In 25 of the 30 urban areas we track buying a first home is affordable for a couple on median incomes, but not on Auckland's North Shore - and saving for a deposit remains a challenge

The rise in the number of first home buyers reported to be applying for a mortgage is being borne out by the March update to our home loan affordability tracking.

In fact, 25 of the 30 urban areas we track show buying a first home is affordable for a couple on median incomes.

Our benchmark for affordability is where the mortgage payment isn't exceeding 40% of take-home pay (after-tax pay). That is roughly equivalent to a third of gross pay.

In fact, of those 25 currently affordable cities, in 19 of them you will need less than 30% of take-home pay for the mortgage, and in six you will need less than 20% of take-home pay.

These affordable areas now cover 70% of all housing sales.

Unfortunately, if you live in Auckland (or Queenstown) you are probably not in one of these areas.

But Auckland first home buyers are not seeing conditions getting any worse. In fact, in the Queen City, unaffordability for first home buyers is at the same level it has been since early 2015.

In Central Auckland, first home buyers need to commit 41.1% of their income, in Auckland's West it is 43.0%, in Auckland's South it is 41.1%. At the outer margins in Papakura it is 39.0%, in Franklin just 34.6%. But in Rodney it is 44..5% and the main problem area is the North Shore at an unaffordable 55.5%. All of these levels are stable.

Outside Auckland

Even though they are still affordable by our criteria, they are getting a little more stretched in some other cities. Whangarei for instance will now require 23.0% of take-home pay, up from 17.7% just two years ago.

In Hawke's Bay we are seeing similar rises, but to only 27.3% in Napier and 21.4% in Hastings.

In Wellington there are declines in affordability for first home buyers too, but the levels are still very do-able. It's 30.9% in Wellington City, 25.7% in the Hutt Valley, 29.5% in Porirua and 29.2% on the Kapiti Coast. Essentially, there is no practical affordability restraint in the Capital City for couples on median incomes. But if you need an even lighter load, first home buyers are facing just 19.4% in the Wairarapa.

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

The situation is also very do-able in Christchurch. The Garden City comes in with 21.8% of a median income for the mortgage payment on the same basis. In Selwyn it is higher at 31.1%, while in Waimakariri it is a also affordable 22.4%.

The bottom line is that for working couples wanting to buy their first home, there actually is little financial impediment in most of New Zealand. But trying to do it on one income makes it harder (of course), or trying to find an affordable house in a very high demand area like central Auckland or the North Shore may not be possible. However, these are not the types of places starter homes typically have been available - or are likely to be in the future. Compromises have always been required, including distance from work.

None of this, however, is relevant for people on low incomes who struggle to find accommodation, let alone affordable accommodation. Typically their incomes are too low to allow saving, let alone for a deposit on a house. And low or unreliable incomes are not credit-worthy for a mortgage. New Zealand's serious housing crisis for people on low incomes is not being tracked by our home loan affordability series.

The deposit struggle

Saving for a deposit is a struggle anywhere. First home buyers will need to have accumulated a deposit in the range of $35,000 (Whanganui and Invercargill), all the way up to $87,000 to buy in Wellington where lower quartile housing is more expensive. Neither Auckland nor Wellington savers could save a 20% deposit in the four years before they want to purchase. Auckland Central lower quartile house prices are now $635,000, but they would only have $74,000 available if they saved aggressively as a couple. That is just 11.7% as a deposit. A Wellington couple have a lower quartile price of $578,000 but could only save $87,000 on the same basis (Wellingtonians have higher median incomes). That is a 15% deposit.

Like the affordability measure, first home buyer couples in most other cities face a far less stressful process and most could save a 20% deposit.

Still, even in most of Auckland (except the North Shore perhaps), buying a first home at the lower quartile price will still be doable for most couples on median incomes. Which is why the RBNZ data on lending by banks to first home buyers is tracking higher.

Home Loan Affordability - First Home Buyers

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219 Comments

Yes its possible, but is it prudent to be taking on a huge amount of debt in this economic environment?

We didn't want to take on a huge amount of debt so we just saved up for our first house.

Out of curiosity, when did you buy your first house and where?

If I continue to save at the same rate it would take me 22 years to be able to buy a median priced Auckland house outright. No big deal...

Last week, in Christchurch. We saved half of two average incomes for 10 years.

Good effort. That must be very satisfying after 10 years of saving.

@ shock , if you are renting for say $700 a week in Auckland , that is equal to to you servicing your landlords $600,000 mortgage .

Why would anyone do this ?

There is no time like the present to buy your first home , or start saving for the deposit

That's some seriously dodgy maths. Add in rates, insurance, maintenance, opportunity cost of equity, risk of capital loss, buying and selling costs, future interest rate rises and the picture doesn't look so rosy.

I'd be asking why the hell would anybody buy!

Do that for another 10 years and you'll be able to retire fully income independent :)

Well done Sqaure! Congrats. Don't let anyone tell you it can't be done or you made a mistake

Haha, you sound like a Real Estate agent I knew with motivational lines like that! That's the kind of things they were posting on their media page.

Nicely done. You've got serious options now with the extra cash flow assuming you were renting before.

Hi Sqaure congratulations from me on your achievement. You had a goal and continued saving for ten long years but now, excuse the pun you're "home and hosed". We ourselves found that the first home was the hardest and then it becomes easier as you build up an asset base. You are fully justified in wanting to slow down for a while but when and if you're ready, climb in to rental property investment, you will not regret it over the long term. We know this from personal experience, don't let anyone on this website tell you anything different.
HouseWorks

Yes, step right up folks, buy rentals in Hamilton - 100% per annum uninterrupted capital gain!

Now back to sanity, well done Square. As long as you can bypass paying as much interest (dead money) as possible, you can't go wrong. It's a home where any capital losses or unlikely gains just don't matter. We saved up and paid cash for our only home 20 years ago so I admire your discipline.

Those fools who are heavily leveraged/negatively geared, have unwavering expectations of continued gains. The bank is their Landlord.

That's right it can't be possible to buy well and relatively easily add value to property - yeah right. You just have to know value when you see it and be able to see hidden potential, something others can't see. If you were genuinely interested, I would happily show you what we did turning an unwanted property to a property that we have since received numerous compliments for and now a huge income from. But I see you are still wearing your oversized blinkers that are affecting your vision in more ways than one, the OP's name is Sqaure and not Square as you have put. Keep an eye on the details Retired

"Past performance is not indicative of future results".

Couldn't see it anywhere so am I right to assume it's based on a 30year mortgage?

Yes. That is the market reality these days, sadly.

So there's no debate about whether a 30 year mortgage is a actually affordable in its self, it's just market reality.
No wonder banking is so damn profitable, they can hide a fundamental thing like that and everyone just ignores it.

Why has no one thought of just increasing the mortgage term to 40 years to improve affordability further? You know, to reflect market reality and all that.

Just wait for the retirement age to go up, i think that's what's holding it back.

And given that most people are buying in their late 20s or 30s, that's profoundly disturbing. It really leaves little margin for error over a lifetime, given that interest rates are at historic lows. We are in a fortunate enough position to have got in in the nick of time, but i would never now commit to more than a 20 year term. Just feeding the banks.

David, from memory the affordability studies went to a 30year mortgage from a 25year(?) mortgage a year or so back. Are the references to the Auckland afffordability being basically the same as 2015 based on the same 30year criterai or were the 2015 numbers on the older criteria?

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Must've gotten to the point where the affordability measurement looked too bad. Best thing to do in that case is obviously change the measurement so things don't look so bad.

Only $8 per day to reduce term from 30 to 25 years based on 500k loan at 4.8 percent

Why would you quote it in per day.. nobody pays a mortgage daily. $240/month or $112 fortnight. Which isn't insignificant if you are already stretched to pay the mortgage and raise the sproglets.

Wait? Can you fix a mortgage for 25 or 30 years at 4.8%????

Nope?

Yeah, thought not.

David, could we get a clarification please. On the affordability report (Auckland March18) in the notes it says:
"Home Loan: (Median house price less a 20% deposit)
Mortgage repayments are based on the value of the home
loan, paid weekly for 25 years, using the bank average interest
rate. "

but above you say it is 30years? Could you clarify when the affordability report changed the mortgage length, and whether it was from 20 to 25years, or from 25 to 30 years, and whether the historical data has been re-evaluted using the new mortgage length or remained at the shorter mortgage period, as that would somewhat distort the results.

Thanks.

Push the first home buyers into the market at the top of the cycle so that if the govt decides to crash the economy those impacted the most will be first home buyers who are far more likely to elicit sympathy from the voting public than landlords ;p

Hi sadr001,

What Government tries to "crash the economy"?

TTP

Venezuela?

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Who wants to be a life long debt slave somewhere as hopeless as Auckland. You are just handing a couple of decades of your labour over to some entitled boomer pr*ck who was lucky enough to be born sooner than you.

Your money goes a lot further in Queensland. Weather is better too.

Just a shame its full of Aussies, snakes and spiders.

