used in the Home Loan Affordability Reports is $101,400 a year, so they would be eligible for the Welcome Home Loan, allowing them to buy a home for up $650,000 if it was brand new, or $600,000 if it was older, with a 10% deposit (up to $60,000 or $65,000 depending on the age of the property).

However there are some disadvantages to such an arrangement, the main ones being that it increases the size of the borrower's mortgage from 80% to 90% of the purchase price, which would also increase the amount of their mortgage payments.

It is also likely to restrict where they could buy a property because Pukekohe and Franklin are the only districts within the Auckland region where the median selling price is below $650,000, and many, if not most of the new homes that are being built are priced at the middle to upper end of the market, putting them beyond the reach of most first home buyers.

So it's likely that even if they qualify for a mortgage with a 10% deposit, they may have difficulty finding a home that they would want to live in and that they could afford.

Separate Home Loan Affordability Reports are available for each of the regions and districts listed in the box at left.

To read them click on the areas from the list (at left) that you are interested in.


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Clearly, the horse has bolted in Auckland.

Once in the Auckland market, it pays to stay put.

Apartment living is almost certainly the way of the future for Auckland (and also Wellington). Stand-alone houses close to the city are becoming prohibitively expensive. More and more are being sacrificed to make way for developers and the apartments they build.

It all seems a great pity to me.

Very much so. The young couple and young family categories state Auckland region as unaffordable due to exceeding 40% of income for mortgage repayments. It still doesn't look good for the future.

Hi Dictator - is there somewhere I can find the figures for acceptable rent/mortgage to wages ratio? Am pretty sure it is 40%, but where can I get the proper stats...

I'm not sure that there's a source justifying the 40% figure. In the past I've pointed out that I disagree with 40% and instead recommend 25-33% as affordable. The links below talk about 30% as a threshold. The link at the very bottom contains a historical reference to housing cost thresholds which appears to be the origin of the guideline.

Here is an official link for households paying more than 30% from Statistics NZ.

Here is an article that has a reference to a benchmark set in the New Deal Era in the US which set rent thresholds.

Traditionally housing costs of up a third of income have been considered affordable but nearly all of those measure gross income ie. before tax. The trouble with using a gross measure is that it doesn't take into account the effect that rises or falls in tax rates can have on housing affordability. That's why's Home Loan Affordability Reports use 40% of after tax income as the threshold figure to determine affordability.

When I recommend 25-33% I'm referring to after tax. A lot of the traditional measures make little sense. Imagine paying 33% of your gross income on housing and being in one of the old tax brackets like 66%+ tax. That would be insane.

e: Note that I take a more frugal approach to housing costs as I believe people should be diverting their money to more useful objectives.

I agree Dictator... Imagine how well NZ would be doing if that were the case. What's happening now is people are borrowing on the mortgage (ie going into more debt) to buy the pair shoes, rather than having the money (because they pay less on their housing) and buying outright... Banks laughing, National laughing, potential for disaster - massive!
ps thanks for those links

I think a lot of people start by buying too much house for their needs. The mortgage is larger and the percentage of income is higher. Then it's easy to fall into the trap of pay down some of the mortgage then just borrow more. The banks are still rather loose, especially compared to the US where they are very paranoid. Payments creep up and people end up with 50% of income going into debt servicing (common here and extremely common in Australia).

The younger people are the worse paying 40% of income is. If you pay 40% for housing + ~10% for student loan payments + 15% retirement savings to main your lifestyle at 65 that takes 65% of your income. That gives you 35% for food, transport and lifestyle expenses. I probably went a bit light on retirement savings but it paints a picture where people don't really have a lot of financial room to move (although most don't realise it and just spend).

One of the best conversations I read on this site - although Dictator i would set 30% of take home pay as the cap for housing costs.

This is something the investors that contribute regularly to this site don't like. I have suggested that rents should be regulated at a max of $200 per week for a whole house (between 25 and 30% of the average take home pay, individuals, not couples). This would in one hit, make a huge difference in housing, poverty, particularly child poverty, pressure on wages, and the overall economic money-go-round and thus the overall health of the country. Not to mention stop the government subsidising investors to the tune of better than $2 billion per year. Imagine what they could do with that money instead?

