Even KiwiBuild homes are likely to be beyond the reach of many first home buyers if they don't have a decent deposit or a better than average income

Some of the KiwiBuild homes planned for Auckland.

By Greg Ninness

KiwiBuild is the Government’s flagship policy to provide more affordable housing for first home buyers.

But affordability is a relative term and whether a property is affordable or not depends on who the buyer is.

What is affordable for one person could be out of reach for another, making it difficult to judge the success or otherwise of the KiwiBuild scheme.

To help address that issue, we compared the prices and income limits for KiwiBuild homes in Auckland, which has the most pressing housing affordability issues, with those that are used in interest.co.nz’s own Home Loan Affordability reports, which gave some interesting results.

The prices of KiwiBuild homes in Auckland must be no more than $500,000 for one bedroom or studio dwellings, $600,000 for two bedroom dwellings and $650,000 for dwellings with three or more bedrooms.

The Home Loan Affordability Reports use a different price measure, the Real Estate Institute of New Zealand’s lower quartile selling price.

That is the price point at which 25% of sales would be below and 75% would be above, giving a price indication for the lower-priced or more affordable end of the market.

According to the REINZ’s August figures, two of Auckland’s districts had lower quartile prices (across all housing types) which were below the KiwiBuild price caps for homes with two or more bedrooms - Papakura where the lower quartile price was $543,000 and Franklin where it was $537,000.

And a quick search on Trade Me Property reveals that the number of one bedroom and studio units for sale in Papakura and Franklin is negligible, so it seems safe to assume that almost all of those sales would have been for homes with two or more bedrooms.

That suggests that in Franklin and Papakura, a substantial number of the homes that are already being sold each month, most likely significantly more than 25% of them, would be selling for less than the current KiwiBuild price limits.

Around the rest of Auckland, the REINZ lower quartile prices in August ranged from $632,000 in the central suburbs (within the boundaries of the former Auckland City Council, including the CBD) to $740,000 on the North Shore, mostly well above the KiwiBuild price limits.

So looking at price alone, there is limited scope for KiwiBuild to improve affordability on Auckland’s southern rump in Papakura and Franklin because a significant portion of homes being sold there are already selling below KiwiBuild price limits.

But there is greater scope for KiwiBuild for improve affordability in the rest of Auckland if KiwiBuild homes can be built in those areas in sufficient numbers to move the market.

Of course who will be able to afford them depends on how much they earn.

The income measure used in interest.co.nz’s Home Loan Affordability Report is based on the median take home pay for a couple that are both aged 25-29 and working full time.

In Auckland that would give them $1626 a week in their hand (combined pre-tax income of $102,800 a year).

The KiwiBuild pre-tax income limit for a couple is $180,000.

Interest.co.nz calculates that after tax they would have $2620 a week in their hands, which is 61% more than the income level used in the Home Loan Affordability Reports.

Another way of looking at the KiwiBuild income limit is that it is 61% higher than the median income of couples aged 25-29 where both work full time.

So it’s not just for people on low or average incomes.

There is no doubt that a couple earning the maximum income of $180,000 allowed under KiwiBuild would find it extremely affordable to buy a KiwiBuild home.

Interest.co.nz estimates that if they had a 20% deposit for a three bedroom KiwiBuild home costing $650,000, the payments on their $520,000 mortgage would be $615* a week, or 23.5% of their take home pay, well under the 40% of net income threshold at which the Home Loan Affordability Reports consider mortgage payments start to become unaffordable.

Most of the major banks have indicated that they would be willing to provide mortgages for up to 95% of the purchase price of a KiwiBuild home.

If a couple earning 180,000 a year purchased a $650,000 KiwiBuild home with a 5% deposit, it would only push their mortgage payments up to 27.9% of their take home pay, still affordable by any standard.

But what about people who aren’t so highly paid?

Couples earning the median income of $1626 a week that’s used in the Home Loan Affordability Reports would find buying a KiwiBuild home in Auckland a more daunting task.

They could do it if they had managed to save a 20% deposit, in which case the payments on a $520,000 mortgage on a three bedroom KiwiBuild home would eat up 37.8% of their take home pay, putting them under the 40% affordability threshold.