Hi Pragmatist,

There also seem to be a lot of real estate agents, used car dealers and hifi salesmen in Australia - further adding to its appeal.......... (-;

TTP

Hmmm, sounds like they need to have a few sales conferences by the NT rivers for those RE agents and used car salesmen then

Its full of kiwis as well, approx 500k under 40 educated and raised in NZ and left for cheaper housing in Aussie. What a result that is for the tax payers that funded 13 years of health and education for all of them. Number one issue was lack of jobs to pay mortgages down at the price of entry, or more simply stupid house prices. But hay.... to avoid the heavily leveraged going broke, lets keep exporting doctors, nurses, builders IT workers etc etc.

No, simply not true, there aren't 500K Kiwis in QLD, 2013 census they were 192k total in QLD, 650k in all of Oz.

In your 1st sentence you complain being a "debt slave" which means owning a house, then in your second (angry) sentence you talk about "handing over your $ to some lucky boomer pr*ck..." which I assume means the landlord, so you're now talking about renting?
Then in the next paragraph your issue seems to be about location,

I think he's talking about paying off a mortgage over decades. It's a free country, no-one is forcing anyone to live in Auckland, let alone buy there. Moving elsewhere to a more affordable location is a logical decision.

Ignore him , he is an angry and unhappy man , who thinks it was a breeze for us baby boomers to buy a home . It was not .

And now it turns out that just like 30 years ago , a married and working first home buyer family spends about 50% of their joint income on the mortgage.

Not much has changed

Its a lot harder now, if not impossible.

@steven , its not impossible ........... I have a son who is in his mid-twenties and lives at home .

He pays rent to my wife and I and I invest the rent each week in bonus bonds .

I have struck a deal with him , and the deal is for every dollar he saves towards a house deposit , he will get a dollar of his rent paid to us , given back to him .

He has saved $30k in 3 years and he is entitled to get all his rent back giving him over $55k . Add that to his Kiwisaver of $20 k and he has access to $75 k

He has to save another $25 k and will meet the criteria for a 10% deposit as a first home buyer .

He is on track to do this by his 27th birthday .

Its not impossible , it takes a bit of planning, discipline and some hard saving ,staying out of debt and being prudent with money .

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Now if he was renting in the 'real world' and paying a landlord market rent who would not gift him back his rent, how long would it take before he got that deposit together?
Have you increased rent on him as the years have gone on? To simulate the real world that renters face.

I'm fortunate enough to own a home, but I can't see how a young person or family can work, pay rent, and save at a rate that would give them a deposit of 75k to even get in to a simple first home.

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Not to mention a 55k gift from his parents. It would be significantly harder for those with parents unable to help them out financially.

Very fortunate son! I'm a 26 year old and teamed up with my partner and my brother a few years ago to purchase a place in Auckland. I personally put in $37,000 deposit and have a $150,000 mortgage that I service. Sure its not the most ideal situation but it seemed the most logical move. Of course only time will tell whether sitting tight and saving, instead of buying property, was a better option.

@andrewNZ , Good on you .......btw my son is also Andrew , he is about year or more younger than you and he is simply not able to to do what you have done .

You will be better off than he is in the long run , he simply could not buy now , the 10% deposit is a big hurdle and the debt would be unaffordable on his wage . His siblings are not interested in a joint buying arrangement which is a pity really

Has he thought about just working harder to earn more money?

he simply could not buy now

That sounds defeatist, surely if he cuts back on things like his cellphone and coffees he'd be able to easily afford a place of his own?

I don't know if subsidizing him with cheaper rent is the best idea. It's conditioning him to accept handouts that he wouldn't get if he was actually in the real world. That's sounding awfully socialist for a strong free-market capitalist like yourself Boatman. Surely he'd be better off if you let the private rental market dictate his rental costs?

Zing!

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What's this world coming to when Boatman's own progeny are dependent on parental handouts and can't purchase a home on their own merit!?

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Cognitive dissonance

Exactly.

"Houses are just as easy to buy nowadays" (said while providing own child with a handout because they cannot save enough to buy a house without daddy's help).

The Bank has just transferred his future retirement wealth and everything that he has worked for into their next profit announcement and he doesn't even realise this! And the banks will continue to do this until people realise that their wealth is on paper only and will not provide them the security that they are hoping it will. It is the oldest trick in the book! As long as people are willing to blindly give up their lifetime of savings and wealth to the banks via home loans during an asset bubble, the longer this transfer of wealth from the middle class to the banks will continue.

It would be nice if this asset bubble would end sometime. Time is dragging on.

@Brock landers ........ why dont you ask yourself why the bubble has NOT ended ?

Maybe there is no bubble after all and house prices are just reflecting the costs if building houses and paying skilled builder wages , or did this not enter your thought process ?

The price of housing has a distinct relationship to the ACTUAL cost of building the house .

If anyone was making "super profits "from housing , there would be more entrants into the housing market to chase the "super profits "and this would continue until the market is in equilibrium , IE Demand is met by supply .

Rubbish. House prices are set by how much buyers are willing and able to pay. Period.

The exact same house in Gore and Auckland will have very different prices.

How much a buyer is willing and able to pay depends on:

How much existing savings and assets they have.
How much of their retirement money they want to gift to vendors.
How much daddy is going to give them.
How much money the banks will conjure up as debt for them.
How much they believe the house is going to go up in the future.

And quite often in our new vibrant and diverse Auckland, how much money needs to be laundered...

The picture of a frictionless utopian functioning market you paint doesn't exist in Auckland.

When credit conditions tighten and expectations of capital gains evaporate prices can and will correct.

@Plutocracy ............ when have I ever even suggested "houses are just as easy to buy nowadays "

I said nothing of the sort

I have always said , and continue to point out that we found it very difficult to save for and buy our first home , and that was 36 years ago .

And thats why I am and will continue to do everything we can help our children own their own homes

Its always been a hard slog to save for and buy a home , and now it turns out that its not much more expensive relative to income or as a % of income than it was back then.

Our wages in the late 70's and early eighties were a pittance compared to salaries we now earn , it was really hard to buy a home back then , trust me I did it , I know , and we have not forgotten

"Houses are just as easy to buy nowadays" is the same thing as "It's no harder to buy now then it was in my day" which seems to be your regular spiel.

I take it your parents helped you purchase your first home with a handout too right?

You also seem to selectively forget that there was significant wage inflation over your years which greatly diminished the burden of your loan. If that wasn't enough, you also didn't start saddled up with a huge student loan like a lot of people do now.

I'm Gen X so I've got no skin in the game (I already own a house) but the way you undermine the struggles of the younger generation sickens me. You're truly a hypocrite when you claim it's 'just as easy' while giving your own kid a handout because it's 'impossible' for them to do it without family help. Now imagine if your kid didn't have well off parents, then what? I'm sure that's the kids fault too right, should have picked better parents.

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Really though, "it's not impossible, those who are given deposits by their parents can manage it" is a pretty sad statement on how bad things are for younger Kiwis now.

Well done andrewNZ! Don't worry you have done absolutely the right thing (don't listen to people who don't own and tell you about not buying). You will be better off financially and also from a pride-to-own aspect.

Awesome, Boatman great way to teach financial responsibility to your son by giving him an incentive! Well done

His kid is so useless he needs handouts from daddy. Can't even stand on his own two feet. Bludger.

Do you really have to get personal or be disparaging? ........... the only reason I am helping my son , ( and will help the other 2 in due course ) is because I know from my personal experience how hard it was for us to buy our first home in 1982 .

It was really hard , we saved every cent , even putting spare coins in a jar in the hallway , and when we had a decent sum we put it in our home savings account , at the Post Office

Home ownership for first buyers has never been easy , NEVER , and we got no help from anyone .

I don't know, surely if you can label me an "angry and unhappy man" it would be reasonable to point out how tragic it is that your grown adult kid can't get though life without living at home and getting large handouts from daddy.

The sad thing is you probably don't understand how by doing such things you are making the problem worse.

Everyone with handouts just p*sses the money up against the wall bidding up prices of houses against each other. Just like they do with their kiwisaver retirement savings and just like they do with however much debt they can get their hands on from the banking system.

This is the true root cause of bloated house prices. Cut the supply of money and the prices will follow.

You and people like you giving handouts to their kids are taking a wrecking ball to our egalitarian society.

I feel sorry for your kid in a way, living at home, or indeed in Auckland holds you back in a lot of ways. There is a lot of shame at that age telling the girls you live with your parents and there is disappointment in life knowing that you are bludger and not a self-made man.

Even an angry and unhappy man like me manages to save an order of magnitude faster than that by the way. What is his excuse?

I'm sure it did seem quite hard back then, but you mentioned in another post on this article "not much has changed since then".

1987 - average house price $88k, average income $25k p.a = 3.52 house price ratio.
Here

2017 - average house price around $500k?, average income $75k p.a. = 6.66 house price ratio.

The deposit requirements for the average house has effectively doubled since 1987 while 6 month term deposit rates are 3.45% now versus 14% - 18% in the 1980's ( here ) .

Interest rates dropping has made it more affordable to service a mortgage, i get that part. 18% interest rates on a house that's 3.52 times the average income today ($220k mortgage) would be a mortgage of around $700 to $800 per week, whereas the average $400k mortgage @ 6% would be $500 - $600 per week. The bit we have to worry about is how long will interest rates stay low, and will wage inflation continue to stagnate?