That's just crazy and basically communism. Every house would have to be the same. Bring back Soviet architecture?

We call them cookie cutter homes in Nth America & there's very good reason to build them
It reduces the cost while keeping standards high.
NZ hasn't got a clue how to develope large communities economically
Basically it's cottage industry building not on any scale of efficiency
Nothing will change as long as the building supplies duopoly remains
No government will upset the big two,

"This would in one hit, make a huge difference in housing, poverty, particularly child poverty, pressure on wages, and the overall economic money-go-round and thus the overall health of the country."

So correct.
But not how you think.
It would absolutely destroy the housing environment.
You think availability and quality of housing is bad now. It would be so much worse with some silly rent cap.

Rent caps are stupid. They have never worked and never will, unless they are non binding.

"This would in one hit, make a huge difference in housing, poverty, particularly child poverty" it sure would, it would increase homelessness tenfold

Extremists all of you. You claim all or nothing - a typical investor position when your position is under threat. A rent cap would work because once in place the market would again take over and poorer houses would rent for less than a good one, and leave money in the hands of those who need it. Homelessness? Maybe but only because the landlords who like to crow that they are providing a social service are shown in their true colours by refusing to rent properties, because they cannot bleed their tenants white. Rent caps haven't worked because the Governments have failed to the other rules required to make them effective, such as standard of housing, no land or property banking and so on.

Rent caps in my city so why not in Auckland ?
Politics again just like the govt protects the building supplies duopoly
NZ is too small & so everyone knows each other in big business
The big two building supplies companies are well protected from any outsiders

True. Time to intensify inner city suburbs with multi-level apartment blocks and improved abilities to commute via public transport.

Rick it's the right idea but it won't work in NZ because the cost to build is too high
Hence even a shoebox apartment costs too much per sq ft

Again why you probably need a party with a real Build program and the ability to use bulk supply arrangements (and tendering) to break the current duopoly pricing private builders are subject to. I.e. use the Pharmac model.

We don't build many apartments, because stand alone houses close to the city are prohibitively expensive and therefore less profitable to acquire for apartment development than comparable locations in other cities.

The future is to leave Auckland.

Clearly the horse has bolted.

Leave Auckland if you're over 40yo and your household net equity is less than $3m. Auckland is not a place for you as you're moving towards retirement.

Glad to see DubleD talking nonsense again
Makes my visit here a good laugh
How did you come up with over 40 ? Less than 3 million ? It's so categorically bizarre!
So many people have just reached the crest of success over 40
As for choosing to live in congested Auckland with its massive per capita immigrants I'm happy to then agree no place for me by choice

Glad we got rid of the likes of you.

So,what proportion of Aucklanders would be both over 40 and with less than $3m of equity? 50% perhaps?
Let's say that it's on;y 30%,that would be around 500,000 people.Let's say it's only 20%,that would still mean around 300,000. What would happen to Auckland and its property market?
I suggest that you stop to think before inserting your foot in your mouth next time.

$3m is close to nothing these days for a couple. If you're 40yo and still struggling to get to $3m net equity you have to ask yourself what you have been doing in your life to not get you to where you're supposed to be. I'd say 5% of Auckland over 40 population should leave immediately!

Where is this 3m net equity Double GZ

Mostly in the properties we all own.

You are not serious.
No one is stupid enough to believe that.

The banks believe in equity.
One can have a fairly good idea how much a property is currently worth within a 100K. Sure next year may be different but right here and right now a good property or even a not so good one is easy to sell for just a little less than a fair price.

I think you'd be hard pressed to find any bank that believes that the average couple in their 40s has net wealth of $3mil.

But hey, if you want to believe that, I'm not going to say you can't.
Like I said previously, though, you'd have to be pretty stupid to genuinely believe that.

