KEY POINTS:
Here is an earlier selection of your stories:
Voice of Irresponsibility
There seems to be a choice for those of my (20's) generation: work 60 hrs a week, scrimp on everything, buy an overpriced, poor quality house in a crappy suburb with long commutes to work (or Gore), and hope the property market doesn't crash and leave your precious investment a massive liability. Forget about it, and have a life. Live in the city. Blow most of your paltry paycheck on rent, spend the rest on travel.
The second option seems better to me. Why bother living in a first world country if you're going to make yourself a slave to a house? Why struggle all your life, to build a nest egg you'll only enjoy in the few years before you die? What sort of stories will you have to tell your grandchildren? Also, present housing prices are massively inflated- why put yourself at so much financial risk when renting allows you to live better (or invest in other areas if you earn enough to save)? And what if the oil crash is as bad as we think? Outer suburbs will be prisons when petrol is $5 a litre. More central city apartments are needed- not 'executive', but basic, livable constructions. Not having much room is the price you pay for living in a real city.
M Franks
I agree with Hubbards comments about immigration pushing prices up. 8/10 people who come through my open homes here on the North Shore are recent arrivals, usually arriving in NZ within the last 6 months or so. These are the typical buyers that I see.
Brandon
Most of the people sending their property success stories in are missing the point entirely: they either bought property before the price boom or they don't have a family to support. I support my family, have a good job, no credit cards, no overseas holidays, no coffees, no alcohol, almost never eat out etc. My money goes on nappies, food, and keeping my family clothed and warm with a roof over their heads, nothing frivolous at all. Almost everything we own is secondhand. The banks look at how much I earn and who I support, and they won't lend me enough to even buy a small do-up house in an average suburb. Simple as that.
JB
15 years ago $20K saved over 15 months was enough for a deposit on a fist home worth $160K say, and you borrow $140K very do-able. Now you need $200-250K deposit saved over more than 3 years! For a first home say $370K- $380K. Poor buggers theses days, its really hard for the youngen of today. Good luck sincerely.
Chris
Typical comment from a property developer who hasn't actually crunched the numbers for the average family. If you're dual-income-no-kids(DINK), yes, you have no excuse. I have a family of 4 to feed. We just couldn't make the numbers work, considering the entry price on Aucklands North Shore is high 300Ks, even on the most depressing budgeting regime. Renting has it's merits but in NZ, but as stated in the article, you can be turfed out with little notice for no reason at all. How can you raise a family with that over your head? Proper legislation needs to be put in place that affords renters some security and kick the cowboy landlords out of the marketplace.
Alan Wilkinson
The ignorance of basic economics displayed by many comments is depressing but unsurprising - New Zealand's poor government is the direct result. If house prices were too high due to demand you could make a killing by building more, but you can't otherwise young people would be doing it. The problem is entirely Government caused - by restricting supply and increasing costs via appalling legislation and regulation. The rest of the debate is just hot air and tilting at windmills.
Juro
It's called poverty creeping on us.
Mat Bishop
I feel very sorry for the many young Kiwi families who are struggling to get on the property ladder. Although I agree that there are some people out there who expect it all without the sacrifice, the current market has gone well beyond any semblance of normality. My Wife and I have lived abroad for the best part of a decade and fortunately for us we purchased property in New Zealand just prior to the latest boom. For expats like us, the market is great as is offers massive returns on our investment without the worry of having to find a well-paid job in New Zealand to cover the mortgage.
The property boom is a global phenomenon so the government cannot be totally blamed for the current crisis. However its tax policies have made property so much more attractive than other investments that you have to wonder how it can defend itself. Investors in New Zealand put their money into property because the gains they make are largely tax free. Compare this to the heavy tax burden placed on savings and share dividends. So while the chattering classes sip champagne and discuss their latest 2 bed acquisition in Parnell, young working families are paying the price through ever spiraling costs and stagnant salaries.
If the government really wants to help low income Kiwis to become home owners it would ditch talk of offering subsidies to first time buyers in good areas as it will only further inflate prices. Instead it should encourage Kiwis to diversify their investments into other areas. Compulsory savings and an annual tax free allowance for investing in the share market (similar to the UK ISA system) would not only provide a boost the local capital markets but give investors something else to put their money into. Finally, restrictions should be placed on foreign ownership while taxes on investment properties brought into line with other assets.
