-
The Reserve Bank has fired all its bullets and has now lost control of local retail interest rates.
———
‘The New Zealand dollar fell and wholesale interest rates spiked higher after US jobs numbers sent shockwaves through the world’s financial markets.‘
-
It seems to me that a lot of younger first home buyers these days, are not prepared to do what my generation did. We bought a house we could afford. It needed work done. We did it ourselves (most of it anyway). We didn't expect to have a designer kitchen, two bathrooms, a carpeted garage, a spa pool or a BBQ area. We started at the bottom, paid our mortgage off as quickly as we could, and it was "home." We stayed in our first house until my ex's work situation changed and we had to re-locate. At that point we bought a "better" house, which was younger and needed little done to it. We raised two more kids in that house.
Yes, I understand and appreciate that this was many years ago, when interest rates were low, but so were wages compared to now. I also get that house prices are vastly different (ridiculous!) now - but that aside, home buyers need to take responsibility for their decision making. Do your maths and work out what your proposed mortgage will cost you if the worst case scenario arises, interest wise. If it is obvious that you would be screwed if it happened, don't bloody buy that house!
It's not rocket science.
-
A reminder of the disastrous ‘speculative frenzy’ we lived through -
https://www.bloomberg.com/news/featu...ared-to-income
It's Beautiful and Virtually Covid-Free. Just Don't Try to Buy a House There
Prices are surging for even the most dilapidated homes in New Zealand, one of the world’s most unaffordable property markets.
By Ainsley Thomson
7 April 2021 at 5:00 AM NZST
‘Every week seems to bring new stories of unimaginable prices being paid. In March, a modest three-bedroom bungalow in the desirable Auckland suburb of Greenlane sold at auction for NZ$5.98 million, some NZ$2.6 million above its local council valuation, according to real estate website OneRoof.
Behind the explosion in prices is ultra-loose monetary policy that has sent borrowing costs to historic lows and fueled a rush into higher-yielding investments such as property. Those forces are driving up values globally but New Zealand, which vanquished Covid-19 and is recovering sooner than most, has become a poster child for the boom.
Even dilapidated houses, known as “dungers” in New Zealand, are in hot demand. In January, a tumble-down, three-bedroom house with peeling paint and boarded-up windows sold for NZ$1.81 million in the Auckland suburb of Avondale, revealing the value of the land it sits on to developers.
The median house price is now 6.7 times the average annual household income, according to Infometrics. To get back to an affordable multiple of about three, the economics consultancy estimates there would need to be a 55% drop in house prices or a 123% lift in household incomes.’
-
https://www.nzherald.co.nz/nz/man-ac...BYIAZVFKF2EYA/
‘Up to 30 Auckland building projects are “potentially compromised” after a Taupō man allegedly forged the signatures of qualified engineers to sign off more than 1000 buildings around New Zealand.
At least 40 councils are now scrambling to check if any properties in their regions are structurally at risk.
A police investigation is also under way but no charges have been laid. The matter has also been referred to the Ministry of Business Innovation and Employment.’
-
 Originally Posted by justakiwi
It seems to me that a lot of younger first home buyers these days, are not prepared to do what my generation did. We bought a house we could afford. It needed work done. We did it ourselves (most of it anyway). We didn't expect to have a designer kitchen, two bathrooms, a carpeted garage, a spa pool or a BBQ area. We started at the bottom, paid our mortgage off as quickly as we could, and it was "home." We stayed in our first house until my ex's work situation changed and we had to re-locate. At that point we bought a "better" house, which was younger and needed little done to it. We raised two more kids in that house.
Yes, I understand and appreciate that this was many years ago, when interest rates were low, but so were wages compared to now. I also get that house prices are vastly different (ridiculous!) now - but that aside, home buyers need to take responsibility for their decision making. Do your maths and work out what your proposed mortgage will cost you if the worst case scenario arises, interest wise. If it is obvious that you would be screwed if it happened, don't bloody buy that house!
It's not rocket science.
Exactly. Anyone borrowing $800k for a home and then complaining when the rate increases has only themselves to blame.
-
Originally Posted by justakiwi
It seems to me that a lot of younger first home buyers these days, are not prepared to do what my generation did. We bought a house we could afford. It needed work done. We did it ourselves (most of it anyway). We didn't expect to have a designer kitchen, two bathrooms, a carpeted garage, a spa pool or a BBQ area. We started at the bottom, paid our mortgage off as quickly as we could, and it was "home." We stayed in our first house until my ex's work situation changed and we had to re-locate. At that point we bought a "better" house, which was younger and needed little done to it. We raised two more kids in that house.