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Except 30 years ago it was a 20 year mortgage, not a 30 year mortgage, and saving for a deposit took a year or two if you put your mind to it, not 5+, and it was a single fulltime income, not two fulltime working incomes.

@Pragmatist , there is absolutely nothing to stop you paying your 30 year mortgage off sooner . In fact for as little as $20 a week you can reduce the payment term significantly and save tens of thousands .

Just stop buying ridiculously priced $5 cups of coffee every day and use the money to reduce your mortgage.

The other thing to do is each time your get a bonus , or an increase , put it ALL into the mortgage instead of blowing it .

Just exactly how much coffee do you lot who keep saying people should stop drinking, think people actually drink? I reckon most would have to be drinking about 20 cups a day to give up to save for all the things that others say you need to give coffee up for.

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Typical BS boomer answer. $5 coffees, smashed avo, cellphones.. rant rant and ignore reality of 13 times median multiplier house prices instead of 3 or 4 times as when you bought.

We dont buy $5 cups of coffee every day.. we brought a coffee machine and make our own at home for mere cents.. and drink free coffee at work like most, we might buy a $5 coffee once a week if we happen to be out somewhere on the weekend doing something and feel like a coffee. Neither do we buy the latest and greatest cellphones and TV etc. Think I paid $400 for the entire TV/stereo setup a few years back.

And no, our cars aren't new or flash, no sky tv, not heavy drinkers or dining out several times a week, and sadly our passports are very underused too (for personal travel).

Any more BS boomer canards you want to trot out now?

@pragmatist Its academic how many times a house costs in relation to the median wage ............ what matters is whether you can afford one , and what % of your wage packet it takes to pay the instalment.

Some things have dropped in relative value and cost ........ like cars for example , a 7 year old Holden (1973 model bought in 1979 ) cost a years wages , today a 7 year old Holden can be bought for around one months wages

House prices have not dropped in the same fashion and probably never will .

Sorry to tell you the bad news , but it is what it is , get used to it ços it aint going to change anytime soon.

And no Government is ever likely to change it either, you just need to do what we did 30, 40 or 50 years ago, forgo luxuries and save , scrimp and save and save and then commit yourself to a very very long mortgage, we did it , and there is no reason for you to have it any other way

I bought a 3 brm house in Onehunga for 123k in 1992. The gross income into the house was around 55k a year. We had a deposit of 20k that took 2 years to save.
Yes cars were expensive.
Comparing then till now is not realistic.
1. There was no internet temptation
2. Advertisers were not psychology PhD,s
3. There was 1 coffee shop in onehunga, the rest was thriving small business.
4. That same house today is 'worth" 10 x that amount
5. Our household income is 4x that amount.

Onehunga is now a better location than it was in 1992. Otahuhu or Mangere are now the new Onehungas.

Here you go, The Kiwi Dream - Land and Location for only three years of your family income.

Is that some kind of lame justification of pricing ? My grandfather had a furniture making and upholstery shop on ponsonby rd and a house in pt chev. His lawyer said he was crazy for buying in the city, mangere was the place to go... there is probably some hidden justification in that story too. Let me know when you work it out.

And these days it costs a lot more. Now its 40% of 2 median incomes for 25 or 30years instead or one median income for 20 years. And in the past there was higher wage inflation so after the first three or four years it was down to 30% of one income to service the mortgage.

You have even stated your own kid can't do it on his own without a dollar for dollar match on the deposit, so what chance does a FHB whose parents can't afford to help have? But no, you'd rather pretend its all the same rather than admit you had it a lot easier in your day in respect to buying a house.

OMG the mutterings of the boomer....."well of course we had it tough blah blah blah"

What a load of crap - what a sad sad man - the bitterness seeps out of you....

Well at least he made a point, instead of your pointless vitriol.

What point did he make??

That the the now refuted by just about every credible source "smashed avo and coffee" ISNT the problem for the young???

But say it often enough and you'l believe it... you may buy the BS - I don't.

BUT I take your point and I shouldn't vent on a personal level so I apologise for playing the the man not the argument Boatman - frustration gets the better of me.

Damn right. I took a 25 year loan and turned it into a 12 year loan by making annual increases along with my annual salary increases. That was 20 something years ago when we had a thing called inflation. Rising wages reduced the amount of debt owing on asset prices dramatically over each year. The first 5 years was always known to be the hardest and then after that it was a walk in the park. Try doing that these days! You can't, because your wages are in competition with cheaper labour. If anything you have a higher chance of wage stagnation or loosing your job and being replaced by a cheaper counterpart.

One needs to think possibly as to why he/she is angry.
There are probably a lot of potentially FHB in the same situation who over the past six or seven years each day watched in frustration as the goal of home ownership (he/she comments to wanting to buy a house albeit in Queensland) get further and further out of their reach.
I don't think buying a house has been easy for any generation. My parents used wooden apple boxes as furniture for some years after buying their first home, and for me (a baby boomer) it hasn't been easy especially when first mortgage bank interest rates went to 22 to 25%.
While a year may seem a long period, FHB need to appreciate that the tide is turning. As I have said before on this site, houses especially in Auckland are over valued to both income for FHB and rent yield for property investors. These two cohorts traditionally account for well over 50% of home purchases. An exit of landlords over the past 18 months and absence of FHB over the past number of years - along with possibilities of government policies including ban on foreign buyers and decrease in immigration - are most likely to put downward pressure of house prices especially in Auckland. Probably the most import factor however is that there will be a lack of upward drive in prices from both property speculators and every Joe Blogs who buys on the assumption prices are likely to go up as most commentators see the market at best plateauing.
While there may not be a collapse in house prices, there will be some correction and there is good reason to see some of this over the coming winter months and the year beyond.
The outlook for affordability for FHB can only increase.
Currently the real positive for FHB is that interest rates are at historic lows especially compared to the past thirty years or so, and it looks like this will continue for the next few years (significant events aside).
Should one buy? Well I don't know of any asset where in the long term renting is a cheaper option. As with any person who rents things out; the landlord is profiting from renting a property to you.
Also home ownership has considerable intrinsic value. Drive around a middle to lower housing area of mixed owner and rented properties; it is easy to spot those home which are owned and those rented as generally owned homes generally have very good in upkeep of home maintenance (e.g. fences) and garden whilst those rented to have neglected gardens and lawns.

DP

No it means the vendor that bought it for peanuts, salivating at the thought of all that tax free capital gains and blinkeredly thinking "it was just as hard in their day". The deposit is the easy part it's the lifetime of crippling debt that nobody gives much thought too.

Not angry, just pragmatic, Auckland has been wrecked over the last decade and is now a poor choice of city to be building a life, lack of social cohesion, hellish commuting, the cost of everything and the quality of life for the salaries on offer is very very poor.

With some professions the solution isn't to move to the regions it's move to the mainland.

There are plenty of snakes in Auckland too they are just all involved with the property industry.

it is apparent from the RC in Australia that the business model for Australian banks seeking growth is to "grant" loans so large that the poor borrower is pushed into poverty to service then. And sadly the borrower is probably sufficiently deluded so as to be pleased to be forced into servitude in the name of getting on the property ladder where prices are supposed never to go down. All so sad. If only there were proper requlators to enforce responsible lending standards. but they seem all to be captured by the banks and subservient to their interests for growth. I think this is as true in NZ as has been proven to be the case in Australia, but sadly the regulator here does not want to look and so we will have to wait for the crisis to reveal the degree of recklessness and irresponsibility of lending over the last 6 years.

.

The new poor in Australia and NZ are the middle class who want to play the game.

Middle income people are the cohort in greatest financial risk. They are highly leveraged: they spend more of their income on loan repayments than do people with higher incomes.

Second, their assets are undiversified: they own labour market skills, some home equity and some superannuation. Third, these assets are illiquid (not easily sold): you can’t transfer your skills to another, houses are costly to sell and superannuation is generally inaccessible. By contrast, people at the top of the income distribution also hold more debt, but their assets are more diversified and liquid, and many generate income streams. Conversely, low income people hold proportionately less debt and are more diversified than the middle: they don’t have their (more meagre) assets tied up in housing.

Fourth, middle income people are under-insured or, in financial terms, unhedged. Their insurance isn’t keeping up with their borrowing. Low income people are relatively well insured. They face compulsory insurance, such as for cars and health. High income people have also not increased their insurance, but their need is less because they are more diversified and have more discretionary funds.

http://www.canberratimes.com.au/business/banking-and-finance/new-type-of...

It's quite an interesting article. I'm not surprised that there's middle class poverty in Australia. The number of stories I've heard where people are paying 50% of their take home pay in debt payments (primarily on their house and why did the bank approve that mortgage?).

You might enjoy this news story released today, or not depending on if you are a shareholder or not, or a recent home buyer. Westpac shares slashed today... https://youtu.be/ah0HDXiS4TU

Bats, birds and the GBR. However the issue is it being in Aus that the Visa requirements are impossible for many NZ families to get approved. Many families are stuck here, and while it may only be small things like minor health issues for one family member it is pretty damning for the whole group. NZ is the one and only hope for many families and even that is thin on the ground.