Sam
The problem with Auckland housing is that the prices are out of reach for many.$400 000.00 will not buy a decent three bedroomed house in an area with good schools and which is reasonably safe. A lot of households are investing in other portfolios other than housing. Take for example a mortgage of $400 000 @ 8.5 per cent will need repayments of in excess of $700 weekly and this household will have two or more school going kids .The govt should free land in and around Auckland which may alleviate the problem but people still need to save for retirement having a house alone is not enough.
Nina
Seriously. people need to take a look at themselves. I am 22 and get 25,000 before tax so thats around 18-19000 a year after tax. I want nothing more than to own my own home but on my salary it is not possible. I study part time which I had to get a student loan for. I wish I was on 70-100000 a year as my life would be so much easier, I could plan for my future and make my goals and dreams come true. People that say that cant afford a house on such a high income mustnt want it enough to sacrifice.
Trix
Here's another person who wonders at the deathly silence regarding a Capital Gains Tax to take the heat off the housing market (except, of course, where the home being sold is the home in which one resides). Also, what about Stamp Duty on homes purchased (other than the first home or the home in which one is going to live)? That would reduce the number of "mom and pop" investors who don't have a clue about what they're doing as landlords, and would encourage such investors to diversify. Every other Western country in the world has those kinds of taxes (as is amply trumpeted in "investors" sites like www.investinnewzealand.co.uk) - the politicians should be talking about those kinds of measures before raising interest rates, or the level of GST, or allowing more cheap (for "developers") shoebox mickey-mouse development over greenfield land. I'm earning $70K, I have a car worth $3K, and I fly across the Tasman twice a year for a few days. Hardly a lavish lifestyle, and given the amount of money I have to spend on rent, I can't see myself getting a sufficient deposit together any time soon.
Loan Borrower
Both parties have their points. I speak as a student loan borrower, who was raised in a place with no university, parents combined income was $22,000. I moved to Auckland to go to university, worked right through, obtained a post-graduate degree and then worked for one of Auckland's big corporates. Most people who are talking of scrimping and saving did this 5-10 years ago or more, when prices were lower. It's harder to do it now. But is possible. Discipline is important. The key point though - wages have not kept up with house prices. Quality of living in NZ has dropped as people sacrifice more and more to buy into the housing market. Houses are more unaffordable. They are not entirely unaffordable for all, but for many they are. This is not an opinion. This is a fact. On an average wage, one person can not afford to buy in Auckland. Stop arguing with each other - lobby the government for wage increases or house subsidies.
Nev
Most of your comments have missed the point! The comments listed tell of misery and heartache at either not being able to afford, or having put life on hold to acquire the property. This shouldn't be a banter parade between those that have and those that havent, this should be about why it is so damn hard to have a family and a home of your own. My wife and I with a combined salary of $90k bought our home, and then two years later had a child and we still have not recovered from the 6months she took off. The governments Working for Families doesnt cater for the working middle class family with 1 child, but pours out for those on benefit with 5 kids. So, all people hear this... live in an 'underclass' community, dont work and have many kids and your life will be a happy one. Be one of the majority, work hard, dont go on vacation and dont have kids and you might just get by. Labour have failed the masses!
Economy God
I wouldn't worry all that much people. There are so many factors going against the NZ economy at the moment, that it will inevitably affect the housing market; let me explain. The farmers and exporters in our country are currently screwed due to a high NZ$ low unemployment. They have already started laying off employees and stopped buying machinery etc in trying to manage their debt levels which puts pressure on other industries / suppliers in NZ. Every trend in NZ's history will show that between 12-18 months after farmers and exporters stop making money, the economy falls, big time. They are the back bone of NZ. This will lead to unemployment rates increasing, lowering income and with the interest rate increasing and probably will go to close to 9 per cent, people will start to sell up and move into 'cheaper' more affordable housing. On top of this you have the baby boomers retiring and looking to sell up. The market could very well become flooded. My advice, go overseas and earn better money, save, wait for the above to happen and come back to NZ ready to pick cherries around 2010 - 2011. The NZ$ will fall as well making the exchange rate even better coming back into NZ. Any economist will tell you this. I am a banker, I have seen these trends – and I can tell you the banks are very nervous about the Agricultural industry. And yes I am overseas. Good luck.