Yes, I understand and appreciate that this was many years ago, when interest rates were low, but so were wages compared to now. I also get that house prices are vastly different (ridiculous!) now - but that aside, home buyers need to take responsibility for their decision making. Do your maths and work out what your proposed mortgage will cost you if the worst case scenario arises, interest wise. If it is obvious that you would be screwed if it happened, don't bloody buy that house!
It's not rocket science.
Totally agree with your sentiments. People not willing to do the hard work but also not willing to start humble. I remember my uncle and aunt lived in a garage for 2 years before they had enough money to build their home.
That said: I remember when I was just out of uni, starting salary was $30k. I then bought my first 3 bed home for $73,500. Mortgage was $50pw.
Now starting salary out of uni is $70k? But that same 3 bedroom home I recently saw priced at $695,000.
That is a world of difference. Starting grad salary about double. Price of home almost 10 fold.
-
I agree. But people seem reluctant to ever consider relocating to somewhere far less expensive. It does to some extent, depend on what job you have, but in this day and age, many "professional" type jobs can be done remotely. Jobs at the other end of the spectrum can literally be done anywhere. Why would someone working as a caregiver, cleaner, cook, teachers' aide, builder, mechanic etc, choose to live in Auckland and pay ridiculous house prices, when they could very easily find a job in a far less expensive city or town? If you want more bangs for your buck, you seek out a location that will give you that.
Lifestyle is what you make it. You get to enjoy your lifestyle significantly more if you are not stressed out worrying about how to pay your $800,000 mortgage. If you can buy a similar house for $600,000 elsewhere, why would you not do that???
Originally Posted by blackcap
Totally agree with your sentiments. People not willing to do the hard work but also not willing to start humble. I remember my uncle and aunt lived in a garage for 2 years before they had enough money to build their home.
That said: I remember when I was just out of uni, starting salary was $30k. I then bought my first 3 bed home for $73,500. Mortgage was $50pw.
Now starting salary out of uni is $70k? But that same 3 bedroom home I recently saw priced at $695,000.
That is a world of difference. Starting grad salary about double. Price of home almost 10 fold.
-
Originally Posted by ynot
Exactly. Anyone borrowing $800k for a home and then complaining when the rate increases has only themselves to blame.
Yeah, but when does a huge mortgage x how ever many of these have been issued become the retail banks & secondary lenders problem?
“If you owe me $10 you’ve got the problem, if you owe me $1,000,000 I’ve got the problem”.
-
In the 70’s if you were on an average income and wanted to borrow hundreds of thousands of dollars they’d think you were mad, in this day and age banks are practically begging people on average incomes to sign up to an $800,000 mortgage to buy a bog standard residential property. They all have sales targets to meet & just one product to sell: mortgages on residential property.
It’s not just the mind-set of would be property buyers that changed, it’s the mindset of the retail banks.
I doubt ‘mortgage brokers’ existed in a big way in the 70’s, 80’s, and 90’s either. There is this whole apparatus of what I term ‘the property industry’ that exists to tell people that eye-watering prices are actually really affordable & that they have to get in now otherwise they will miss out.
I remember the TV ads with the young lady talking about the large ‘capital growth’ to be had in a certain area, and another ad with the smiling lady saying “yeah, this is a great buy”. You don’t see these ads anymore.
Were there ads like that in the 70’s, 80’s, 90’s? Not that I can remember. Real estate agencies and retail banks made untold billions billions out of the property frenzy, and plowed a portion of their winnings back into advertising that told people that property was the risk-free bet you couldn’t lose.
-
Originally Posted by Logen Ninefingers
Yeah, but when does a huge mortgage x how ever many of these have been issued become the retail banks & secondary lenders problem?
“If you owe me $10 you’ve got the problem, if you owe me $1,000,000 I’ve got the problem”.
In NZ not that often I would guess. Not like the US in 2009 when owners unable to pay mortgages gave the keys back to the bank and ran. Not so here.
Posting Permissions
- You may not post new threads
- You may not post replies
- You may not post attachments
- You may not edit your posts
-
Forum Rules
|
|
Reply With Quote
Bookmarks