But if they had just a 5% deposit, the increased mortgage payments on a $650,000 three bedroom home would eat up 45% of their take home pay, while the mortgage payments on a two bedroom home purchased for $600,000 with a 5% deposit would eat up 41.5% of their take home pay.

So for the young, median income earners with a 5% deposit, the one bedroom or studio units priced at $500,000 are the only affordable option, with mortgage payments on those taking up 34.6% of their take home pay.

Of course if interest rates rise, as they will do one day, everything becomes even less affordable.

And although banks have indicated a willingness to provide 95% mortgages to KiwiBuild buyers, those mortgages still need to be individually approved.

And the banks are likely to favour higher income earners over lower or average income earners when approving 95% loans.

And unless your mortgage is pre-approved, you cannot go into the ballot for a KiwiBuild home.

So young couples on median wages who don’t have a decent deposit may still find themselves locked out of the housing market.

However it is early days for KiwiBuild.

If KiwiBuild helps developments proceed that would otherwise struggle to get off the ground, that will help improve supply.

And even at the current price limits, if enough of them are built it should improve overall housing affordability.

But it’s not a magic wand.

It’s likely that many people on average incomes will still struggle to be able to afford to buy their own home in Auckland as long as prices remain around current levels.

*The interest rate used to calculate mortgage payments in this story was 4.61%, which was the average of the two year fixed rates offered by the major banks in August.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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77 Comments

As a matter of interest , is there anywhere in the OECD, where someone earning the average wage is able to buy their own home, have a 20% deposit, and service an 80% mortgage ?

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You're able to do that in large parts of the US

Just out of curiosity, what is the average income of Americans who live in small and average sized towns?

How about Arlington, Texas? Random state with a city around the population of Christchurch/Wellington

https://www.realtor.com/realestateandhomes-detail/947-Mazatlan-Dr_Arling...

Probably insulated, unlike an NZ home. Central aircon, Built in 2009. 4 bedrooms, two bathrooms. 361k NZ.

Located in the DFW metro, with a population larger than New Zealand, or Sydney.

NZers really need to pull their head out their ass and look at the rest of the first world to see how much property is really worth. Shame visas are such a hassle or I'd be saving4UShouse

Lol you can’t compare dfw and New Zealand

Are you familiar with it? I know people who live there but haven't been.

From what I gather salaries are much higher and costs are much lower. Not comparable to NZ at all.

Yes you can actually.

Many assume because they are so 'different' that we cannot become more similar in those things that we chose.

Case in point, is that they have extremely affordable housing in spite of high immigration and low interest rates.

And as the evidence shows the main determinant of affordable housing is allowing supply to meet demand in developer real time, which is very similar to the Toyota Method.

To achieve this you need to have zoning controls (or lack of) that allow presumptive land use, both up and out, which Texas does.

You'll find one can compare anything to anything. I can compare a limousine to an egg sandwich if I please.

And what makes Texas special? High land taxes and low income taxes. Simple really.

There's a lot they don't do right, but this one is great.

There were also comments here not long ago showing that downtown San Francisco was about the same price as Albany, Auckland. Is that enough for you?

I’m in Silicon Valley right now. San Francisco and the wider Bay area are horrendously expensive. A local couple told me that survival wages for a single person are $25 per hour and a family would need $45 per hour, so $50,000 and $90,000 per year (all USD). Those would be renters not owners. I was shown property near the San Fran CBD at USD 1.2 million for a decrepid starter apartment on a main road. Many travel up to 2 hours each way to work. I’m coming to the conclusion that my son would struggle to establish himself in this area and big salaries would disappear in big costs.

I'm in tech, getting a high salary would not be an issue.

But now that I remember it the really cheap apartments we found were some kind of subsidised thing for low income (or in NZ english - high income) people.

That was me, posting actual examples of 2 bedroom apartments in SF vs. in Albany, and with Albany actually looking the worse deal. Easy to find good examples of that by comparing on Zillow and TradeMe.

https://www.zillow.com/san-francisco-ca/

https://www.zillow.com/homes/for_sale/pmf,pf_pt/condo_type/2087893260_zp... $799k
https://www.zillow.com/homedetails/1582-Sanchez-St-San-Francisco-CA-9413... $850k

Note, this is on SF itself, not over the bridge in Oakland where things are a bit lower priced.