NJB
My husband and I are renting a house and we love it. This is our personal choice. We are investing our money for our retirement. Both of us work and we bring home $90K annually. We can afford a mortgage but we have decided not to buy. We take our kids camping in the holidays and we enjoy life. When we die our kids might not inherit a house but they will have lasting memories of the things we all did together as a family. There is no way we could afford to do that with a whopping great mortgage around our necks for the next 20 years. My family have stability even though we rent, and if the stove blows up or the hot water cylinder blows its not our problem. If we buy we would be living to work instead of working to live. Life is short and you only get one shot at it. Our choice and by the way I make my own coffee and walk to work!
Gloria Sigglekow
My son and daughter-in-law have $45,000 to put down on a house but when we inquired about the amount they would be paying off of a $260,000 loan it worked out that they would be paying back more than they are paying in rent $360.00 a week, they have three children so it has too be a 3 bedroom place at least and one also has to think about rates, water, house insurance things that they don't pay for because they are renting so its not just the mortgage you are up for. and they still have to feed themselves and with groceries going up in price all the time things are not easy, and they are both working and they do not waste their money.
Andrew Atkin
"Jon" effectively made a very important point when referring to families. Housing unaffordability is isolating real wealth from those who need it the most - young people with families (or trying to make them). If forces Mum to put off having kids until maybe biologically incompent ages, or encourages them to not have kids at all (we already have to make up the difference with immigration). This is the biggest cost of our inflated property market of all. And this is why we need to correct the market as soon as we possibly can.
Paula
This "woe is me" attitude is typical of the generation who believe that society should give them everything on a silver platter. Stop going overseas, stop purchasing the latest toys and learn to live on a budget like your parents did!Stop being snobby and take responsibility for your own future. Young people are buying houses in todays rising market. They save for their deposit and move into a reasonable area that they could afford...make some capital gain and move on....just like their parents did who were paying 21 per cent in interest on their mortgages back in the 70's and 80's.
Peterh
Interesting cross section of views. My path as a landlord started following the 1987 sharemarket crash and a stint working for a superannuation company where I saw the rorts experienced by investors. Property was an avenue where I could control my own destiny. I now own four properties, retired at 57 to the beach and travel overseas four months of the year. I am a fair landlord , charge below market rent , keep the properties in tip top order and have actually sold two of my previous properties to tenants. I believe I provide a service to my tenants and expect a similar professional attitude from the tenants.
It was hard work at times but the end vision of an early retirement kept me going. Property investment is a long term vision and commitment and does require sacrifice. However, the ratio of todays house prices to wages does need addressing but I suspect this will only happen when my generation of the baby boomers begin to off load their properties for more liquid assets linking in with a more imaginative approach to first home ownership.
Sonia
It surprises me how many people are telling the "lazy Aucklanders" to stop moaning. The simple fact of the matter is that it has become much harder for the average wage earner to afford a house, anywhere in NZ. I am 22, just finished Uni and am now working my first full time job. Naturally, I am not earning a huge amount, in fact, I am earning less than the average wage earner. My husband is still at University and he works a good 30 hours a week on top of that. Neither of us drink or smoke, we don't have children and we rarely go out. I never buy coffees and we share an inexpensive car between us. Bills for Rent, food, power, water, telephone etc pretty much eat up both of our pay cheques, yet we still try hard to save - but it is not easy and no doubt if this was 10 or 20 years ago we would be in a much better position then we are now. Sure, if you work hard you can save up for a home - but please realize that it is a lot harder now then it was even 5 years ago and simply prioritizing is not going to work for everyone. House prices have gone up while average wages remain low - you do the math.
The Headmaster
The problem in Auckland seems to be identical to that in Sydney - a government-caused housing shortage that is incorrectly diagnosed as a shortage of money. The article "Sydney's Housing Disaster" at http://www.financialsense.com/fsu/editorials/2007/0420.html debunks many myths about the housing shortage. If only everybody stopped drinking coffee then there would be enough houses for all.
