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  1. #1
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    Default NZ 1st homebuyers are ScReWeD...

    New Zealand is at the beginning of a first homebuyers crisis...
    lets assume NZ median house price is $330,000 .... and you pay a piddley deposit of $30,000
    -also assume interest rates are 8%
    -number of years to pay the loan off are 30 years
    -loan amount is $300,000, after deposit is paid

    you therefore get....
    Year 1 2 3 4 5 6
    Beginning principal bal 300,000 297,352 294,492 291,403 288,067 284,464
    payment 26,648 26,648 26,648 26,648 26,648 26,648
    interest component 24,000 23,788 23,559 23,312 23,045 22,757
    principal component 2,648 2,860 3,089 3,336 3,603 3,891

    -and so on, for 30 years
    -in the first year you are paying $24,000 in interest only... wow... and only $2,648 is coming off the loan balance at the end of the first year...
    -so, your house value has to increase 8% in the first year... (24,000/300000) just to break even and cancel out payment for interest only (8%)
    -year 2 opening balance is year 1 beginning principal balance less principal component
    and so on...
    -so for 30 years you are paying $26,648 per year or $512 per week, every week.....
    -total amount paid to the bank after 30 years is $799,440 ...[:0](26,648 * 30)
    -the above example doesnot include the benefits of what you save in rent by having your own house

    I have only ever been told to buy a house, by parents, friends, every single person I have gone to, to ask for advice has told me to buy a house... The housing success stories are all to common for people who are 5plus years older than me and beyond...

    but yet, I look at the above loan amortization table... and cannot see a path...
    I am 22, student, without a house (of course)... and cannot allow myself to be a 52yr old man, and have a house only... so I looked for another means... I spent two years just looking at shares, and the last 2 years playing high risk shares, with much success I add... I applied a simple strategy where I invested in high upside, low downside... trouble is finding a share with these characteristics... any way....
    It is always a goal of mine to have a house... but It will have to be paid largely in cash...

    Or I will need a combination of a few events happening...
    -house price falls dramatically
    -interest rates to drop, (not likely in the next year) but interest rates will drop in the medium term
    -rental rates to increase dramatically, so house buying becomes more attractive
    -wages to go up massively (yeah right)
    -large govt incentives...

    we are due for a housing fall... If you are a first time house buyer, dont be fooled into housing by others... let the numbers speak for themselves...the only way to make house buying attractive is large front end payment, or up weekly payments.up $500, yeah right...
    any more than 15years spent to pay for a house is far toooooo long!...(for me)

    at $500 per week for 6 weeks equals 3 thousand, a nice sized share parcel... we are going to be a generation of renting property, or inheritance... I want neither...

    they say there are risks in buying a house... no theres not... theres no risk in doing what everyone else is doing, because at the end of the day everyone will be in the same boat... and either all better off, or all worse off... there aint no risk in that...
    to get ahead in life you have to take risks....

    I have heard that many property buffs are changing their views on apartments... I heard of apartments selling recently as low as 55k in auckland...
    if you are pondering a first home, then all the best, wheather you buy a house or not, it will still be the largest decision you will ever have to make
    Thank you for taking the time to reading the above...
    Cryptocurrency holdings in utrust cardano and power ledger... ripple... neo.... .....LOCI ...
    Market capitalisation 130billion...
    Coinmarketcap.com

  2. #2
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    Default

    opps, the amortization table above looks alittle unclear, this will help...
    Year...................................1.......... .2..... ...3............4.. ........5.............6
    Beginning principal bal...300,000....297,352...294,492...291,403.....2 88,067....284,464
    payment.........................26,648......26,648 ....26,648......26,648.....26,648......26,648
    interest component........24,000......23,788.....23,559.... ...23312....23,045.......22,757
    principal component........2,648.........2,860......3,089... .....3,336.......3,603.......3,891
    Cryptocurrency holdings in utrust cardano and power ledger... ripple... neo.... .....LOCI ...
    Market capitalisation 130billion...
    Coinmarketcap.com

  3. #3
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    SC
    That is 'shrewd' observation.
    What you did not mention is that your house price is already pegged whilst your income will(hopefully) be 'upwardly mobile' with time.
    You can even get some flatmates to subsidise your repayments, and they don't even have to know you own the place

    Now the second house - that is a different story.