Then compare to out in Albany, on TradeMe:
https://www.trademe.co.nz/property/residential-property-for-sale/auction... $860k

The long commutes ExEx is talking about would put you out in the likes of Conchord (outside SF) where you could get a standalone house more affordably than in most of Auckland's outer areas too, and an apartment far more so.

I visited SF and quite a lot of Cakifornia in the pre gfc days, that property bubble was already expensive, lots of boomers cashing up and heading inland to Pheonix etc in Arizona. I hear most of the California housing is murderously expensive now, surely though Oakland must have some good deals? I spent time out there and found it quite charming.

and in most of New Zealand. Just not in Auckland or parts of Wellington, any of Queenstown. Most other centres are just fine. To be fair, this is only the case if household earnings are median or higher. In many parts of New Zealand households can do it even on one income.

Which parts of New Zealand?

Show me the listings where you think it's possible. Not your vague recollections of how much Masterton or Oamaru cost 5 years ago - actual prices today.

Affordable, but at what cost? That first home is next to Dunedin's busiest highway into the city and is probably the most undesirable location possible for anyone who knows that area.

I mean sure, you can find a handful of houses which are "affordable" in the whole country if you look hard enough I guess, like if you have an Auckland salary then a few places in Southland could be defined by world standards (4 times your annual salary) as affordable.

But have you seen the condition? It is pathetic to the world standards.

I think he may be trying to drum up some support to sell some mortgages?

Perhaps places where there is more to look forward to in life and career than buying a bunch of houses to live off rental income.

Going to have to be a bit better defined than that for the question to mean anything. Otherwise the answer is probably yes, every single OECD country.

Southland in NZ for one, average single income is apparently $50k, and house prices starting with a 2 or 3 are common.
And with a 100year mortage in the Netherlands i'm sure people can afford to service an 80% mortgage somewhere in the country.

If you narrow it down to a 25year mortgage and major centres then the answer changes a lot.

@Pragmatist , you are correct , I should have been more specific , and said "major cities " such as Sydney or Vancouver or Singapore or Geneva .

Anyone can afford a shack in the Wop-wops

Anyone can afford a shack in the Wop-wops

at 200-300k a shack, not everyone can afford it.

Pretty much any couple working fulltime even at minimum wage can. Of course in the wop-wops finding a job may be more of an issue. Servicing a 280k (80% of 350k) 25 year mortgage is $360/week. Roughly 1/3 of take home pay for two minimum wage workers. If its a single income you'll need to be doing a bit better than minimum wage obviously.

Assuming interest rates never increase from an all time low...

Even at 10% interest rates the repayments are under $600 pw. So that would be a bit over half their take home pay, assuming there was no wage inflation. Probably getting a bit tight by then, but thats if mortgage rates more than double.

Auckland is less affordable than everywhere apart from Sydney, Vancouver, Hong Kong.

Having read some of the responses above to your question, which is a good question, it is obvious that many don't know where we sit in the housing universe, or if they do, it is in their own self interest to perpetuate the present system.

For starters, it used to be one income to one household measure to get the basic income to medium household ratio. Up until the late 1980's in NZ, average income to house price was approx. 3x income. This had been very consistent over time until then, and was consistent with many overseas jurisdictions.

Then they changed the measure to include all household income ie the other working partner and now this has been further extended to include working live at home kids. Further they have been reducing the size of the household to keep within affordability levels because the rising household income was not enough for you to afford the same size house as per past comparisons.

Even all these efforts by home owners were not enough to keep the medium multiple at 3x.

And the reason for this is when you create a bottle neck, a monopoly is created, and any saving the end user (homeowner) might make gets capitalized into the price, ie the end user is never the beneficiary of their sacrifice.

The main bottle neck in NZ housing is mainly due to increased land use and infrastructure restrictions, and since the early 90's the price of housing has decoupled from valued added true costs of housing and the price of housing is now 5 to 6 plus in the regions (on a like to like comparison basis between past and present house types) and 10+ in the likes of Auckland.

But the most important lesson to take from jurisdictions that have a more presumptive right to build, ie lower land restrictions, is that the market is stable around the 3x multiple over time, ie there is no boom or bust with prices and this is irrespective to interest rates, immigration etc.