One would think the regions will continue to see growth. Cashed up people in Auckland selling and moving. People that will never get in will move to regions to obtain the kiwi dream of owning their own home and giving their family some security.

Exactly - The boomers are the wealthiest generation who ever lived and they'll eventually liquidate assets and move to the regions. Boomer realestate purchasing power is more related to accumulated equity than credit availability. In Auckland meanwhile the prices of houses is a function of Chinese (and other foreign) buyers and credit availability, both factors currently in decline.

'The boomers are the wealthiest generation who ever lived..''

Its a common misconception that the boomers are passing on WEALTH. Their legacy is actually DEBT (yes debt is now wealth). So the boomers were lucky in that they lived while mankind
- used up the highest quality resources
- elevated per capita energy consumption to record levels
- THEN started up a debt tab that made untold promises for even higher living standards all to be paid with MORE resources some time down the track... But theres a limit to tab economics in a finite resource world.

In other words, they timed the Ponzi perfectly.
Up ahead, its all debt and declining means to pay.
When the debt breaks existing claims of wealth become meaningless.

My workplace has recently employed about 12 ex-Aucklanders who recently left because they wanted to start a family and buy their own home. Some of these people are born and bred Aucklanders and are happy with their decisions even though they have left their families behind. They are also house hunting and about to buy their first home. As an ex-Aucklander myself, I was curious and asked them how they felt about their decision to leave and their new hometown. All of them were happy and settled and were convinced that they had made the right decision. I still miss Auckland, but it is only a one hour flight away and I visit several times a year, but I agree with them on the traffic and housing absurdity. They can actually buy their own home here and still have money left over to live how they want to.

People come, people go and people move around. It's BAU and it shouldn't be a big deal. Who cares if I move to Queenstown or Timaru tomorrow? Ridiculous.

What region did you move too Tainuibabe? 12 ex aucklanders that is a few

Yes that is quite a few to be employed within one organisation. I moved to the Manawatu and now work in Palmerston North. Employment options are pretty good here. Most people find jobs within 3 months of moving here. Every industry you can imagine has a representation here and surprisingly a few head offices of some companies throughout NZ are based here. Who would have thought that? Cheaper commercial rents and cheap land prices helps.

That's exactly it why pay those prices. NZ is a beautiful country, sell up buy cheaper and have better quality of life. Buy a business if you want career change. Relax from that congestion that has created from rampant immigration.

Quoting the article:
"In fact, 25 of the 30 urban areas we track show buying a first home is affordable"
Question, would a similar ratio not apply to most countries, where 83% of places are affordable for FHB and 17% of the most expensive areas are unaffordable?

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Best to use metrics among data sets that are actually comparable. The Wall Street Journal just referred to the NZ property bubble as one of the biggest globally and comparable to Spain and Ireland in 07.

https://www.wsj.com/articles/to-spot-the-next-financial-crisis-look-who-...

Damn, behind a paywall. Couldn't find a copy elsewhere but i'd love to read that. The basic premise that those that think they dodged the bullet because of our "rockstar economy" may have only delayed the inevitable seems plausible.

Any chance a cut'n'paste could find its way to pragmatist@yopmail.com?

Nothing much interesting ther. Usual stuffs..Aus, Canada & Sweden vulnerable to economic shock. NZ also mentioned . I could read it here.
https://www.google.co.nz/amp/s/www.wsj.com/amp/articles/to-spot-the-next...

Thanks, but that link still gives me about 6 lines then the chance to subscribe or sign in.

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The fact that over 40% of take home pay is considered affordable in Auckland when interest rates are this low is alarming. What if interest rates hit 7 or 8% in a few years time will that take those same median income earners to 50% and beyond..

Affordability needs to be assessed over the lifetime of the loan. What is borderline affordable loan today may not be in a short period of time. So a range of 25 - 40% over the lifetime of a loan is what you would be looking for with the average being somewhere around 32 or 33% max IMO.

> If you believe this will happen, you are predicting something the banks are not and should probably lock in a 5 year mortgage rate at sub 6%.

That's what I would be doing if I felt the mortgage rates were going to increase that much... I just believe it'll take closer to 10 years to increase mortgage rates back to the 7-8% mark. The world economy's still hurting big time. They aren't going anywhere fast.

It's aways been damned tough financing a first home (unless you happened to have won a lottery, or come into a sizeable inheritance).

But, in the medium to longer term, few (if any) regret it.

As always, short term pain for long term gain.

First home buyers - don't trust those people who have fantasies about house prices falling by a large amount. They won't. (Many/most of the people who argue along these lines have never bought a home - and have become disaffected.)

Not only will a first home likely turn out to be your best investment, but it will give you stability/security and boost your self-esteem and mana. For many home owners, the non-financial benefits are as important as the financial ones. Add the two together and it's a no-brainer.

You'll be much better off by buying a house THAT SUITS YOUR NEEDS as soon as you can afford it. Paying rent is dead money - though you already know that. Who wants to be a slave to a landlord?

TTP

@tothepoin........... thank you for pointing this out . Our offspring seem to thing it was a breeze, they are deluded into believing one simply bought a house like you would buy a secondhand Japanese car today .

It was hard , really hard to get on the ladder

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Ah yes I remember it like yesterday. Simply work a season at the freezing works then buy a house. So difficult buying a house in your early 20's and starting a family. Whereas today many people in their 20's are still living at home. You'd think it must be difficult to save up the $80k or so deposit in Wellington. Pocket change really.

$80k... thats only 16,000 coffees! A mere 10 years of 4 $5 coffees a day, everyday. Oh, hang on, better allow for that mad compounding interest (less RWT).. so, 9.8 years?

I picked a bad week to give up coffee.

Old arguments being recycled need old demolitions to be recycled:
https://www.greaterauckland.org.nz/2017/03/07/no-boomers-its-not-like-it...

I bought my second hand 5 year old house back in 1993 on a single average income and it was EXACTLY like buying a used car. Dead easy. In fact, I sold my second hand car to raise the extra $5K that I was short by. 6 weeks later I was in my own house and catching the bus to work. The interest rates were much higher than now, which kept the house prices down and the term was extended to 25 years from the usual 20. It was dead easy to buy back then. Don't get divorced today if you want to remain a home owner, because if you are single your are "f***ed! As soon as the banks introduced 30 year terms, guess what happened? House prices went up because there was more easy credit floating around. So instead of being a slave to a landlord, owners are now slaves to the banks and they are creaming all of your future income and wealth off you and paying themselves and their shareholders. I'm a share holder, I know. But I would rather not see New Zealanders being taking for a ride because of the myth that buying in this economic environment is worth it. It is not!

Its funny I remember 30 years ago a house, $130,000, now same house $600,000K, people are virtually on same wages.

Not sure how it is easy now.

I recall 30 years go you could buy a house in West Auckland for around $75,000 and my salary was only one tenth of what it is now.

Wow you must be on 1 million dollars. I had friends in freezing works and working in steel plant on close to 80k 90k. Hard work but good money.

Two years from school I was on 35k at steel mill 30 years ago. So should be on 350k now ay Zac. Wish that was true . I have a friend on over 700k but he's very high up. Not normal.

Paper rounds don't count.

Is it that much better to pay your rent to the bank rather than the landlord? It's not anywhere near clear cut that buying is always better financially than renting, especially when you properly account for the maintenance, rates, insurance etc you now have to pay. I personally would not discount the chance of prices failing to rise significantly in the future, or even falling.

Agree that there are significant benefits to owning in terms of stability and ability to improve, so long as you plan to stay in the same area for long enough. There is also a significant benefit of essentially enforcing savings on those who are unable to do so on their own by having to pay down the principle. This is more of a psychological argument than financial.

"Is it that much better to pay your rent to the bank rather than the landlord?"

Yes it is, my parents have been renting for 50 years, they have $0 to show for it.
I bought my 1st house 25 years ago, now I have $.......

Hence my second paragraph

"There is also a significant benefit of essentially enforcing savings on those who are unable to do so on their own by having to pay down the principle. This is more of a psychological argument than financial."

I've been renting the last few years and have saved a significant amount of money, in theory you could have rented and saved the money which has gone towards paying down the mortgage. If I'd bought in Christchurch when I arrived 4 years ago I'd probably be worse off today, financially at least.

The fact that many are unable to do so and would otherwise spend every penny is a major argument for owning a house, but it is to do with psychological flaws rather than financial arguments.

Well stated, Yvil.

Plenty go to their graves with no money....... but having made their landlord rich.

TTP

Yvil, many never get out of debt either. It all comes down to discipline, goals and unwavering commitment. Those who can only save using a contract with a bank often out themselves as the jealous (interest paying) brother to those that save hard cash. Spoken from personal experience.

Your words ring true in my family too. Some of us are always going to end up being debt slaves to the banks while pretending to own it all and forking out all of our future income potential to others. And some stay humble, go without in the early days and pay down debt fast. Guess who ends up being jealous of who? Those that are mortgaged up to their eyeballs and living in a fantasy world start to hate those that are living life how they want to, without debt and without a bank contract! I know which side of the fence I would rather be on these days. Life is sweet for me now. I do what I like and work when I like and for who I like. Debt free gives me choices that others don't have because they are still living lives that have been dictated to them by their banks.

