New Zealand - The Good, The Bad and The Ugly.

[intern]

Uh, guys, sorry, I can't make the MTB jaunt to Rotorua this weekend because I got one of these off a mate and have to go fetch it in Auckland tomorrow morning:

 

[intern]

Uh, guys, sorry, I can't make the MTB jaunt to Rotorua this weekend because I got one of these off a mate and have to go fetch it in Auckland tomorrow morning:

[Wayne Potgieter]

 

Uh, guys, sorry, I can't make the MTB jaunt to Rotorua this weekend because I got one of these off a mate and have to go fetch it in Auckland tomorrow morning:

 

Please tag as NSFW.

[intern]

Please tag as NSFW.

Good point Wayne...

[patches]

Let's hope it stays that way over the next say 10 years!!

 

I know right! The fluctuations have played in my favour so far, but I do worry about the future.

 

Our mortgage is split into parts to try benefit from fluctuating rates, as well as offer a little certainty.

 

• 47% fixed for 1yr
• 47% fixed for 3yrs
• 6% floating in an offset account

 

Given the historic low, when it comes to re-fixing the 1yr portion in about 6 months time, I may opt to fix for longer. The 3yr will be up for re-fixing a year after that.

 

NZ is a strange one where fixed rates are lower than floating. In SA (and in Aus I believe), it's the other way, and one pays a premium to fix the rate. Weird!

[DawieO]

Good point Wayne...

So as far as getting together for a bit of a catch-up and MTB’ing the Redwood forest goes... you okes pretty much sucked.

 

Fortunately the forest has been glorious today and should be great tomorrow too.

[bertusras]

I did some quick comparison between the R10m vs $1m debt scenario

 

(all the above and below based on a 1:10 exchange rate).

 

In SA a R10m loan at 7% interest (current rate) over 30yrs would mean:

• R66,500 pm repayments
• R23,950,890 (~140%) paid over the total term

In NZ a R10m loan at 3% interest (0.5% above current rate) over 30yrs would mean:

• R42,160 pm repayments
• R15,177,750 (~52%) paid over the total term

So not only is the monthly cost in NZ approx. 2/3 of what it would be in SA  (making it far more affordable, plus in general salaries at a direct conversion are higher in NZ), but over the life of a loan one can see how "money is cheap" in NZ.

 

That 4% makes ALL the difference!

 

Valid calculation, however, how much would a $1mil house in SA actually cost though, R3mil?

 

Edit 1:

 

In SA a R3m loan at 7% interest (current rate) over 30yrs would mean:

 

• R20,000 pm repayments
• R 7 185 267.00 (~140%) paid over the total term

Same proportion of interest no matter the cost though, which is where the real value lies. However you can't discount the local cost of equivalent properties.

 

(we're slowly considering a move to Aus so I've been a lot more interested in their market the past few weeks, and from an SA point of view it's scary, but once you convert back to purchasing power, it's not all that scary. Comparatively we're spending around 12% of combined gross income on rent per month. In Melbourne we're looking at around 12% to 16% of combined gross income. Which wasn't far off to my surprise.) Edit 3: In fairness it's a smaller apartment-type property to the duplex with garden-type property that we've got now, but I was surprised.

 

Edit 2:

 

And if you change the 30 to 20 years, it makes a massive difference to the total amount repaid:

 

In SA a R3m loan at 7% interest (current rate) over 20yrs would mean:

 

• R23,200 pm repayments
• R 5 582 152.00 (~86%) paid over the total term

Edited November 7, 2020 by bertusras

[davetapson]

Valid calculation, however, how much would a $1mil house in SA actually cost though, R3mil?

 

Edit 1:

 

In SA a R3m loan at 7% interest (current rate) over 30yrs would mean:

 

• R20,000 pm repayments
• R 7 185 267.00 (~140%) paid over the total term

Same proportion of interest no matter the cost though, which is where the real value lies. However you can't discount the local cost of equivalent properties.

 

(we're slowly considering a move to Aus so I've been a lot more interested in their market the past few weeks, and from an SA point of view it's scary, but once you convert back to purchasing power, it's not all that scary. Comparatively we're spending around 12% of combined gross income on rent per month. In Melbourne we're looking at around 12% to 16% of combined gross income. Which wasn't far off to my surprise.) Edit 3: In fairness it's a smaller apartment-type property to the duplex with garden-type property that we've got now, but I was surprised.