I certainly think only a very small percentage of Aucklanders would have a net worth of over $3mil. I think Double-GZ is being a bit extreme here. What I was getting at was that it is reasonably safe to assume a net worth figure in dollar terms in property at any one time give or take a couple of hundred k.

Well done ZS, yet another case of your trademark "oh, I wasn't arguing that, I am talking about this other completely arbitrary and not yet mentioned point."

Who was contesting that you can't calculate net wealth with an amount of accuracy?

I thought you were contesting that. These misinterpretations occur from time to time when people aren't being very clear in their communications.

And what is unfair on young and upcoming Kiwis is the expectation that $3M+ net worth individuals should be paid an unneeded pension by the young, while they haven't passed on the other parts of NZ society that were typically part of the social contract, i.e. well-managed housing outcomes.

The young have every right to get angry and take action.

Nyad it's really just DubleD & the guy from P&T AKA Zachary believing that equity is like profit
The both of them think just because a bank will lend them money based on their equity they have made a profit
They fail to understand that the bank will take the entire house from them if their equity should fall
Or at least request an injection of capital from them.
These two believe in perpetual motion not property cycles
Their comments are typical of spruikers I would see in the papers in the 1970s & 80s before the 1987 sharemarket crash.

Only 21-22 percent of Auckland 520K households are mortgage free, most of those are over 70 years of age. The median Auckland price is 865K and there is the small problem of 135-140 Billion in Auckland mortgage debt.

Wow 135-140 Billion in Auckland mortgage debt, and 99.99% of you lot want the market to crash LOL!

They all seem to be looking for problems where there are none.

That would be my advice Leave Auckland
Life's too short to waste time

It's very easy to fix it. To put the horse back in the paddock, just bring back land value tax.

1.5% transfer tax on all property & over 1% annual assessed property tax works even without capital gains tax because people must factor in the heavy cost in taxation to hold any form of property. Trophy properties in exclusive Auckland suburbs have been grossly under taxed for decades.
Working class suburbs more than contributing their burden & subsidizing the revenue shortfall
Worse the city has used borrowing to make up the shortfall
Yes the city of Auckland is inefficiently run but it is also not collecting enough revenue from the people ensconced in high end real estate within its city boundaries

This is what the youth need to understand and get motivated to drive for. It's their only chance to rebalance the misbalanced situation the selfish among the older generations have created.

Otherwise they'll be forever stuck paying rent and a completely unneeded pension to entitled feeling multi-millionaires.

Except for the high body corporate fees. Also loss of control, and the risks of living in towers (eg London fire etc). As well a other probelms associated with apartment living.

It all really depends if we want NZs populatoin to grow, so the quality of life decreases eg. apartment living can also mean a lower quality of life, as no garden, more noise etc. Or do we each want our own house and small plot of land, but have a smaller population. I know which one I would prefer. Also apartments don't usually get the same sorts of capital gains as a stand alone dwelling.

Just watch out that you aren't deceived like Jacob and the thing you've worked for seven years for isn't switched out for an older model I guess.

Honest question: In a large (over 1 million inhabitants) and growing city, is there a one-way trend towards ever lower home ownership that is irreversible ?
I would love to hear all the commentators opinions, not so much on the morality whether this is right or wrong, but rather if you believe lower home ownership is inevitable or not ?

It's a tough question, and tough to not write an essay about it. If we maintained the same regulatory environment and tax structure I think that the move away from home ownership would continue.

I do think there will be changes and if not riots leading to property destruction. No politician can ignore the opinion of a large number of people in the long run. Whatever changes are made either housing becomes affordable or we have a housing construction boom leading to massive oversupply sticking property investors/developers with a large number of households. Massive oversupply would bring prices down but someone would get burnt and lose money in the process.

The bottlenecks we see in construction will change over time but it's a matter of what sacrifices are going to be made. I'd say lower house ownership is not inevitable in the long run (but that doesn't mean things will necessarily change in our lifetimes).

Sorry "areyouserious" your link shows home ownership from Statistics Singapore, what's your point ?