Yes you can find regions in NZ where the medium multiple is far lower than Auckland and can almost support a 80/90% mortgage, but this is because that region is more in the bust phase of the property cycle.

The fact the prices in some regions have risen with the outflow from Auckland just goes to show that every region in NZ is just an Auckland Cluster@&#$ awaiting to happen. This is because as soon as demand comes on, the bottle neck supply mechanism is not responsive enough.

NZ housing is in the position it is because we are using a methodology that supports the outcome. And it is not a good outcome. It is totally man made.

And the solution to having more truly affordable housing is also man made, but at this point in time we have chosen to make housing more expensive than it needs to be, and at the sacrifice of family stability, education, health etc.

it's hard to know who to feel more sorry for in this present market, those FHB home buyers who haven't saved enough to buy these needlessly overpriced houses, or those that have.

Where I am in Brisbane, you can still buy a 3br house for 450K, roughly within the 20km circle of CBD. That's about the same distance as Manurewa, Henderson to Auckland CBD. Please don't compare Auckland vs Sydney or Melbourne. Auckland has nothing against Sydney or Melbourne and is even smaller than Brisbane.

Property bulls always do that. There was someone here seriously comparing Auckland to London a few months ago. Their rationale for thinking the prices could be fairly compared was that - even though London is one of the financial capitals of the world, the Auckland houses had lawns.

Not just property bulls. There was a post on LinkedIn from the chief economist at Auckland Council, where he compared Auckland's situation with West coast US cities like San Francisco, San Jose and Seattle.
He implied that Auckland's rapid economic growth has brought in thousands of expats and international companies but may have put an unforeseen burden on the city's infrastructure and resources, very much like 'its counterparts on the West coast'.
I would say that's absolutely delusional thinking!

'have put an unforeseen burden on the city's infrastructure and resources'

To the ignorant everything is an unforeseen burden or unintended consequence.

Auckland is always comparing itself to what it doesn't want to be in regard to housing affordability as if looking to those that are doing it wrong, they will find the answer.

The more common sense approach would be to look to those jurisdictions that already have housing affordability, and copy that.

Auckland is much smaller than Brisbane and not much bigger than Adelaide.
Perspective

According to Wiki, Auckland's density is 10x Brisbane. I assume that this then translates into higher land prices here. Especially around the fringe of the city areas. My experience of Brisbane is that it has the worst PT system out of the major east coast cities. Maybe reflective of its low-density issues?

Tokyo-Yokohama has a median income to price ratio of 4.7. A new home can be bought for just over $400,000. Two or one cars are not necessary due to the quality of public transport and mixed-use zoning -meaning many commercial amenities (employment, shopping etc) are close by.
https://medium.com/land-buildings-identity-and-values/what-is-the-secret...

There is a good video here on what it is like for the middle class to live in Tokyo
https://www.youtube.com/watch?time_continue=704&v=iGbC5j4pG9w

Watching a video on housing in Tokyo, they seemed to have simple planning rules and more alignment with actual libertarianism.

When you inflate an economy with too much debt to the housing sector the cost of production also rises as everyone clips the credit ticket on the way through to supply a home at a price that is similar to the secondary market. Builders do well, material suppliers do well, electricians etc etc.... The banks do quite well too.

When the credit supply tightens, or people decide that they don't want any more, then prices fall in the secondary market and new homes look ridiculous until, builders get cheaper, material supplies get cheaper, etc etc. The slow down in the construction sector is just the start of this process and has been evident for 6 months. Land owners are now offloading developable sites rather than take the risk themselves because ultimately if the credit to the end user (Mortgagee) is being tightened the pool of buyers becomes much smaller..

So what you're saying is, all Kiwibuild buyers could afford to buy a house in Auckland, but are too pretentious to want to buy in those areas where houses are cheap. So the Labour Govt is effectively subsidising over-entitled Millennials into being able to social climb by providing them houses in the expensive and more desirable areas.

too pretentious?
Is it too pretentious to want to live, with your young family, in a location which is reasonably safe, with good schools?
I think most wannabe first home buyers don't expect to buy in Remuera. But equally, there are plenty who don't want or expect to live in an unsafe, shitty suburb with sub standard amenity and education. And I think that's perfectly fair and reasonable.
Hopefully Kiwibuild will provide a lot more options in those middle value suburbs where so many FHBs are locked out.
KW - where did you buy your first house?