Forgive me for asking this, but why did your parents not buy 50 years ago when our government was helping New Zealanders into new homes via the government schemes? Were your parents immigrants that didn't qualify? Did they have other dependancy issues that wouldn't allow them to be able to pay back a government loan? I have noticed that you speak about home owning and investing with alot of emotion and this now makes sense. Your parents never became financially independent and on the other hand you have tried to do so, to compensate, but at the other extreme of the line. Both generations are emotionally involved which isn't a good place to be if property values change. An investor never becomes emotionally charged about any market that they buy into, but a speculator does. It is easy to tell the difference. I wish you well and that you can also look after your parents now, just like so many baby boomers are also helping their children into this crazy market.

TTP, make up your mind. Your predictions are all over the show. Changing by the quarter it seems. Talk about a naive flip flopping flop!

1/ Auckland house prices will continue rising no matter who wins the election.
2/ Auckland house prices will rise throughout 2018.
3/ Auckland house prices will oscillate around current levels.
4/ Auckland house prices will rise 25% over an unspecified time. TTP refused to commit to a time frame (weasel words)

And now your saying house prices will not fall by a large amount. This is another way of conceding they are going to fall by a small amount.

FHB are wise to steer clear of the advice of those who forecast the rain once its spitting. Legislative change has caught many small speculator/Landlords by surprise. It's no longer an attractive investment it once was. Many are nervous and want out.

Hi Retired-Poppy,

You write: "And now your saying house prices will not fall by a large amount. This is another way of conceding they are going to fall by a small amount."

Sorry - but you're wrong (yet again). You draw a false implication. My comment clearly leaves open the option that there be no fall in house prices - that is, that house prices remain constant or increase.

Further, misquoting and taking comments out of context (and out of time sequence) does nothing for your credibility.

TTP

TTP, now you're backtracking again and you stoop to question my credibility? What a joke. No one here can take you seriously.

So in reality , this whole housing "crisis" is no such thing .

It is not really that different to what it was 30 years ago , in our twenties about half our combined week's wages went on the roof over our head .

We had to save a deposit , that was the really hard part , it took discipline and effort and forgoing other forms of consumption .

In fact , in our case , one partners salary went entirely to the bank for the mortgage , and we lived off the second wage .

Interest rates were three times what they are now at times due to inflation , it was really hard

This opinion would get plenty of heads nodding at the neighborhood BBQ.

Thanks JC

Lol.

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@ Boatman what an absolute load of bullshit,

I'm old enough to remember those times too...yeah high interest rates but equally high rates of wage growth.

Also didn't have to compete against the cashed up buyers from China...

My first house was a good suburb (Forrest Hill) - $198k - household income was $100-$110k - Ratio = less than 2:1

Run those same numbers now and the incomes would be maybe $150k - house cost $900k - Ratio = 6:1

NOT.EVEN.CLOSE.

God you give us old guys a bad name..."was hard in our day"...no it wasnt - oh and my uni fees were free too......

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In the 80s my parents paid off their home in Auckland city off with 1 factory wage earner. while bringing up 5 children, no support from the govt.

30 years later you have double incomes and are lucky to afford bringing up 2 children.

I would say that our society is becoming more full of slaves to the system than ever before. Both parents spend all day working and sitting in traffic while paying other people to look after their children.

Thats not progress!

It could not have been 30 years ago , Forrest Hill prices only got to $110 to $120k around 18 to 20 years ago , and household income was not $100k per annum .

Whoever said 30 years ago?? I starting working in 1984 and bought the house 20 years ago...and guess what
it was STILL EASIER!!

My parents bought pretty late for a couple in their time - the mid-late 70's under with the iron curtain of Muldoon ..they earnt bugger all and still managed (on ONE income).

You flip and flop all over the place to suit your confirmation bias - sorry, numbers don't lie

Sorry Boatman you should really look at the data first. I also had a place in Forest Hill and the experience of rapid stellar rises are incredible, (when we sold ours it was very a different market to when we brought it). Wish I had held on to it but got another with a sea view. Household income has been relatively static but then the industry has shifted & pivoted around the employment opportunities, (i.e. multiple levels of retraining costs, less job security across the board & more competition), more than the wages. 30years and the neighbourhood there could have been frozen in time, still the same old places & shops, if it were not for the house prices.

@mvgsmf , you reckon I was giving you a load of bullshit ........you certainly seem to have had it a lot easier than we did and .... what on earth were you doing to earn so much money in the 1970's ........... $110k per annum ?

I doubt the Prime Minister was earning $100 k per annum in the 1970's

The minimum wage when I was 19 was $1,95 / hour less Tax and Union fees and canteen fees

A 40 hour week paid $78 which was just $4,000 PER ANNUM

A used Holden or a Land Rover ute cost more than a years wages

My first job paid the princely sum of $83,63 cents , I worked during the day and went to night school

I was not enough to even think of saving , let alone home ownership for a good few years

30 years ago was 1988, why are you talking about the 70s?

His ability with maths and keeping up with the times is limited? Perhaps hit by the Y2K bug. I would suggest recycling the hardware as a fish tank and getting a new boatman but I don't think they make them like they used to.

A good story mvgsmf, but a made-up story. When you make up stuff, you better check the numbers first

Incorrect...please enlighten me where anything here is made up

More likely it doesn't suit your rhetoric to have REAL numbers disagree with your opinion

Could you please elaborate on how you've deduced this is made-up?

For a direct comparison that same house in Forest Hill will be closer to 1.5mil today even with absolutely no maintenance on the building itself. Checked one of my old properties in that area and it was ludicrous the condition & recent sales, the roof & building had all the old paint back from the 70s (with more worn off over the years) and still the same interior and fittings, yet it gets passed around at an insane price tag over ten times what we paid for it. Wages then were actually about the same as now in my area so it is incredible families could even try to buy or even rent within 15km of that suburb.

Boatman, you mentioned that interest rates were high because of inflation (correct).
What do you think inflation means then?
i.e. did your wages inflate?

Lets get something clear ............ 30 years ago we were not earning anywhere near $100k .

And yes wages did go up , we were both Union members in our 20's, but the wages were low as a Priest's pittance .

We really only got ahead when we went to work overseas where our skills paid better wages.

What should I use to inform my opinion?
Actual data?
Or Boatman's anecdotal evidence "wages were as low as a Priest's pittance"?
Hmmm....this is tough.

@B-Rocker..

I completely refute the "We had it hard" statement when in fact the reality is the really important things in life are MUCH MUCH MUCH harder to get NOW.

You honestly want to tell me a young person wouldn't give up their iphone or Avocado toast to buy a house for 2-3 x income..I call bullshit. Of course they would.

in fact most millennial's I spend any time with are far more serious about their future than my beer swilling, skirt chasing, free university self at their age

What do you think I said?
I think you are replying to Boatman?

mvgsmf is on your side, he's not having a go at you. He may be one of the relatively rare boomers that can actually process numbers and not rely on heavily biased self-interest based memories of walking to school, in the snow with bare feet, uphill both ways. :)

Hey, it's not all beer and skittles being a Boomer. Now that we have Facebook we are the first group in history able to have a sly gander at what happened to old flames from 30 years ago and think it was a lucky escape, until we look in the mirror and realise they would be thinking the same!

Yes, sorry I was agreeing with you B-Rocker...

Actually I'm a Gen-X..but still got allot of the same benefits of the boomers due to nothing more than luck of the year I was born = Relatively cheap housing, free university education, didn't have to compete with masses of immigrants for the roof over my head or most jobs.

These are just facts..not criticisms - why are there SO many of my ilk (and boomers) who just refuse to see it for what is it - we were the lucky ones...

“We were the lucky ones” totally agree with you. I am a first cohort B.B. born in 1947 (sooo long ago) and I can remember saying how lucky we were way back in the 80’s. everything was placed in our laps, well almost everything. My ex and I bought our first home as 20 and 26 year olds in 1967 but... he had planned that when as a 17 year he took out a life insurance policy knowing he would need that to get a mortgage/loan. No banks would give out mortgages in those days. We were both state house kids. He went to university part time in the early 60’s attending lectures after work. Managed to live very modestly on one salary. Luxuries came much later. I truly am very worried now for FHB and the future of my young grandchildren. Something in this world has to change!

I'm a Gen-Ex too. My older siblings all Boomers and I managed to learn from them and ride the last wave into easy home ownership at the age of 22. I am thankful that they talked me into buying at such a young age now that the wealth of the middle class is rapidly diminshing fast! The current state of the housing market is NOT the Boomers fault either. You can fully lay the blame at the feet of our Banks and the way they have changed their lending policies over the years. People are like sheep and they just blindly accept the reality of today's market without questioning how we got to this point. Things will be changing over the next few months after the Royal Commission in Australia on their banks winds up. Even I, as an ex-banker myself has been shocked at the jaw dropping stuff coming out now!

You mean he is not an old man from Yorkshire?

Meat workers were and so were Steel workers. A lot of construction guys were earning good money as well. But not now.