 

Edit 2:

 

And if you change the 30 to 20 years, it makes a massive difference to the total amount repaid:

 

In SA a R3m loan at 7% interest (current rate) over 20yrs would mean:

• R23,200 pm repayments
• R 5 582 152.00 (~86%) paid over the total term

I sold a three bed house plus granny flat in Airfield, Benoni for R800k before we left.

 

That house here would go for NZ$1M easy, probably more.

 

Our house, we sold for R2.5M, that makes a deposit here on a house, just, and not for an equivalent house.

[hayleyearth]

<p>

 

Valid calculation, however, how much would a $1mil house in SA actually cost though, R3mil?

 

Edit 1:

 

In SA a R3m loan at 7% interest (current rate) over 30yrs would mean:

 

• R20,000 pm repayments
• R 7 185 267.00 (~140%) paid over the total term

Same proportion of interest no matter the cost though, which is where the real value lies. However you can't discount the local cost of equivalent properties.

 

(we're slowly considering a move to Aus so I've been a lot more interested in their market the past few weeks, and from an SA point of view it's scary, but once you convert back to purchasing power, it's not all that scary. Comparatively we're spending around 12% of combined gross income on rent per month. In Melbourne we're looking at around 12% to 16% of combined gross income. Which wasn't far off to my surprise.) Edit 3: In fairness it's a smaller apartment-type property to the duplex with garden-type property that we've got now, but I was surprised.

 

Edit 2:

 

And if you change the 30 to 20 years, it makes a massive difference to the total amount repaid:

 

In SA a R3m loan at 7% interest (current rate) over 20yrs would mean:

• R23,200 pm repayments
• R 5 582 152.00 (~86%) paid over the total term

Last year my sis bought a house in Port Elizabeth for R1.3m, huge house in complex needed a new kitchen but otherwise it's 'modern'. Here that size and look house build out to of wood will go for $2+ mil.

 

Quality in SA is much better. R1mil in SA gets you more than $1m in Auckland for sure.

[patches]

 

Valid calculation, however, how much would a $1mil house in SA actually cost though, R3mil?

 

Edit 1:

 

In SA a R3m loan at 7% interest (current rate) over 30yrs would mean:

 

• R20,000 pm repayments
• R 7 185 267.00 (~140%) paid over the total term

Same proportion of interest no matter the cost though, which is where the real value lies. However you can't discount the local cost of equivalent properties.

 

(we're slowly considering a move to Aus so I've been a lot more interested in their market the past few weeks, and from an SA point of view it's scary, but once you convert back to purchasing power, it's not all that scary. Comparatively we're spending around 12% of combined gross income on rent per month. In Melbourne we're looking at around 12% to 16% of combined gross income. Which wasn't far off to my surprise.) Edit 3: In fairness it's a smaller apartment-type property to the duplex with garden-type property that we've got now, but I was surprised.

 

Edit 2:

 

And if you change the 30 to 20 years, it makes a massive difference to the total amount repaid:

 

In SA a R3m loan at 7% interest (current rate) over 20yrs would mean:

 

• R23,200 pm repayments
• R 5 582 152.00 (~86%) paid over the total term

 

 

Good points. An apples-vs-apples comparison is nearly impossible. There are just so many varying factors.

 

NZ and Aus house prices (especially in main urban areas) will always seem ridiculous to us Saffers.

 

But the comforting part (and what you picked up on with your Melbourne research) is that it is doable.

 

I sold a three bed house plus granny flat in Airfield, Benoni for R800k before we left.

 

That house here would go for NZ$1M easy, probably more.

 

Our house, we sold for R2.5M, that makes a deposit here on a house, just, and not for an equivalent house.

 

Last year my sis bought a house in Port Elizabeth for R1.3m, huge house in complex needed a new kitchen but otherwise it's 'modern'. Here that size and look house build out to of wood will go for $2+ mil.

 

Quality in SA is much better. R1mil in SA gets you more than $1m in Auckland for sure.

 

I guess that main catch is the land (particularly in Auckland).