Karen Ryder
This article (Government working on housing supply) is a prime example of the reasons why many New Zealanders have allowed themselves to become victims of circumstance, not the architects of their own success. Unfortunately, contemporary New Zealand politics dictates that it is somehow wrong to be financially successful or independent; and further, that if you dare to achieve any form of financial success or independence, you automatically become responsible to subsidise those who don't - whether they try or not.Government forcing developers to build low-cost housing? How typical that the government's response is to come up with an idea which simply shifts the burden of responsibility from the elected representatives to the business community. Here's a radical thought - instead of penalising business people for their enterprise by forcing them into an unattractive course of action, why not encourage them to build low cost housing by making it attractive to do so, such as by way of a tax incentive?
Apparently, according to some tenancy groups it is also undesirable for a person who owns an investment property to have a right to choose who lives in that property. Tenants already have rights enshrined in legislation. This legislation was enacted after significant consultation with both landlord and tenant lobby groups. It is sufficient. A property owner who gives his or her tenant the legally required notice period to vacate the property should not have to provide any reasons for their decision. After all, they do own the property.
There can be no doubt that is good for everyone to have high percentage of the population who own their own homes. It's also pretty clear that people generally look after things in which they have a personal financial investment. I agree with the person named in your article who suggests - again radically - that maybe people have to make some sacrifices when saving for the deposit on a house, and then possibly buy one in a less desirable area to get themselves a start in the market. This doesn't preclude the government from coming up with clever ideas to help people along this path, as long as the cost of their clever ideas is not simply dumped on another sector of the community.
Jon
I cannot disagree more with all the people in this forum quoting nonsense - such as how years ago they moved out of town and bought a house saving hard from their $90,000 joint income - what relevance has that to the young people wanting a home today. To all the 'genius's' I am willing to start a reward fund. I am an average father with two young children and a wife. I have no debt, and earn $50,000 per annum - more than a police officer, and more than a nurse, and more than a teacher. At the moment I have neglible deposit - so it needs to be factored in that I will have to save for a while. But a reward should be offered to anyone (does anybody know anyone that might be able to help - there must be one genius in New Zealand?) who can tell me how I can afford to buy an average (a genius should be able to quickly google that the median Auckland home is currently $430k which means that half of homes are more expensive than this - and half are less expensive) Auckland home for my family – without using the words "move to invercargill" "lotto" "borrow of family" "in my day" etc. If no genius can be found then I can only determine that the childless leaders of our country (eg our prime minister and housing minister) secretly want us all to similarily be childess because that seems to be an important component of any house buying strategy I have seen mentioned so far. I want to know what bank will give me the necessary mortgage, if I need to change job - to what job is available, and where in Auckland is this average house actually located? I also would care to hear from anyone willing to contribute to this reward fund.
Kirsten
I have two beautiful boys, wonderful husband and our own home. We were fortunate enough to purchase a house 4 years ago when I was pregnant with our eldest. We had saved and sacrificed to get there. We have definitely made on the deal with the housing boom and while its not our dream home, we will continue to stay there until we can justify selling. It is about saving and deciding what is a higher priority. We paid our student loans/personal loans and we worked hard to get there. We have our own garden. Now more for enjoyment than a real need to survive off it. But this is what happens when you work hard. You reap the rewards of that sacrifice.
Hayden Nash
Who needs a house in Auckland? I've given up trying to save for the city. Buy a house in a regional town where the prices are cheap and capital gain is assured. Thats what we've done. This time next year, we will have enough gain to buy a new city based house, or another regional one. Think outside the square!
Stan
I agree with Kathy view but its a tough life and if miserable salary simply not enough people will start do all sorts of things like that. When simply if all would have a good income the would not be such problem. The issue in NZ that Government does a lot of social engineering and there where the problem comes from.