I bought a house that I could afford, on the opposite side of town from where I had been renting, because I'm not so pretentious to expect taxpayers to pay to keep me in the style I had become accustomed to. In most cities, young couples build houses on the outskirts of town, and over time they upgrade to houses closer in. In Auckland's case this is Franklin, in Christchurch's case its Rolleston. If you are too snobby to live in these areas, then continue renting in Remuera.
Secondly, its the process of new owners buying into "shitty" suburbs that kick starts the gentrification process, and urban renewal. So crappy suburbs become "hip" suburbs and end up highly sought after. Even in the 90's Ponsonby was considered to be a shitty suburb. https://www.stuff.co.nz/national/72897184/colourful-hard-case-ponsonby-i...

I’d rather rent in Glenfield than own in manurewa

North Shore renting is a joke. Cheaper to get an apartment in a decent building in the CBD.

We're literally giving an unsustainable amount of money to boomers regardless of wealth who moan like shit every time someone suggest it might not be economically brilliant to do so. I know who is more entitled and it's not the people paying three times what their parents did for housing.

Yeah, the irony of those folk who received affordable housing off the back of government-boosted supply, whining against any possibility of similar for following generations. Quite the entitlement mentality.

Not to mention allowed to negatively gear their investments

Millennial are often called out for being frivolous with their finances, yet Boomers had to take out mortgages when house prices were (in income ratio terms) the equivalent of a deposit today. Why couldn't they just save up and buy the house? They actually received interest on their savings.

The government are not trying to reduce the cost of housing, they're increasing supply by injecting more capital and doing so in an elevated cost environment so the ongoing lack of affordability will remain.

They promised to open up supply to greater competition and reduce costs. If they actually had followed through and carried out the promised policy we would have seen cost reductions by now.

But no, they lied.

This is because that is not happened. They are buying properties that were already being built. NZ is at peak construction capacity and there are no unused capacity that can be used by injecting more capital. In five years time, more construction capacity may be available and KB may help to increase the supply by using this extra capacity. The question is will the additional capacity be required in five years time (i.e. do we expect the current crazy rate of immigration to continue and kiwis to stay home) ? or KB will just make the bust of construction sector that much larger? the difference between KB being a life saver or a disaster lies neatly in our expected rate of immigration in the next 5 years.

Didn't they propose to get rid of the Rural Urban Boundary in Auckland? What's happened to that plan? How bout their much touted infrastructure bonds?

'Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering and holding up development. New developments, both in Auckland and the rest of New Zealand, will be funded through innovative infrastructure bonds.'

https://www.labour.org.nz/housing

I think they realised that removing the RUB was a stupid idea.
One of their better policy backdowns, actually.

To be balanced and fair Jacinda Ardern has raised petrol prices, which was the other reform promise Labour made to Aucklanders.

And where the reduction on planning restrictions to higher density buildings too. The Tokyo example shows how valuable this can be.

It seems to me the government is at a crossroads.

1. Does it do a John Key -all promise no delivery https://www.youtube.com/watch?v=cWPgoAI1cLE

2. Does it embrace an entrepreneurial model of reducing supply constraints, improving infrastructure funding etc. Let's call this approach 'Thinking Small' to solve the big housing crisis problem. This approach uses KiwiBuild as a way of finding where the supply constraints are and eliminating them -for KiwiBuild's benefit and for private sector house builders.

3. Does it embrace its Statist/Keynesian tradition. Renege on govt debt promises so it can massively increase State House building. Using the power of the state to get the job done. Alan Johnson the economist from the Salvation Army champions this option -note Alan was one of the authors of the Housing Stocktake https://www.beehive.govt.nz/release/stocktake-finds-housing-crisis-deepe...

Alan doesn't seem to be much interested in fixing the supply constraints and other market dynamics problems -at least I cannot find any interest in these issues in his writings. He wants a full on 'Think Big' response to the housing crisis. Here is conclusion of his todays take down of Phil Twyford's KiwiBuild programme.