You asked if for a large city (Singapore is a 5 million plus city state) is possible to turn around home ownership rates. The Singapore example shows they are sitting on 90% up from less than 60% in the 1980s. So i'm saying yes, I think its possible.

Lol, Yvil didn't want a discussion with opposing views, just Zachary, Gz and the rest to chime in and agree with his world view.

That is why he had no idea what you were talking about, when directly answering the question he 'honestly' asked.

I'm sorry you feel this way "the Joneses" My question is not antagonistic, I'd be interested in your opinion as well

Yes, lower home ownership is inevitable.. if the government is intent on continuing to tip the scales in the direction of those holding the wealth. They do this by allowing free flows of foreign investment and taxing income rather than capital. Those policies will eventually result in fewer and fewer owning more and more. Like a game of monopoly. The system is working as per how those with wealth designed it.

Thanks for clarifying "areyouserious"

Yes. It's called "feudalism."

Listen to the chatter

The following is happening in Auckland now

Conversation on the radio last night discussing the possibility that should TNZ win the America's Cup where would the defenders hold the regatta

Someone suggested Queenstown and lake Wakatipu where all the rich and famous blue-bloods are

Someone else laughed saying there is nowhere to stay because the accommodation facilities, motels, hotels, backpackers cant get staff because potential staff can't get rental accommodation in order to take on the jobs

Queenstown is a small town with a pitiful economy of scale, stuck between mountains and lake with no land to grow on. It is no wonder then that it constructs homes much faster than Auckland, because Phil Goff planning.

In 3 years if we need to defend the Cup, Queenstown will make way more sense than Auckland.

Lake Wakatipu or any lakes are an impossibility, just ask the Swiss who won the AC (with Russel Coutts) then defended it. They wanted to host it on Lake Geneva, the biggest lake in western Europe at 100km long. Couldn't be done, the AC rules excludes it

Apparently they have changed the rules and can now be done

I think it was PJ O'Rourke who suggested holding the AC at Aspen, on grounds that watching them piddling about on the water was dull as anything, and they'd go like a bitch downhill.

It won't be defended on fresh water, it's the bloody America's cup look at the history.

And our master says that New Zealand is prospering.

Forget to add the tag line.... prosperit for few. Rest go and take a jump in sea.

8.7 years to save for a deposit? NONSENSE! Only if you were living rent free!!

While the numbers make sense, it is not necessary true for all FHBs in Auckland to take that long to save up. Simply because you are not going to buy your first home in those higher end suburbs. I always tell people when you buy your first home, start small, something affordable. My first home was a 2 bedroom unit in Mt Wellington. According to homes, current value is mid 5s. with 10% deposit, 15% or even 20%, it is very manageable for someone who has a saving habit.

Its a bit different these days without inflation and wage growth. If you buy that two bedroom unit now and pump most of your income into the mortgage, the chances are that in 10 years time you won't be earning much more (and will probably have kids to pay for as well), so you will be stuck in that 2 bed unit for a long time. Is it really worth having no life for 20+ years just to own a small unit?

Even if you can climb the bottom rung of the 'ladder', it's also much harder these days to get to the next step. Bring back 20% inflation!

I have to agree. A lot of second home buyers are struggling to upgrade and are now stuck on the first tier.

Yes their $300k property has gone up 20% but so has their intended $500k property. So they now need an extra $40k that they didn't before.

That example is NP prices. Auckland prices just hurt my brain.

They use the lower quartile house price to determine the deposit amount, and there won't be any upper class Auckland suburbs that would have any housing that's around the lower quartile range.

When did you buy your first home, and what was the house price to income ratio? Also, $550k for a 2 bedroom unit is $250k too much.

I was always told that two can live as cheaply as one. In theory a couple should be able to live on one wage and save the entirety of another if they are determined. This means they can save a deposit in less than two years.
Live with olds or share a room in a rented house for a couple of years or more. Cycle to work, shop in the op shop. Take a second job each. That sort of thing and a deposit can be saved in as little as one year.

Then do that for the rest of your life while you pay the mortgage?