Actually Boatman wages back then to now are about the same in my high skilled area, only the competition & need to move & contract more has increased. Back then you could have a job with the same company for 20years with add ons and a company car, today you would be lucky to not need to switch to another company in 2 years (without the retirement benefits of the previous employment market). Oh and the job requirements for equipment purchased by the company employee have increased. Bit sad when many of the factories closed in that area and dumped staff to no future, (I was in a front row seat to watch a few go and decided it was time to pivot before my role & the companies were at risk). But that was still before the GFC. Try looking at wage growth in the past 20-30 years and it is miniscule to house price growth.

The MAJOR difference is that a hard working couple on median incomes could afford to buy a 3/4 bedroom HOUSE 30 years ago.
Today the same couple might be able to afford a shoebox apartment.
HUGE difference

And that shoebox apartment would need to have leaks & remediation issues, with a high yearly lease. (The apartment market is equally messed up & expensive now).

Lucky enough in the early years to work for a Govt Dept that provided housing to encourage people to transfer.
Wife looked after kids while i did the long 12 hour shifts.After 2 years a deposit was saved and we got out ito our new home.
Only regret was wife not keen to transfer anywhere once we had our own home.

Wow, thank you David ... I won't be alone in sensing the positivity and change in reporting style on this particular subject from how Greg's monthly reports -- Negative spirit doesn't help anyone and people need facts presented in a balanced way.

I noticed that Auckland's average affordability @ around ~ 42% has remained almost the same since Sep 2016 despite the big increase in average house prices. That is a good thing.

Obviously we should dig deeper and be suburb specific, however having a stable average to me means that the means are catching up with market price changes and affordability is not deteriorating in the last 2 years or so.

You are not correct in talking about big increases in house prices since Sep 2016 - Auckland has been essentially flat in that time when accounting for inflation so no surprise affordability has stabilised.

https://www.interest.co.nz/charts/real-estate/median-price-reinz

If you have a look further back in the chart on this article, Auckland was bouncing around 30% of take-home pay required to service a mortgage as recently as 2008 -> 2014 and has increased steeply since then at the same time as deposit requirements have grown. This is the problem, which has not yet resolved. If prices remain stable or fall a little while wages continue to grow, things will improve. Now that will be a good news story.

It may not have deteriorated but it was terrible to start with.
Cut the spin

David Chaston reports that (I quote)
"25 of the 30 urban areas we track show buying a first home is affordable"
That's 83% of NZ being affordable, a lot higher than I was expecting. Of course areas like "North Shore of Auckland is unaffordable" but would you really expect FHB to buy in the 17% of most exensive suburbs in NZ? If you cannot afford to buy your 1st house in your preferred area, look somewhere cheaper.

That's 83% of NZ being affordable,

Not if you weight the data by demographics and housing aggregates. More accurately, if you can't afford to buy a house, don't. Buying a house for the sake of buying is pointless and futile.

25 out of 30 is 83%, which is said to be affordable

Areas, not suburbs, and the number of areas does not reflect the population..
So the Auckland region which is 34% of the national popualtion:
The affordabilty report says Auckland (Auckland City, Waitakere, Northshore and Rodney) is unaffordable for FHBs, Papakura sneaks in just below the 40% cutoff at 39%, and Franklin is at 35%. So if you are a FHB in Auckland, either learn to like that hour long commute up the southern motorway, learn something about potato farming and agricultural equipment, or leave town??

When I do the maths the 40-45% of of both incomes I cant get down to that % of both incomes.
The figures quoted, please don't tell me they are working on gross figures!!!because that is what it looks like.
Back in the 80's when we had one income 2 kids and 20% interest rates I did not get commensurate pay rises of 20%/annum. We did not go out and buy coffees and cafe meals weekly our Friday night was a video from the shop and home made hamburgers.My house was not 220m2 all appointed mansion but a relatively spacious 135m2 3 bedroom 1 bathroom. I accept that it is far more difficult to borrow and buy a median house,however lets compare apples to apples.

The banks always worked out DTI using gross income in the past, so I assume that they still do. Hence the reason why the stats still use gross income instead of nett income.

The method and data sources are given in the reports. Its net income (+WFF) but it is for age group and area.

SOME UK FACTS....to compare...and whinge about.....Pound to a penny if thinking of a bit of overseas living...a lot of Dollars needed.....in some places.

http://www.dailymail.co.uk/money/mortgageshome/article-5660441/How-expen...

People are working harder than ever just to get by. So many people are so stressed out, working crazy hours for employers that have too little resource. Even at councils and in government departments, I know many who are regularly working 50-60 hour weeks. And near breaking point.
I don't think our society is healthy at all. In fact in many respects I think it's totally sick, and the deep seated issues are being masked by phoney measures of growth and employment.
And I agree with others who see this data as more phoney data (ie. data that presents a headline that is much rosier than the reality)

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I'm sorry to say this - as I think this website is excellent - but this is a really flawed article. All of Auckland is unaffordable, and severely so. The article makes it sound like only central Auckland and the North Shore are out of reach.
Also lowest quartile 'homes' are often tiny apartments. Think about it - many FHBs will be wanting to start families within a few years. So this is phoney.
NZ's high cost of living beyond housing needs to be factored in too.
Auckland's housing affordability is a disaster zone, I'm afraid.

WOW, this article was provocative huh? Boomers, GenX-ers and Millennial's FIGHT!!!!!

I'm a Xennial - it's totally a thing ;-) (people born early 80s)

I've bought and sold a few times (admittedly in the UK) and easiest by far was in 99, and it has been harder every time since then, despite interest rates falling over that time. Really rips my nightie to read boomers trolling younger generations about coffee and avocados. That's not born out by the data and just comes across as cruel and ignorant. The very fact that many boomers were able to buy a house on one income with a 20 year mortgage, whereas now many NZ-ers struggle with two full time incomes over 30 years tells the tale. It saddens me that not only do they have no compassion but they gloat and troll those struggling.

I have alot of empathy for our young ones. I have a daughter who is about to graduate from Auckland University and all I want for her is the same opportunity that I had! I don't gloat about my security these days, but merely point out how dysfunctional our banking system has become and with regret I was part of it during the early 1990's through to just before the GFC hit. I got out in time, just before our NZ Finance companies started to collapse. I was a single mother earning a reasonable income as a banker and I was incentivised to sell as much debt as possible to our customers via a bonus scheme. If I knew now what I did back then, I would have left earlier! As a young woman with a career in banking, I was well looked after by my employer as long as I could sell well and meet my monthly targets! My bonuses were on a small scale, but enough to allow my small family to have yearly oversees trips. My mortgage interest rate was small compared to everyone else, it was a perk. I loved my job and my employer! It took me years to wake up to the carnage that I may have caused, even though I was a responsible lender. But what kind of employer asks you to sell debt to people that can't afford ot the most, like students? I made sure that my daughter didn't take up the banks overdrafts and $2000 credit cards before she even accepted her enrollment! Just lucky for her, that she has an ex-banker mother watching out for her!

TainuiBabe, I wasn't referring to you as gloating. There are plenty of older members who don't gloat or troll and who empathise with the difficulty younger people face with slow wage growth and cray cray house inflation. You give plenty of solid advise and provide valued insight. I pretty much always like your comments.

I wish i'd had an ex-banker mother to explain how debt worked when I was a silly teen!

Psychology
extreme selfishness, with a grandiose view of one's own talents and a craving for admiration, as characterizing a personality type.

https://www.theguardian.com/lifeandstyle/2016/mar/02/narcissism-epidemic...

It saddens me that you wish to stifle debate by pulling on heart strings and labeling good advice and encouragement as gloating and trolling.

Gingerninja is undoubtedly correct.

Over recent years it's become measurably more difficult to finance a first home in NZ.

A little empathy for the first home buyer of 2018 would not go astray.

TTP

The obvious solution for non-homeowners to buy a house is to move out of Auckland to a regional city or to Christchurch. Any well qualified and experienced worker can find a decent job in a regional city & even with a lower salary can then afford to buy a house.
How much value will you put in living in Auckland? That’s the premium you pay - locked out of home-ownership.

I drove past a sign in a big commercial building in Palmerston North two days ago advertising for "Carpenters to apply immediately". There are so many commercial building projects going on down here, not to mention new housing builds that we are so short of them that we need to go back to advertising in big windows. I have builders in my family and they can pretty much name their hourly price these days and many companies are poaching known builders with good reputations and offering rates that would make the most loyal employee walk off the job the same day! I know a few Auckland builders who might be tempted to move to a job that can offer them a chance to buy or build their own house for a fraction of the price and still earn the same income, if ot more. At least they won't need to compete with cheap offshore non-compliant builders!

There are some very heroic assumptions in the report. Such as a couple aged 35-39 having bought their first property 10 years ago. That would have made them 25-29 ten years ago. Prices were high then (just not astronomical like they are now), and I would think far more 25-29 year olds 10 years ago didn't own than owned (remember too prices were lower but interest rates higher)
Don't forget the burden that student loans place on the ability of many young people to save

There is no debate. Prices to income are unaffordable, loan servicing ratio is only one measure and it's entirely subjective to RB policy and bank policy, which will fluctuate significantly over the term of the debt.