"KiwiBuild has the potential to become a massive nation building programme the likes of which we have not been seen since neo-liberalism arrived in Aotearoa with the Lange-Douglas Government. It can become a programme which in part defines the ambitions and ultimately the achievements of a generation in its efforts at creating a New Zealand which is more generous and inclusive. But this won’t happen while the Government fails to ignore the problems that modest income households have in affording home-ownership without some form of state subsidy. Meanwhile we continue to subsidise rents through the Accommodation Supplement and the Government hangs on to its budget responsibility rules like some sort of neo-liberal badge of courage."
https://thedailyblog.co.nz/2018/10/08/must-read-exclusive-call-it-kiwibu...

If a couple earning 180,000 a year purchased a $650,000 KiwiBuild home with a 5% deposit, it would only push their mortgage payments up to 27.9% of their take home pay, still affordable by any standard.

Does that include the low equity margin for the mortgage?

Thinking out aloud; there is one thing that puzzles me - the lack of private "spec building".
During the property boom 2002 to 2005, a number of private speculators built spec houses with the intention of immediately selling them at what were substantial profits. I know of three personally who weren't even builders but managed contract tradesmen, and many builders were involved in spec building. Spec building was a common term banded about.
However, private spec building doesn't seem to be happening currently- or it certainly doesn't seem as obvious. This is despite there being a "housing shortage" (not seemingly such an issue in 2002/5) and houses currently seem over valued (my home at that times was 3.5x my then salary, but it's current RV is 7.5x the equivalent salary). At that time there was also not the same high levels of immigration currently creating a demand for additional housing.
So what is the issue that the government is having to step in to build houses rather than this shortage being met by private spec builders?
- Am I not in touch with the amount of private spec building going on?
- Cost of building materials?
- Shortage of building materials?
- Shortage of land/subdivisions?
- Planning difficulties?
- Lack of skilled tradesmen?
It seems to me that the current comparatively very low interest rates and very high house prices should mean that rather than the government, there should be opportunities for "one man" builders and and private entrepreneurial to be meeting the current demand.
Clearly some of the above factors are not relevant as they apply to government KiwiBuild as well.
I am interested in being enlightened.

Yep, all valid factors.
I think the cost of land, and construction is a biggie.
There's a finite market for $1 million plus houses in middle value suburbs. But that's the kind of price that spec homes need to sell for, given land and construction costs, profits etc etc.
those same sorts of houses could have been sold with a good profit for 600K in the mid 2000s.
That's my take.

I think this is because there is no real shortage at middle and upper end of demand for housing. More than enough number of houses are built for this end of the market. The price for these houses have already peaked as well. No one thinks that you can have the kind of mad capital gains between 2013-2016 (and 2017 in some places) anytime soon.

The majority of the demand is from people who cannot even afford the cost of the land and council fees and charges. This group will only be able to buy property if prices significantly (and I mean significantly) drop (which makes speculation moot) or with significant government subsidy (a very unlikely prospect). You have to be crazy to speculate under these conditions.

Apart from all the costs and regulatory hoops to spec build, the biggest restraint is obtaining credit to do so.
The banks will want you to have enough cash or equity to start the process. Then will generally require a fixed price building contract to be in place (cutting out a chunk of profit) before approving and then depending on your personal income also require a pre-sale contract (which normally needs to be offered at a discount to attract interest - another chunk of profit) before starting progress payments. Tough to make enough profit to pay yourself a decent wage for the time and effort.

I like KB but as the article says buyers will still need more than an average household income.
There is still too much obsession with ownership.
As NZ's major city, albeit at the small end of mid sized cities internationally, Auckland just needs to accept the current and future reality that renting will be dominant, like elsewhere in bigger cities.
Good on the government for recognising this to some extent with its proposed tenancy reforms.
But it's not there yet in terms of housing supply. In my opinion, there is a strong case for the government having a non-social housing rental arm. They should build 1000 apartments per year in Auckland, that are rented out at market rates, and managed by an agency sitting alongside HNZC.
This would provide many benefits, including:
- Better tenure security
- Stabilisation of market rents
- More stability for the development sector

With market rents, the government would get a good return on its investment. Unlike social housing, it wouldn't be sucking the taxpayer dry.

Give it time and it might just work, but only if Labour don't bottle out. If things continue to slow but Kiwibuild continue to build, we could end up with affordable houses and a whole new generation of skilled tradies. I think Labour might be onto something here, even if they are out of their depth elsewhere.