    Cheers and happy new year

  4. #4
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    I purchased my first house as a rental ($300/wk) while continuing to rent personally ($80/wk being my share).

    While I didn't have any emotional satisfaction from living in my own house, it allowed me to get on the property ladder...
    Death will be reality, Life is just an illusion.

  5. #5
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    SHREWD CRUDE, QUESTIONS TO ASK YOURSELF.
    1, The value of the house over a ten year period ?.
    2, The rent that you paid elsewhere?.
    3, The rental income for part or all of it.
    4, Refinance after five years to get all your money back.
    6,Would you be silly enough to lend money for an 8pc return.
    MACDUNK

  6. #6
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    Default

    firstly, I dont expect to make big inroads with the property forumn... I am just the new kid on the block... and yous are prob fat rich cats off property (some of yous)... and going forward i cant see me making it here... I dont even want to spend 15 years paying off a house, let alone 20,30... In australia aint they doing life long loans...

    broke, good point... but, back 20 years or so, when we had persistant high inflation in the 1970's averaging 12% and 1980's 11%... a 12% rise in inflation would just cancel out 12% rise in house value, would it not?... house prices prob rose more than 12% though back then....eg, when inflation peaked at 20%, you would have been getting around that with interest in the bank... so inflation erodes away at returns as well as your argument around decreased debt payment

    foodee, gone were the days where you didnt need flat mates.. my mum and dad never had any, and didnt need to have any...nowadays things have changed... and they were on average incomes... any way, id like to have a family, and kids some time, so flatmates probably aint an option... maybe in the short term only... and flatmates do bring their problems, (baggage)...

    steve, the property ladder has made many a millionares in the past... I cant see the same formula working with this generation... wont we just inherit it anyway...

    macdunk... wheres question 5...haha.joking... i dont pay rent, i live rent free at home... dad gives me free rent, I give him free financial advice..lol..im moving out next year.. I guess once I start paying rent and I see negative cash flows, then.....then...um... im funked...i guess, off to auzzie where I can earn 50% more, and a stronger dollar.. ... no I wouldnot lend money at 8%... rather buy shares, and own small percentages of companies, and aim for much much more...

    the property market can move in two directions... up, or down..
    if we get two more years of 10% growth, then my arguement is a nail in the coffin me feels... or if the market goes down, we will have many bankcruptcies, the people that will be hit the most are those who got in property in say the last few years and have large debt...
    Cryptocurrency holdings in utrust cardano and power ledger... ripple... neo.... .....LOCI ...
    Market capitalisation 130billion...
    Coinmarketcap.com

  7. #7
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    SHREWD CRUDE, What you must remember is the idea is to use other peoples money not your own on the path to riches. I feel sure you are smart enough to work it out. Property gives you very cheap money to invest elsewhere, doubles in price every ten years. After a couple of years you have property with none of your own money involved. Sit down and think about it. macdunk

  8. #8
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    quote:Originally posted by duncan macgregor

    doubles in price every ten years.
    Doubles in price every 10 years? ie about 7% per year

    Thats a new one Duncan. It used to be 10% a year - ie doubles in price every 7 years.

    Do you still reckon propert has doubled every 10 years from 1066 to 2006 and will do so from 2006 to 2056?

    Year average house price
    2006....400k
    2016....800k
    2026....1.6 m
    2036....3.2 m
    2046....6.4m
    2056....12.8m

    A house is considered expensive if it is 7 times the average wage.

    What are the chances of the average wage being $229,000 (1.6m/7 = 229k) in 2026?

    Pretty slim I'd say.