Tessa
I think Jess, is a bit harsh about us New Zealanders being lazy. My husband and I earn about $60k between the two of us, It is difficult for people to save, when you have kids at school, the price of food going up , as well as travel expenses. I would say that if you are earning $80k between two people and have no kids at school or no kids at all, then yes you can save. We do not have any luxury at all, I don't even get to go into a coffee shop for a coffee. Things are expensive, and I can assure you the average man on the street is battling to survive. When we arrived in this country, our dream was to buy our own home, but we were shocked at the prices of property.So Jess, maybe you have sponged off others so you could safe for a house.
Skpp
Owning a house now seems to be thing of past. Its only a investors market. Foreign and domestic (for getting tax exemptions). Read other comments like if gross family income is 90-100K one can afford a house in Auckland but where in Auckland, possibly far from the city in a forest (said correctly by another esteem member of this forum). Do one really can stay away from the society with kids having no friends and to meet some one one have to drive 40 kms one way. Lets accept this truth that Auckland is not a place for common man.
Helen
There's more than just saving for the deposit, there's also the years of repayments. I'm sure I'm not the only one on a fixed income, that is frightened that when I do finally secure that loan I won't have any money left over for emergencies. Repayments on a $300,000 home loan would be $1,000 a month more than I pay in rent. Plus costs. Things would be tight for quite a few more years, and what is the car needed to be replaced, the house needed major repairs, and one of my kids needed braces? Maybe it's not just the love of luxuries that stops us buying a house, but the fear of not being able to pay for the necessities.
Kay
We should all do our children a great service now by not giving in to their increasing materialistic desires without a fight! This may just break the horrible cycle of spend, spend, spend....cause thats the attitude that leaves them home ownership-less! And we should stop condoning throwaway attitudes. And those young couples who have to give up the flash car and the overseas holiday - gimme a break!
Tamblin
It's always about supply and demand. As along as the demand is there, the prices will remain as they are. So what do you do, you decrease the demand.For you Aucklanders disillusioned by your incomes, and inability to afford a house, and/or a quality life-style, just move. Start sending your CVs off to more affordable parts of the country, or overseas. Mayors of cities, outside of Auckland, start promoting your cites, and businesses to attract those "needing" to exit Auckland for the sake of their families etc.
Ch
All these people who are saying they cant get a house in Auckland on $100k plus mortgages. Houses are available in Auckland for asking price of $269k, which can be dropped down in price slightly. I paid that (at the time on a 45k wage) for my place a few years ago and managed. sure it may not be in the ideal suburb, but it is still a three bedroom house, and it is nto renting. For single people like me, take in a flatmate. I have two and it now pays most of my mortgage. Its all about compromise and saving that initial deposit and settling for less than ideal to get into the place.
Wayne
Andrew King is spot on. We live in an instant generation where things are expected 'on tap' and where most things previous generations would treat as luxuries and privlleges, are taken for granted as ours by right. People's spending and saving habits are incredibly poor and lifestyle expectations are way too high. This is the primary reason why a couple on $70,000 can't buy a house. Yes, housing has become much more unaffordable in the past five years (though historic rates suggest this will correct itself over the next few years) but the fact remains that for those prepared to sacrifice the dream of owning their own house is still completely realistic. However, the prevailing attitudes are: "I want it, and I want it now! I'm not prepared to work hard and save hard to get it. Neither am I prepared to settle for living in an area that is not my first choice, or going without on some other stuff in order to pay the mortgage off."
I've worked for charitable organisations all my life and our income is very average (currently $56,000 per year). We bought in a state housing suburb because that was all we could afford. We've resisted the opportunity to move to a better area. Our furniture and cars are second hand, we rarely eat out and don't take overseas holidays. We don't consider any of this deprivation. It has allowed us to now own freehold two houses (our own and one we rent to friends at under market rental) and a bit of money in the bank. Two of our children are doing tertiary study. We provide them with free board while they're studying and both have the aim of being debt free when they leave university - this through working part-time while they study and living leanly. If we can do all this on our income, there's little reason that others can't - if they make good choices. I realise there will always be a small number of people for whom the dream of owning their own house will be out of range, but for most people, its still realistic. The question is: how much do you want it? and how prepared are you to alter your lifestyle?