 

Yes, the physical houses in NZ cost more for less. There are a number of contributing factors like:

• material costs (from living on islands on the other side of the world)
• stricter building codes & practices (not applicable to all houses though)
• higher labour rates (we all know that tradies make some decent bank, No "electrician" picked up outside Builder's Warehouse is getting paid R800+ an hour)

BUT, the main cost lies in he land.

 

I look at our little house, and based on the CV (which in the current market is pretty low):

• 70% value in land
• 30% value in improvements (the actual house itself)
• 60% increase in land value (2014 - 2017)
• 17% increase in improvement (house) value (2014 - 2017), which is rare considering it's a 1950's weatherboard bungalow. Usually improvement values decrease slightly over time)

So even taking houses, build quality, and all that out of it (which is still overpriced). In my area people are paying over R9m equiv. for under 500sqm of cross-leased land. That's about R18,000 per sqm.

 

I think there are very few places in SA where land alone would cost one that much.

 

Land and location is the main issue, and in a way that's fair because we choose to live in this specific location.

Edited November 9, 2020 by patches

[Wayne Potgieter]

So as far as getting together for a bit of a catch-up and MTB’ing the Redwood forest goes... you okes pretty much sucked.

 

Fortunately the forest has been glorious today and should be great tomorrow too.

Hey DawieO

 

I must apologise, I realise I started this ball rolling and then totally flaked out. Things are crazy in the Potgieter household right now - no excuse.

 

When we do eventually get together, the coffee and/or beer is on me.

[davetapson]

I think that we should have a Christmas drinks meetup, just because. 

I was going to suggest we did this before Wayne disappeared down south, but it looks like we might be keeping him a bit longer...

 

Whatsay? 

A Thursday evening somewhere mostly central?

I'd suggest somewhere in Takapuna as that is central for me (   ) but probably somewhere in the Viaduct is more central...?

I live and work in the far north, so a bit clueless on options.

Stake in the ground: Thurs 19/11?

 

Edited November 9, 2020 by davetapson

[patches]

I think that we should have a Christmas drinks meetup, just because. 

 

I was going to suggest we did this before Wayne disappeared down south, but it looks like we might be keeping him a bit longer...

 

Whatsay? 

 

A Thursday evening somewhere mostly central?

 

I'd suggest somewhere in Takapuna as that is central for me (   ) but probably somewhere in the Viaduct is more central...?

 

I live and work in the far north, so a bit clueless on options.

 

 

 

Sounds like a great idea!

 

What about at Spur? 

 

Haha, just kidding! Viaduct or Newmarket could work for those working in the city. Viaduct is probably easier for those who bus to the Shore (little South Africa 1), Newmarket possibly easier for those who take public transport south-east (little South Africa 2).

 

I'm fine with either! 

[Clippies]

I think that we should have a Christmas drinks meetup, just because. 

 

I was going to suggest we did this before Wayne disappeared down south, but it looks like we might be keeping him a bit longer...

 

Whatsay? 

 

A Thursday evening somewhere mostly central?

 

I'd suggest somewhere in Takapuna as that is central for me (   ) but probably somewhere in the Viaduct is more central...?

 

I live and work in the far north, so a bit clueless on options.

 

Stake in the ground: Thurs 19/11?

 

 

 

Good idea, I dont remember what any of you like like from the ride we did in Woodhill ages ago. 

 

Viaduct suits me, work in town.

Takapuna would also work, because I live on the shore....obviously.

[davetapson]

Stake-in-the-ground No.2:

 

O'Hagan's
Viaduct

19/11.

18h30 - 19h00 ish?

Happy to hear about something more original...

[hayleyearth]

I think that we should have a Christmas drinks meetup, just because.

 

I was going to suggest we did this before Wayne disappeared down south, but it looks like we might be keeping him a bit longer...

 

Whatsay?

 

A Thursday evening somewhere mostly central?

 

I'd suggest somewhere in Takapuna as that is central for me ( ) but probably somewhere in the Viaduct is more central...?

 

I live and work in the far north, so a bit clueless on options.

 

Stake in the ground: Thurs 19/11?

 

I'd be keen for a MTB ride too, with the kids. Layla is loving the MTB thing!!

 

Edit: and she can say bicycle in 3 languages

Edited November 10, 2020 by hayleyearth