Oddly enough it is as if National managed to change just enough of the rules to make Kiwibuild possible now, rather than in 20 years time. They fought tooth and nail to reform the RMA and planning processes, but were largely thwarted in their attempts. Obviously if National hadn't brought in 500,000 new people we really didn't need, then the task would be much easier, but without a crisis nothing would have changed. Is Kiwibuild the successor to Kiwibank, an enduring policy success by a Labour government?

This is all based on an assumption that 40% of net income is when mortgage payments start to become unaffordable. I don't get the percentage aspect. If you earn $100k then you supposedly need $60k to live off. But if you earn $50k you supposedly only need $30k to live off. This makes little sense to me.

Mo' money mo' problems

I tip my hat to you sir, great comment

Yes I find that odd as well.

I save over 45% of what my take home is right now, and I'm not exactly a big wig. So if we take the money I spend on rent and earmark that for maintenance/rates, 45% is easily affordable to me (ie, I'm still going to be able to eat out and absorb minor financial shocks).

If my pre-tax income doubled - and we ignore rent - my expenses aren't going to rise by much (well, maybe I'd need a nice suit and dry cleaning). 60% would be affordable.

$650,000 for dwellings with three or more bedrooms

$60k single income household, stay at home wife and two kids can borrow $203k from the bank. Just don't see a young family having a $400k deposit...

Yup, not going to happen

And at $615 per week, how do you do that on one income. Putting off having children to save for a deposit and mortgage payments when down to one income makes me worry by the time we have kids, nature will tell us we left it too late.

Sadly too true for the risk of medical issues rise steeply when trying later on, for the children and the mother.

I didn't have any kids, anyone with an above average IQ knows there are already too many people on this planet anyway. Just about all the major problems we are facing in this world would disappear with a reduction in population.I was paying up to $650 a week on my Mortgage on my own.

How is a studio suitable for long term ownership versus a short term rental? What message is this sending re lifestyle expectations? Furthermore how many studios in these blocks are going to become Airbnb short term let's etc in the future?

The expectation is that you'll pay standalone prices for 1 bedroom apartments. Can't imagine why young people put off having families or struggle with financial stress/mental illness.

The affordability reports interest.co.nz use unfortunately paint a rosier picture than reality.
-The median take home income is far lower for the young age group, where around 1/3 of the working population of 25-29 have student loans (using historic data could not find precise figures but this ratio was somewhat conservative to the figures I obtained from previous OIA requests).
-It would be imprudent to opt out of at least minimum contributions to the kiwisaver scheme given the return based on tax credits alone.
As some on here may or may not realise a 12.5% deduction on wages over $19,084 will therefore markedly decrease the take home income for this 1/3.

Therefore a 'conservative' median estimate for the take home income for a couple in this age bracket on the median income of $102,800 lowers from the $1626 weekly stated here to a more realistic $1513 weekly. Increasing payments from 37.8% of take home income to 40.6%. For a couple both with student loans on the median income this lowers to $1413 weekly take home pay, and increases payments to 43.5% of take home.
Arguably those with student loans have higher median incomes to account for this. However would be interesting to have a more detailed analysis. But certainly the $1626 median stated is in fact not the true median for take home pay, especially for this heavily indebted portion of the population.

This is why folk ranting against young Kiwis not being required to rack up large debt for university in order to get a job need to check their entitlement mentality.

The cost of the fees policy this year is less than the Accommodation Supplement for landlords (which also raises the rent floor, benefiting all landlords), and way less than the pension benefit that's handed out regardless of need (over 60% of our welfare budget).

We cannot just keep adding more burdens to the young while expecting them to fund the care of the old. A bit of quid pro quo is a more fair and reasonable approach.

Why can't we do this here for moderate to low income people.

https://www.cnbc.com/2018/10/12/thousands-line-up-for-zero-down-payment-...

Magdalene Altidor lost her home to foreclosure during the subprime mortgage crisis, but this week she was first in line at a four-day event in Miami where borrowers with poor credit were offered no-down payment, low interest rate loans.

At least these are fixed rate mortgages for the full 25 or 30 years of the mortgages. But still, no down payment and for people with low credit scores. Couldn't possibly go wrong could it.