Margot
I'm one of those lucky rich people earning a little over 60K. I rent an okay house in Kingsland with 2 others for $510 p/w. There is no way with running a car, rent and all the other expenses life has to offer I can get the 40K deposit together. I might have to move to Invercargil to afford a house. I especially love getting home after working like a dog all day and seeing the tenants of the state house across the road (who aren't NZers) drinking and smoking on the balcony after a hard day of watching TV. Its good to see the hundreds I pay to Helen each week being wisely spent.
D
It's really not that hard to purchase a house, you just borrow money and slowly pay it back. Three years ago my partner & I were both unemployed (myself for 2 years prior) but we then moved in together. Both got jobs, joint income only about 80k, bought a house 15 months ago. Sold it a couple of weeks ago for 20 per cent gain and have bought a new property worth nearly half a mil. It doesnt take a rocket scientist to realise that a house can earn more that you do - essentially you're living costs are almost nil. (ie last year I paid about $18k in interest and it gained it's house $50k in value) - My advice: Get a 100 per cent loan.
Brian
I've been renting for over three years after I sold my house. I never expected this kind of absurd phenomenon in NZ on housing market and recently felt some investors and real estate people are playing a big part of it. The house I am renting is sold at low 700K but it was sold the next month at low 800K. The problem was the investor didn't inform the new buyer this was leaky. Last week I've been to an open home in Remuera which was sold at 1.15m last month but it's on the market again and the real estate agent asked for mid 1m...this is crazy. And I think government should consider imposing heavy capital gain tax on to who sell a house without living for a certain set time, even one year.
Andrew
I would like to see local planners and government increasing the population density on land already occupied rather than extending the urban sprawl. New Zealand can learn a lot from the Europeans in that respect.
Charlie White
We are a kiwi/Irish couple who live in London and managed to get our deposit together for our first home in NZ only by earning the pound. Due to the rising interest rates we have found that we need to stay on here in London to enable us to save as much as we can towards our mortgage. We would dearly love to have come home now. Our mortgage we thought would be affordable at $280k - but even this size results in massive monthly repayments due to the extremely high interest rates. We bought out of Auckland as we thought it would be more affordable but due to the size of our monthly repayments we will need to commute 1.5 hours into Auckland each day, as we need an Auckland salary to be able to afford our mortgage. I thought the London quality of life was poor due to house prices here and the long commute to work - I now beg to differ! I think the Govt needs to look hard at investors in our country and make it easier for genuine first time buyers, maybe with a first time buyers grant? Young people need a hand to get on the property ladder and rising interest rates do not help. It's a disheartening situation that is only going to get worse, unless something is done.
Ronstan
I thought it would be interesting to note a headline I saw in a local paper here in Brighton England. "Hyde Park Apartment Sells for £83 Million" Also, I'd like to note that a household income of 50 - 75k is not a huge wage. In todays multi income society a household income of 75k - 100k could be considered good. Also renting in New Zealand is very well regulated and is a good option. Rents haven't moved much in 5 years and will in the end be the capper of the investment market (as in the stall in Auckland apartment prices last year). In the UK they have only just introduced a bonding agency similar to the tenancy tribunal this year. I've heard that anywhere in Europe you can be kicked out for no reason and it can be a real lottery as to how much bond you get back.
Robert
You can't expect to buy anything without sacrifice. If a couple is earning $100,000 a year, can't buy a house that means you are spending too much. I have been teaching English in Japan for 14 years and never earned more than NZ$60,000 a year. I saved at least half my salary every year and invested it in the NZX. I have saved $800,000. I will return to NZ in 2008 (with wife and child) and will either buy a 300K house in Manurewa (a cheap area) or rent a 3 bdrm house for about $300 a week. A landlord who rents a 300k house for $300 a week is getting a very poor 5 per cent gross yield (ignoring capital gains). With house prices where they are now renting is the correct economic choice but if my wife wants to own her own home we will have to buy something.
Tim
I earn a fair amount more than the national average, and I would struggle to get into a cheap house within 30 minutes of where I work in Auckland.My brother bought a house 8 years ago, and he was earning a lot less than I get now and with almost half the deposit I currently have saved, yet he had no trouble getting a new 3 bedroom / double garage house with views.I hear the big OE calling