I have practically had three jobs for the past twenty years. I have my normal day job, I'm also an on-call engineer and grab all the overtime I am offered as well as home maintenance guy, painting and repairing houses.

but, but you are in your early thirties, or so you keep telling us... so since you were 12, you were an engineer? What train did you drive? See what I did there? Can't believe a word you type!

I believe it is Double-GZ who is in his thirties still. We are not the same person. I am a late Boomer. My rather grand job title is Senior Systems Engineer. I started work as a humble telephone technician (PO linesman) in 1977. I know I come across as a lot younger than I am.
I would say I have been pretty lucky though. I left school after the sixth form and got into office equipment after a couple of years. Office equipment evolved into computer systems. A lot of work is required to be done after hours so there were many opportunities to OT especially after the turn of the century. I have been in the same job for many years and still get good penal rates like double time for what can be very easy work. I've also had a company car most of the time. I grew up in a culture of DIY so have acquired a lot of tools and skills for home maintenance.
I know people accuse Boomers of being a lucky generation and it is true but it has always been like this in human history. I figure if Prince Harry can be privileged by luck of birth I can be too. Anyway I work like a Trojan so am not really too privileged. My wife calls me a slave and longs to own a new house one day.

I have just turned 40 this year and thankfully I'm not struggling to buy my first home in DGZ as I bought my family home over 8 years ago. I work in a communication company in the CBD as a back-office support worker.

the boomers are a exception in history. They have lived through the most abundunt period in history ... when we could burn fossil fuels like there was no tomorrow & resources were abundant. Growth was a given.
Any idiot could make a go of it.

Now the only growth is in human population and debt load. The available pie per person is decreasing and our previous debt promises (& pollution etc) are catching up with us. Add in a dash of diminishing returns and its obvious theres very hard times ahead.

They also sit between generations that paid higher taxes that gave them much - and these taxes and services now much reduced - and following generations who do not receive the same benefits. Best of both worlds, benefiting from the higher taxes paid by their preceding generations while not passing the ball on to the next.

true - the previous generation scrimped and saved and the boomers now rely on their "passive" investments courtesy of the next generation's debt load.
But its really about the energy burn & the net energy to feed growth (the tax sits on the back of this) ... Its no coincidence that there was (relatively speaking) a period of longer than average peace during the boomers lifetimes .. when cheap fossil fuel flowed out of the ground there was a period of "peace"... which was then replaced by easy debt to keep the party going.
Now its getting kinda of late.

Rick you actually understand history Sad the spruikers here are inept

They were also the first generation to really have dual family income, that isn't a bad thing and there's a way to go yet in terms of equality, but having two people in full-time work vs the previous generation of a man provider and a housewife gave them a massive lift as well, unprecedented buying power. Again that was fought for, deserved and earned, this is no way meant to be a sleight on women's rights, just to be clear, merely a statement on economic/generational differences. Nowadays we have to have dual income to be able to afford anything.

Zach is the book out yet ?

So you started at the P&T Zach ?
Did you know Mike Shipman ?

It's your youthful charm that has everyone convinced you're but a spring chicken, Zach.

Many are already doing this.

Are they now. You heard this at the BBQ so it represents reality?

Renting a room in a shared house, second jobs and shopping in op shops are hardly strange and unheard-of. That's just normal for most in their early working days.

Of course, now the second job is probably being done by a fake student, the room is the price of a one or two bedroom flat a few years ago, and the op shops have put up their prices.

I personally know quite a number of married / defacto couples living in shared rentals, some in large houses with 3-4 other people. They often try to get the main bedroom with ensuite for a bit of privacy. Even for this they're still often having to pay $300+ in Auckland - and this NOT in desirable suburbs.

I also know many who have flatmates or friends who are couples.

As opposed to your BBQ talk that suggests this is not happening...?

What happens if you dont want houses as investments. You dont want to work in your job, and you want to start up businesses.

Buying houses is not the only way to make money. But on here it seems as if its the be all and end all.