The market is stuffed.

Those so desperate to get into the market are sacrificing quality of life, delaying starting a family, moving away from family, erroding family bonds by outsourcing child rearing to low wage imported day care help, adding massive stress to their lives...the list goes on. The game of life has changed under "free market" globalisation in the last 30 years. The longer term implications are a deterioration of society and quality of life for both the "haves" and the "have nots". The solution? Significant reform to restructure how our markets function and how the monetary system distributes wealth. Labours policies if enacted are positive but still too little and way too late.

Its kinda funny that younger generation will need the help of boomers to help out for a house purchase. One takes public transport or uses an aged but trusty Toyota Corolla, drinks ordinary coffee,home-cooked meals is not averse to wearing hand-me-down clothing from Sallies, minimal overseas trips etc.

How is it those weaned on Starbucks, latest ipads, flashy cars,frequent dine-outs in fancy restaurants,branded clothing need their help?? Should have been the reverse.

Jaf WRONG WRONG WRONG you are making completely subjective statements that do nothing but reveal your bias. Data shows that millennial's are saving at a higher rate than either boomers or Gen-X did.

So how does that fit your nasty, self congratulatory little narrative? How can millenials be the frivolous consumer addicts you suggest when they earn less and save more than older generations? Furthermore, the cost of technology has massively come down over the decades and buying tablets, TV's, phones etc does not represent the huge percentage spend that it once did, certain aspects of cost of living have come down over the decades, eating out, tech and cars are all an example so compare apples with apples. Just because tech is more affordable now, does not translate to meaning that life is more affordable. Giving up coffee's, ipads would be a drop in the ocean when a home costs x11 income. https://www.businessinsider.com.au/historical-price-trends-for-tech-prod...

https://treasury.govt.nz/publications/staff-insight/are-today%E2%80%99s-...

https://www.businessinsider.com.au/millennials-saving-twice-as-much-as-b...

https://www.greaterauckland.org.nz/2017/03/07/no-boomers-its-not-like-it...

Thanks. It s funny though when many jobs require this technology & on call remote work ability these days. They might as well said we should go back to phone booths every km, and pen & paper when those options for employment have already disappeared. I had to buy extra sever equipment for a couple of roles & do a lot of remote client work yet the cost of that equipment is now a requirement for the employee to cover, not the employer, (don't get me started on the cost of engineering equipment & tools).

Thanks. It s funny though when many jobs require this technology & on call remote work ability these days. They might as well said we should go back to phone booths every km, and pen & paper when those options for employment have already disappeared. I had to buy extra sever equipment for a couple of roles & do a lot of remote client work yet the cost of that equipment is now a requirement for the employee to cover, not the employer, (don't get me started on the cost of engineering equipment & tools).

You missed out the avocado on toast and doing lines of caviar off a hookers arse.

:rolls eyes:

No no no.. its cocaine of a hookers arse. Caviar and Kopi Luwak for the morning after.

Why couldn't you have said something earlier before I got my beak all gummed up?

Speak for yourself, I was all about the meowmeow, cocaine is so Gen X ;-)

The game of life has changed under "free market" globalisation in the last 30 years. - Bluff

I think people don't quite realise just how much things have changed and how rapidly. We have gone through a social transformation. In some ways for the better and in some ways for the worse.

For individuals doing well this is a great and exciting time to live but things will continue changing.

Faced with this the individual needs to look after himself and his close family and enjoy the ride.

Natural forces will continue to shape the future. Evolution will continue its long march. Who knows if this is the right path to a better future or a dead end? Only time will tell.

The solution? Significant reform to restructure how our markets function and how the monetary system distributes wealth. - Bluff

A lot of commenters seem to want government intervention that brings in some sort of socialist or egalitarian system. History has shown that this is madness. It's even more difficult and less likely to work in a multicultural, globally minded, society.

People tend to go through this stage at some time in their lives. I too was once inclined this way until it dawned on me that the annual burning of wickermen on the volcanic cones of Auckland just wasn't going to happen. You have to move on to a new future. Thus I embraced Globalism.

Zach, dude, this is a classic strawman logical fallacy and frankly beneath you.

It is perfectly possible to support globalisation AND reform without resorting to either totalitarian socialism or letting the world become a capitalist feudalism. There are miles and miles of grey area in between either of these options and a sensible mind might suggest that reform and adjustments to address problems where they occur, is perfectly reasonable and NOT some terrifying exaggerated march to communism.

A sensible mind would also require that reform and adjustments to address problems need to be well researched, communicated and have wide agreement. Nothing the COL have done so far meets those requirements, yet they wonder why there is so much dissent and push back.

Ex Expat I wasn't referring to the coalition actually and whilst I agree that the coalition haven't yet demonstrated anything I would consider awesome, they have certainly attempted to acknowledge and address some of the problems, instead of deny or worsen them. NZ gave National nearly 10 years and I think 6 months is too soon to condemn the coalition. There's another vote in 2.5 years, if the coalition haven't demonstrated their chops by then, we can vote for something else. Got to love democracy right?

But also, I would never expect a government to seek agreement of those that profit directly at the expense of so many others. That's just called corruption. I expect government to look for the greater good within reasonable parameters.

The assertion that National did nothing re housing is hollow to me. They screwed the scrum on the Unitary Plan to get intensification in Auckland even when their own voters pushed back (I wrote to the local MP and got told in nice terms that it was a fait accompli), tried to side with developers against residents in Three Kings, set up the SHAs etc. What is undeniable is that it didn’t work well enough and to me the actions of the new government are no more effective as they are not presenting a paradigm change. Enough people here who have been there done that have said as much.

Ex Expat, using compulsory land acquisition is something that Labour declared support for, Nationals Nick Smith dithered over; http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1167.... You do realize how silly it sounds that nine years is exactly the same length as seven months. You are too hasty in comparing results, desperate to unearth muck on a new Government with a vision for change, a shift from nine years of no change.

Try and enjoy your weekend. The days of septic politics are thankfully behind us. Its you that is trying to reinvent them over-n-over.

I recall this https://www.national.org.nz/enabling_faster_and_better_urban_development and thought it was outrageous at the time. This is the type of thing you do in war, or for the collective good e.g. public works.

As for 7 months VS. 9 years, wtf were the COL doing in opposition for all of those years? They should have come out of the election with developed plans and enacted them right away. They’re stalling for time and trying to get others to form their policy witness 75 working groups. This morning on Nation was a great example of how inept this lot are; they announce a policy to stop benefit deductions if the beneficiary refuses to name the child’s father. Despite 17,000 beneficiaries being affected they haven’t changed the law to allow them to have full benefits. Why? Because they spent that money on free tertiary fees for families like mine. Who should have been the higher priority?

BTW The British High Commissioner was very impressive on the Nation. I’d have her as PM in a heartbeat.

PS you are delusional if you think politics are getting nicer. The AM Show poll and threads here and elsewhere show the vitriol is increasing.

Ex Expat, yeah, I agree and National did also bring in the Brightline test. I didn't say that National did *nothing*, I said that they denied there was a problem (the housing crisis) and in some cases exacerbated the problem. And they had nearly a decade to do something that they had campaigned about (2007 speech on the housing crisis).

And I haven't said that the Coalition has solved the problem or that they have been effective yet. But 6 months is not really long enough to judge the effectiveness of attempts to address an extremely complex problem that took decades of mismanagement (by both previous governments) to build,.So the jury will remain out for me, for some time yet, on the Coalition.

Personally I think more needs to be done on Immigration Policy, to also address lack of competition in the building industry and addressing BRANZ red tape and costs, which are OTT IMO.

I do like the R&D tax incentive that the Coalition have proposed though and hope that this will bear some fruit down the line in encouraging Kiwi innovation and productivity.

Agree on immigration and housing materials. I bought my Dualit kitchen applicances from the UK, so why not my other needs?

As for R&D tax incentives I’ll wait to see whether it ends up as others have said with creative accounting to claim it.

Ex Expat, yeah, as with every piece of new tax legislation, a lot will depend on the tightness of the wording, and subsequent test cases to explore loop holes. Undoubtedly creative accounting will come into play as it does with every single other tax matter. We have an accountant in the UK who has gone to court with HMRC several times and won. It's up to government to make their laws clear and enforceable or else it's going to be open to interpretation. I would imagine that it'll be the civil servants and lawyers actually drafting the R&D policy though, not sure the average politician would ever have the level of skill in detail and semantics needed for tax law regardless of which party they are in.

I shall be bringing over as much as I can from the UK this year when we sell our UK house. Boiler, solid wood kitchen, bathrooms etc etc, even with shipping, duties and GST it's considerably cheaper than buying in NZ. If I can import quality for less on such a small scale, why on earth can't building suppliers and housing retail? Either they are taking a much higher profit margin or they are running very inefficient business practices compared to other countries. I haven't figured it out.

Nonsense gimgerninja, how else can you interpret "restructure how our markets function and how the monetary system distributes wealth" ?

Sounds pretty radical to me. And when that doesn't work? More distribution of wealth....slippery slope.
Things are fine if you embrace Globalism. The world is your oyster.