    If house prices keep doubling every 10 years no one will be able to afford to buy them.
    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

    The information you have is not the information you want.
    The information you want is not the information you need.
    The information you need is not the information you can obtain.
    The informaton you can obtain costs more than you want to pay.

  9. #9
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    How fast have house pices gone up?

    It depends how you look at it.

    In the UK in 1985 a house cost 3.4 times the average wage.

    In 2005 a house cost 6.1 times the average wage.

    Conclusion in the last twenty years house price in the UK have not even doubled in price.

    I.E gone up 3-4% a year.

    http://news.bbc.co.uk/2/shared/spl/h...l/nn2page1.stm
    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

    The information you have is not the information you want.
    The information you want is not the information you need.
    The information you need is not the information you can obtain.
    The informaton you can obtain costs more than you want to pay.

  10. #10
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    SC, I did it this way as I did not really have the means to move in outright and this way I also received the benefit of tax deductability of the costs such as interest/rates/insurance etc.

    It was just a means to the end.

    The most difficult bit is getting the initial deposit...
    Death will be reality, Life is just an illusion.

  11. #11
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    I see your point macdunk...other peoples money or not... it dont matter.. us newbies are priced out of the market, so it doesnt matter where the money came from....
    My point is that 1st homebuyers are screwed...(usually the younger ones)
    My deposit for a house has gone all into shares... I can afford a deposit, but I cannot afford 15, 20, plus years... or in my example 30 years...

    hey Rmb... u raised a good point.... and that is that we are less likely to get 100% capital growth from property than ever before..

    our property market is run by foreigners that buy up our houses, push up prices, and yet the new generation coming through are screwed on like 11, 12,13 dollars an hour...
    what good can you do with $400 after tax per week... and $512 weekly loan payments is too large even with two flatmates...
    so house prices have been rising through more wealthier internationals..who consider our property cheap... cheap for them expensive for us... expensive for us unless you are already on the property wave of course....
    Government raised minimum wage last year and in April this year, and propose again next year... this is a clear signal... lower paid jobs are at the lower aged end of the market...
    and the youth need all the help they can get if property is their life long debt ridden goal

    Cryptocurrency holdings in utrust cardano and power ledger... ripple... neo.... .....LOCI ...
    Market capitalisation 130billion...
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  12. #12
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    SHREWD CRUDE, Most people start with nuthing everyone leaves with nuthing, its what you do in between. The cream always reaches the top my friend in any generation. MACDUNK

  13. #13
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    I might be egyptian macdunk.... I may want to take everything with me to the afterlife..haha []...
    does anyone agree with my summation???, because there aint no way that even at 450 after tax plus two flatmates say 100 a pop each equals 650 less weekly loan payments of 512 equals $138 to survive on...

    maybe foodee, you could do it real hard for a few years... get your pay rise and then just, use that extra cash to live on... take the 30year loan, and breeze through until your 52 without kids, because you need their rooms for the dough... []...lol

    Yes I have a plan macdunk, it aint nuffin to do with property, the cream at the top dont spend 20plus years to gain a 300,000 investment... so nor shall I... and even if your investment doubles... you are still paying $799,000 in total over 30 years...

    my argument has nothing to do with the outlook on property... it is to do with the first homebuyers outlook on their life long debt ridden goal...


    Cryptocurrency holdings in utrust cardano and power ledger... ripple... neo.... .....LOCI ...
    Market capitalisation 130billion...
    Coinmarketcap.com

  14. #14
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    quote:Originally posted by Shrewd Crude

    I might be egyptian macdunk.... I may want to take everything with me to the afterlife..haha []...
    does anyone agree with my summation???, because there aint no way that even at 450 after tax plus two flatmates say 100 a pop each.
    SHREWD If you really were crude at a $100 bucks a pop you would pay the bloody place off in quick fashion.macdunk

  15. #15
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    Just be patient and keep investing. Prices will not be 7x wages for the rest of your lifetime. Fear will hit the market eventually and will drive out the speculators. Bide your time and you will pick up a bargain.

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