How do we get the next Rod Drury or build unicorn companies in NZ that hires thousands of people.

Hi Yvil
I believe the answer to your question is yes home ownership rates will remain lower than in the past. Is this a bad think ? Depends who you talk to, if we look at countries like Switzerland or Germany Home ownership rates are really low and they are the power houses of Europe ?? I see NZ moving more to apartment living particularly in Auckland visit Paris it's just about all apartments. So if you do not own a house what does life look like ?? If you have money management ( which you need for home ownership ) there are great opportunities to put your money into new technology stocks eg Apple made lots of people wealthy or our local Zero company. Being a renter has benefits to - freedom no maintenance, easy of moving, much cheaper to rent a nice home than own it, money not tied up in one asset class or thing. As a country we have a one eyed view that a house is a must/birth right, well I know lots of people that may have a house but have a miserable life because of the cost of it ! Also the article about taking 7 years to save for a house - when did it take less ? I saved all my working life from 17 and worked 2 years overseas to save for a house and it took me 10 years...

Really - my parents bought a house at 22 on a single below average income. I think that was fairly common back then...

What will probably need to happen is more long-term tenancy and related laws as exist in some of these countries. Germans have rented in large numbers because it's not a bad option vs. buying. Property prices haven't in the past soared because the government created the structures and policies that supported supply of homes.

The current insecurity of lifestyle that renting provides to NZers makes it a not very palatable long-term solution.

Also - not to belittle your example but the maths is different these days and there's no point us denying it.

Auckland doesn't really build many apartments (compared to anywhere), this is a moot discussion in that regard.

We have had plenty of land zoned and ready for apartments, for 20 years now, but for the past 10 years we haven't been building them. And the reason is the same reason everything else is screwed up in Auckland, we had the GFC and then our council decided to go full retard. Our land in Auckland is now prohibitively expensive to build on.

Well Shoreman, I was born in Switzerland and I grew up in an apartment till I moved out of home. I didn't see anything wrong with living in an apartment and I actually liked it. I understand the Kiwi psyche is different especially the older generation who believe in the home on the quarter acre section.
For once I agree with Rick Strauss, in order for renting to be more palatable in NZ we need better security of tenure for tenants

Yvil Shore man probably can't comprehend growing up in an apartment . It's a great place to grow up because there's a community aspect and apartment housing development is planned way better than anything in Auckland. I'm in one now until I move next month to the country. You can buy a mansion in France for very reasonable cost by the way Shoreman just not in the city.
NZ cannot build economically for a number of reasons not just land availability
The fact NZ had a extremely smart PM in Key who failed to address the issue is a tragedy in itself
NZ can't even build terrace homes efficiently I think it was 600K for one in Hobsonville in the govts affordable home scheme ?

I think realistically after the last nine years we are forced to conclude National were never particularly interested in achieving housing affordability. They've said multiple times they don't want to see house prices come down, they've resisted discussing demand completely, and they've denied ever since leaving the campaign trail and getting into power that any housing crisis exists.

Their talk of wanting to urgently address a housing crisis appears to have been just cynical, dishonest talk.

Took me about that long back in 1990

If you can save $10,000 a year on the median income you are doing amazing. Median property in Auckland is close to $1,000,000. Deposit is $200,000. That's actually 20 years of saving to get a deposit. That's how long it used to take to pay off a mortgage. And that would be getting you into $800,000 of debt with interest servicing of $40,000 a year, which is more than the after tax income of the median wage. Not even close Greg.

The figures in the article are based on first home buyers buying a lowest quartile home, not the median priced one. Back in March 16 that was $673,000 for Auckland, requiring a deposit of $134,000. They're also assuming a couple both work and manage to save 20% of their combined take home pay as well. Sorry folks, no money for kids I guess.

Bizarre thing is a number of commentators have mentioned that its okay for housing to double in value approx every 10 years. So if you happen to live on the North Shore where it will take you 8.7 years to save your deposit, you live like a you know what (won't say what exactly to avoid racial based editing) for that period of time only to find yourself nowhere near your objective and have to start all over again.....the carrot just gets dangled out a little bit further....another 8.7 years of saving.....