Zach, no, not necessarily extreme at all. Plenty of the functions of global markets are imbalanced, allowing citizens of one country (with different laws and currency value) to take advantage of these differences to make a great deal of wealth, at the expense of the actual citizens and tax payers of said country. That should be regulated IMO. However, that certainly wouldn't lead to communism.

Another example is imbalanced tax treatment, which is an aberration to an actual true "free market". In NZ, taxes have been imbalanced with some assets and incomes being taxed much more than others, allowing those with the less-taxed assets to easily accrue more wealth at the expense of those who don't have the access to this preferential tax treatment. A free market would tax all assets, income and wealth equally (and minimally).

Another example of the flaws in globalisation is that everyone and his dog has been able to buy NZD and buy into the NZ bond market, some from countries that do not have an aggressive and punitive foreign investment tax on its domestic investors...whereas IRD NZ taxes FIF so that if NZ-ers buy an overseas investment they are taxed annually on both the overall capital value every year AND the yield on the capital!!!! This gives some citizens of other tax jurisdictions an advantage over NZ citizens.

I would be a supporter of free markets and globalisation if governments of the world actually allowed for fair and equal tax treatment across the global markets so that domestic citizens had a level playing field with each other. That's not a socialist policy, that's a capitalist one. However, the playing field is not fair and equal and is therefore at the mercy of those who can take advantage and benefit at the expense of others.

Unfortunately now that NZ is part of the globalist machine we can't really restructure things. The only option is to embrace globalism. With such high migration it would be madness to redistribute our wealth to new arrivals anyway. Our course is set, might as well be in the group that can take advantage of the situation.
I see Finland has canned its UBI experiment.

I am pro-globalisation and immigration, but that doesn't mean that I agree that all aspects of globalisation and immigration should be an unregulated, unlegislated free for all ...that citizens become the victim of when such policies exist that ultimately harm them! You're making straw man arguments again and exaggerating and polarising the options to try and make a point, when there is an incredible range of options that are noway near either extreme.

There is no need for anything to be unfortunate, governments and voters are not entirely passive to the effects of globalisation (as Brexit has clearly demonstrated). Governments can regulate and legislate to level the playing fields as much as possible to protect their citizens within the global context. And immigration isn't a tide that we are somehow at the mercy of, governments also set rules on immigration. Deciding who can immigrate to your country, what they have access to etc, what is in the countries best interests, is all well within government purview. As is regulating what income and assets are taxed and to ensure that foreign consumers are not able to receive unfair advantage over domestic citizens.

You keep on believing that gingerninja.

Ninja you're right. Reform needs not be radical. It's a perpetual balance of self correction for society. Attempting to fix what's not working. Of course, if the system is working for a minority who have a greater voice, then of course reform is seen as a threat. A good example is the current reform (tweaking really) of RB policy, it's been 30 years and well over due. The reform to come on the Australian banking system once this royal commission is complete. The reform of the property market has started, with extended bright line tests and the removal of negative gearing. Next, ban on non residents. The property market has not been a "free market", it's been falsely geared through tax incentives and a monetary system geared to lend large amounts of credit to it. Better to be in property than business in the past 20 years for sure.

Distribution of money equitably in society is a capitalist ideal, it doesn't work as well as it should because it's too easily corruptible by greed and power.

Ginger - precisely. Most countries in the world have embraced globalisation AND protected their citizens better than we have here.
As you say legislstion and policy does not need to work in polar ways. Like almost everything in life, there is a spectrum with all sorts of options along it.

Zach, if a suggestion is perfectly possible, and indeed has occurred elsewhere in the world, demonstrating clear practical real world viability, how is it a belief? My suggestions aren't fantastical or impractical, they don't require belief.

My sense is that you are referring to my opinion as a "belief" as an attempt to patronise or undermine me. Which is a shame. I prefer it when you bring your more reasoned and informed A game, which is a much more enjoyable and enlightening exchange.

We protect our citizens just fine here in NZ. What are you on about?

World's Happiest Countries

We're in the top ten!

And the highest countries are ones that haven't enbraced neo-liberalism, and retain strong social welfare states.
Funny that....

I couldn’t see the make up of the index but I’m willing to wager that neo liberalist 1071 would blitz Finland if it wasn’t held back by the DGM in the rest of the Country. /Sarc

Ginger, as you are British, I am interested in how you perceive the views of kiwis on property versus British views on property.

Fritz

Brits love property, especially a good property makeover, but they don't labour under the delusion that it is always a good time to buy a house and that housing investment is the best way to get ahead in life. People want to own their own home just as much, but not multiple properties.

There is a housing crisis in the UK, which has many features in common with the NZ housing crisis but just not as extreme.
The problem has been a global phenomenon. Cheap debt and low yields encouraged many to plough into property investment. And just like in NZ, since the GFC inflation has been very shy and wage growth has been sluggish, so wages have not kept up with house price inflation at a time when house price inflation has been historically higher than the previously.

The UK governments have been more proactive than NZ to address the housing crisis there though. There are DTI's, various tax changes to discourage property investment (they are even removing mortgage interest as an allowable tax deduction etc), alongside attempts to encourage wage growth and house building programmes. In the UK, there is no such phenomenon as the "mum and pop investor", they exist, but it's not common place as in NZ, where boomers often have more than one house. Property investment is certainly not the only game in town in the UK. British peoples investments are MUCH more diversified. However, similar to NZ, British boomers typically have a great deal more wealth due to not having paid university debt (the average graduate in the UK now starts life with at least £30-40k of uni debt), having benefited from easier housing affordability criteria, higher wage inflation, better job conditions and security and having benefited from the demographic shift from one to two income households. So there is some generational bad feeling similar to NZ.

UK household debt to income is lower than NZ (government debt is higher but honestly, the UK gov has had high debt since the wars and manage it fine so that's not necessarily a significant factor), there are loads more job options spread more evenly across the UK and I think maybe only 13-15% of UK's population actually lives in London (although more commute in). Transport in the UK is an order of magnitude better than NZ so it's much easier to live somewhere quite far from work and there are more commuter options.

There have been several waves of crazy house price inflation in the UK. House prices started going up at a faster rate than the previous historical norm when women joined the workforce en-mass. This is often overlooked but by the 90s more households were becoming dual income. The more you earn, the more banks lend and this naturally causes house price inflation. Then monetisation and complex financial products led to more loose lending and we all know how that ended! The London financial markets were heavily affected and involved in all that. The UK housing market and economy was hit much harder than NZ was for many reasons.
After the GFC, banks became heavily regulated, which has protected UK citizens from themselves and being able to take on stupidly sized mortgages, but it was still very hard for anyone under 40, without existing capital to get on to the property ladder. Just not as hard as NZ.

Many Brits have been expecting their current housing bubble to pop. And right on cue, London prices are well down and sales in March came in an average £25k below the asking price.

Thanks Ginger. That's what I thought. I suspected Brits were not 'quite' as obsessed and deluded around property as kiwis.
We need a good crash here

I'm against globalism Zach. You might think of it as the free flow of goods. But it mostly is just a device to take control from us and make us helpless. You said it yourself when you said "... now that NZ is part of a globalist machine we can't really restructure things."

I know KH and I have a lot of sympathy for your viewpoint. For me it's a case of "if you can't beat them join them" with a touch of reverse psychology

But the reality is, for me personally, I find myself in the top 10% of the Globalist Imperium. To advocate demolishing it would risk immense personal sacrifice for people who share very few of my personal beliefs. I have come to the conclusion that the status quo suits me just fine as I suspect it does for most of the readers of this site.

More happiness to be found in giving than taking.....wonder if there's a correlation between capitalism and depression?

I'm going to exploit those less fortunate than me then wonder why I'm stale, pale, and unhappy...

Finland's UBI was a trial for a trial period, it will run till the end of the year. It was hardly universal, as it was just trialed using 2,000 unemployed
https://yle.fi/uutiset/osasto/news/finlands_basic_income_organisers_corr...

The time for a UBI is not yet here, but we do need to be prepared for a time when it may be necessary.

We already have one, it's just limited to those aged 65 and over. Currently.

The natural effects of globalisation will likely mean we'll run very short of worker income to rely on for taxation and for consumption, so of course at some point countries will need to address that - and tax a mix of land, robots, companies etc. and fund a UBI to in turn enable living and consumption. Not just the oldies taking the wages from the young and spending them.

And right behind Canada are NZ and Australia.

But NZ is different even though we are part of some global empire strikes back Elysium, the force is with you Luke.

We live on a terrestrial plane that makes us impervious to all the worlds global changes. We are different.

*chortles*

@gingerninja.
I was merely making the point that the young often need recourse to their parents for assistance i.e towards initial deposit for FHB, using equity in family home to support mortgage loan.Its also helpful to have parents providing accommodation until such time as the millenials can stand on their own because rentals are unaffordable.

Especially encouraged by your assertion "that millennial's are saving at a higher rate than either boomers or Gen-X did. "

Many of the points you raised ( with passion!!) are merit-worthy and the links you signposted make insightful reading.
Is there ever a time we stop learning esp from alternate views??

TQ