Interest Rates - Where to next?

[minimoke]

I don't know why you think debt is your friend? It is just a different form of slavery - to the bank rather than plantation owner.

Back in 94 you made a move without anyone holding a gun to your head. You voluntarily went to the bank and asked them to loan you some money to help you achieve one of your ambitions. Like a "friend" they stepped up and gave you a hand and it came at a cost called interest. It was a mutually benificial relationship - quite unlike slavery. Indeed you could have broken the relationship wheneever you liked - you just had to either save harder or get flatmates (like you did) or sell your house. But there will be a time when you reckon you can make more by using someone elses money than your own - and debt will again be your friend.

Your second paragraph sums it up nicely - housing is affordable if people are prepared to make sacrifices. Its the largest thing most people will ever buy in their lives - its not supposed to be easy. Thats why I think people struggle buying their first home under the guise of inaffordability - its because they want an average home half way up the property ladder rather than starting closer to the bottom.

[Ptolemy]

MM

I think you miss the point - is that house in Sandringham 15 year later worth nearly 3.5 times more when incomes have only gone up 40% in that same period. If I was buying now on the same relative wages I would be contemplating living a tiny two bedroom unit in Papakura. If I chose to do that if would be a significant tradeoff to my lifestyle. The argument was about the affordability of house in general not whether someone could afford a shoebox in the booeys. You will always be able to find a house you can afford to buy (Mataura, Papakura) if you look hard enough but to what ends do you want to sacrifice life - that is the point of having an affordability index.

Anyway, I doubt either of us will change the others mind. Debate is good. It is an important topic for most NZers given most of us have most of their life's saving tied up in it.