Basically house prices and rents need to come down in value significantly or wages need to increase dramatically (or better yet a combination of both). Otherwise the next generation is, well frankly, it's %$$#@

I_O what's your view on my question above ? copied & pasted below.

Honest question: In a large (over 1 million inhabitants) and growing city, is there a one-way trend towards ever lower home ownership that is irreversible ?
I would love to hear all the commentators opinions, not so much on the morality whether this is right or wrong, but rather if you believe lower home ownership is inevitable or not ?

Depends.....the next generation of kiwis may decide that they don't want to be a bunch of greedy, self-centered darklords, in which case the demand from 'investors/speculators' will die away with boomers as they leave this earth. Natural result will be less demand on limited supply and a resulting drop in prices and higher rates of home ownership. Equally they may vote to prevent having the country sold out from under their feet to foreigners, with similar results to the previous statement. But who knows if this will occur.

So if there is a cultural shift, which I hope there is (call me an idealist), then perhaps its not inevitable.

But given how leading your question is, I take it you like that line to make yourself feel better about the situation (i.e. you don't have to take any ownership for resolving the problem?) But if it's not that, given you tell me you're not a darklord yourself, it will be interesting to see what the crystall ball you have, has to say about this?

Thanks for your opinion I O. I'm sorry you feel my question is "leading", also I don't have a "crystal ball", I was simply interested to hear what other people were thinking on the subject

The article, as a sidebar, exposes an Interesting aspect of the housing market - the Welcome Home loans scheme.

This was implemented back in the glorious Helenista days - 2002-03 - as a 'solution' to the relative (even back then) inability of the battlers to get housing finance.

The unintended consequences (which, as most textbook cases do...) only emerged later.

Picking a figure at which to pitch the loan to the aforesaid battlers, took a regional price point. Of some derivation, obviously, but most likely a median/average/PDOOMA of recent sales.

This figure ($100K for Christchurch, around $350K for Awkland IIRC) ignored the fact that property could be had at very substantially less than that figure, particularly for battler purchase - small, run-down, 'needs TLC' etc.

So it served as an instant, universal oopards pricing signal for all sellers simultaneously, at that end of the market. After all, why sell that collapsing shack, for which one had privately estimated that a canny buyer would pay no more than $183K, at less than the Glorious WH loan figure plus a Modest Profit.

Which is exactly what happened. I've related my own case here - nice work if you can get it.

If we estimate the extent to which this new pricing floor conferred instant CG to tens of thousands of low-end houses, we could say an average increment of $100K, times say 30K homes in Awkland - that's $3 billion CG.

Now divide that CG thus conferred, by the number of WH loans ever advanced: say 10K.

It works out to $300K advanced via CG per WH loan.

It also explains the precipitate jump in the rate of increase in house prices thereafter, at least to some degree. Because the reaction to the re-pricing across the board was, oddly enough - 'hey, we cannot find a house for the current WH loan limit - better raise it'. E.g.

First home buyers can now borrow up to $350,000, up from the previous cap of $280,000.

Which, unsurprisingly - set off another round of universal price increases....which set off another WH loan limit increase which.....

The Welcome Home Loan was introduced in 2003. Between its inception and May 2009 a total of 4,482 Welcome Home Loans have been settled, translating into access to home finance of over $719 million.

The above works out to $160,420 advanced per loan. Compare this with my (quite possibly chimerical) figure of $300K given away in unearned CG via Universal Higher Price Floor, to all and sundry....

And even today, who, in their right Economic mind, would sell a house for less than the current WH loan limit? Because the essential qualification - 'can you fog a mirror' - is fairly straightforward.......

My contention is that this was easily the dopiest, most economically damaging policy, invented in recent times. Markets for houses are slick on the upside, sticky on the downside. They certainly don't need stoopid Gubmints incentivising mass upwards re-pricing....but that's exactly what happened.

Simply put.
Tis the nature of a subsidy to distort the market.
WHL= subsidy.
Accom supplement= subsidy
Added together gives a massive market distortion, add the migration add there you have it.

It occurs to me that our council has a cargo cult mentality. They have seen property booms in other places and know that land becomes really expensive during a boom. So what they do is make land really expensive.

What they fail to grasp is that eventually in a boom that land becomes so expensive that you can't buy it cheaply enough to develop it and make a profit. That this is one of the fundamental reasons booms end.

Auckland Council has made land so expensive it means property development is on the cusp of ending forever.

I don't think there is any cynical intent behind council's approach to planning, to be fair. It's just systemic failure, incompetence and lack of leadership.
I've said it here before. We had systemic planning failure from 1999 when the Auckland Regional Growth Strategy was adopted. That strategy was predicated on a whole lot of up zoning that never happened, until the Unitary Plan came through.
The ex ARC and the various legacy councils had dysfunctional relationships and couldn't make it work.
I attribute at least 50% of the housing disaster to the Council's failures 1999 - 2016.
And the situation is basically impossible to resolve now, it's all too late, unless there is a land price correction or 'crash'.

Auckland's growth between 1999 and the 2007 GFC was the biggest apartment building spree we have ever seen. All undertaken on the back of lower pop growth and lower prices. The entire CBD was upzoned and has remained so, there is currently room for another 15,000 - 20,000 apartments on the area that was originally upzoned 20 years ago. But of course they aren't getting built, because our stupid unitary plan makes it prohibitively expensive.

Nowadays having made central Auckland land prohibitively expensive to develop, the council builds endless sprawls around all the exurban towns. The only "flaw" according to our council is that they are running out of money to build mega-sprawls. But they will now bring in congestion charging on the central city to make it as difficult to do business as it is to develop.

Our council creates massive sprawl from Tuakau to Wellsford and makes sure sweet FA apartments are built - calls it a compact city.

A land price correction and crash are inevitable, because the council is actively destroying the agglomeration value of Auckland city - demand is going to jump off a cliff. But that crash won't save this town, with this current plan nothing can save this town.

Huge assumptions around potential first home buyers saving 20% of their income. Student loans are a reality for many (good on you for acknowledging that). Also, big assumption around 'couples' saving together. There's single people out there, plus people who are not in stable long term relationships.

And further down the line these buyers can look forward to having a 350k mortgage or more in their 60s and 70s!
This is great for banking business.

And to top it all Andrew Little has announced he is not planning to reduce the number of PERMANENT RESIDENCE VISAS that will be issued under a Labour Government

So we continue to build 8,000 houses a year to house 70,000 to 75,000 people.

More of the same ............ what an utterly insane and shambolic state of affairs

Those decisions are made by 'the deep state', not elected representatives.

The Deep State, the Zeitgeist, International Steering Committees, something like that.

Why Zachary you believe in the Steve Bannon deep state propaganda too ? Astounding !
Nothing deep about you !

I watched Yes Minister.

Boatman, I don't disagree with the madness of immigration and under-supply of houses but your figures are not correct.
Yes there are between 70-75'000 net migrants pa into the whole of NZ
but we are not building 8'000 houses pa in NZ, over 10'000 houses were built in Auckland in 2016 and nationally 29'097 dwelling consents were issued in 2016 (source Stats NZ consents & population).
So to be accurate we are comparing say 72'000 net immigrants with 29'000 new building consents. If 25'000 of the consents end up in completed dwellings, that gives a ratio of 2.88 new immigrants per new house (72'000/25'000) which, to my surprise, is actually ok

Zachary, remember this listing at 36 St Vincent Avenue, Remuera?
Sold tonight at the auction - 7 bidders, a bit of a frenzy. I will disclose the price soon...but guess how much it went for?

I reckon it went for almost 4mil. Just a little over the high figure.

Unfortunately no. It only went for $3,700,000. Mind you it is just a dated 2-bed 1-bath house with 1-garage, and in the south side of Remuera Rd but it is within DGZ nonetheless.
Here's the video: