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

[davetapson]

Our previous rental was a 40 year old multi storey with really bad insulation. It was cut into a steep gradient and not well insulated between the ground and the walls in the lower levels.

 

Having moved to a 2 year old rental in Silverdale, I can honestly say that old homes can go suck a toffee.

 

I cannot believe how huge the difference is and wish I had moved sooner.

There was a guy selling a Jeep Cherokee across the road from us when I was looking for a car - he used it for carting stuff around when he was renovating houses.  I was chatting to him about stuff and his  comment was "well, you can spend a bundle renovating an old house, but you still have an old house..."

 

We're moving into a multi-level house  also cut into a (south facing) hillside - as it is currently the only habitable rental in our school zone.  I can imagine it's going to be like trying to heat a chimney in winter.  The gas heater is at the front door at the bottom of the house and I can see the heat creeping along the ceiling and leaking out the topmost, back bedroom leaving the living areas still cold...

 

My buddy who's just bought a new build out in Kumeu reckons he turns his heat pump on for half an hour and the house stays warm for hours.

Edited December 16, 2020 by davetapson

[Wayne Potgieter]

 

My buddy who's just bought a new build out in Kumeu reckons he turns his heat pump on for half an hour and the house stays warm for hours.

The new rental has a ducted air conditioner.

 

I put it on for 45 minutes late int he afternoon and the whole place cools down and stays nice and cool for most of the night. Gotta love double glazing!

[Kranswurm]

The new rental has a ducted air conditioner.

 

I put it on for 45 minutes late int he afternoon and the whole place cools down and stays nice and cool for most of the night. Gotta love double glazing!

We have just put UPVC windows and double glazing in all the windows in the CT apartment.

It makes a huge difference.

[Wayne Potgieter]

Yo dudes and dudettes.

 

I am looking for some suggestions on some clever bike storage ideas.

 

https://community.bikehub.co.za/topic/187699-bike-storage-solutions/

 

Help a bro out.

[patches]

I know we have collectively despised them before... but estate agents, right!

 

I have had 2 attempted visits (as notified by my Nest doorbell) and 1 letter from estate agents, trying to coax me into selling (ie, making them lots of money).

 

The letter yesterday stated how a house about 150m from us sold for $700k over CV, and how the unsuccessful bidders are still very eager to buy and if we could assist.

 

Are definitely mental! Based on that letter, the house sold for around $2.7m. For a 200sqm 1920's bungalow on 800sqm land.

 

Another one (on the same street) sold last month for $1.6m at half the size, half the land.

 

It's effed!

[Wayne Potgieter]

I know we have collectively despised them before... but estate agents, right!

 

I have had 2 attempted visits (as notified by my Nest doorbell) and 1 letter from estate agents, trying to coax me into selling (ie, making them lots of money).

 

The letter yesterday stated how a house about 150m from us sold for $700k over CV, and how the unsuccessful bidders are still very eager to buy and if we could assist.

 

Are definitely mental! Based on that letter, the house sold for around $2.7m. For a 200sqm 1920's bungalow on 800sqm land.

 

Another one (on the same street) sold last month for $1.6m at half the size, half the land.

 

It's effed!

The Brother of the owner of our IT business that I work for is a barrister and solicitor.

 

He has changed disciplines to property law and is making a killing.

 

A saffa mates wife was a bigshot for Ernst and Young and was headhunted to come over to NZ. As soon as she could, she quit, became a real estate agent and is printing money.

 

I cannot get over how bizarre this all is. Some friends of ours are in an absolute frenzy to try and buy a run down meth house for $1.4m in Howick because it is in the "right" school zone.

 

They reckon they would need to spend around $150k just to get it liveable.

 

Its totally stupid.

[RossW]

I know we have collectively despised them before... but estate agents, right!

 

I have had 2 attempted visits (as notified by my Nest doorbell) and 1 letter from estate agents, trying to coax me into selling (ie, making them lots of money).

 

The letter yesterday stated how a house about 150m from us sold for $700k over CV, and how the unsuccessful bidders are still very eager to buy and if we could assist.

 

Are definitely mental! Based on that letter, the house sold for around $2.7m. For a 200sqm 1920's bungalow on 800sqm land.

 

Another one (on the same street) sold last month for $1.6m at half the size, half the land.

 

It's effed!

My only question. How are people affording these prices?

 

I have a good job; I think. As part of life, my wife took 9/12 months off this year to be with our son. Earnings have been significantly reduced because of this. But despite two full years of very good saving ethic, we are still likely two years away from having a deposit. And I'm only talking about a $700,000 place.

 

So my second question. Am I doing something wrong?

[davetapson]

The Brother of the owner of our IT business that I work for is a barrister and solicitor.

 

He has changed disciplines to property law and is making a killing.

 

A saffa mates wife was a bigshot for Ernst and Young and was headhunted to come over to NZ. As soon as she could, she quit, became a real estate agent and is printing money.

 

I cannot get over how bizarre this all is. Some friends of ours are in an absolute frenzy to try and buy a run down meth house for $1.4m in Howick because it is in the "right" school zone.

 

They reckon they would need to spend around $150k just to get it liveable.

 

Its totally stupid.

 

Housing market is carnage at the moment.

 

My only question. How are people affording these prices?

 

I have a good job; I think. As part of life, my wife took 9/12 months off this year to be with our son. Earnings have been significantly reduced because of this. But despite two full years of very good saving ethic, we are still likely two years away from having a deposit. And I'm only talking about a $700,000 place.

 

So my second question. Am I doing something wrong?

Guy who helps us out with finances just says it's never been cheaper to buy houses, basically due to the interest rate.  So people are buying them.  

 

As to your question, I've never much stopped asking that question.  Only answer I can come up with is that we don't currently live in any debt.  But how we'd afford to service the debt, if that's the case, is also a question I can't answer.

[patches]

The Brother of the owner of our IT business that I work for is a barrister and solicitor.

 

He has changed disciplines to property law and is making a killing.

 

A saffa mates wife was a bigshot for Ernst and Young and was headhunted to come over to NZ. As soon as she could, she quit, became a real estate agent and is printing money.

 

I cannot get over how bizarre this all is. Some friends of ours are in an absolute frenzy to try and buy a run down meth house for $1.4m in Howick because it is in the "right" school zone.

 

They reckon they would need to spend around $150k just to get it liveable.

 

Its totally stupid.

 

It's official! Auckland housing frenzy is worse than Aussies Toilet paper hysteria, hahaha!

 

The school zone thing is a huge deal in Auckland. And as we've discussed before, the DGZ (double grammar zone for those not familiar with Auckland), is the holy grail for most Jaffas.

 

Fortunately we are in a good school zone, albeit the sought after schools are segregated (Westlake Boys & Girls).

 

That said, we're still keen on Christchurch when the mini-humans come along, we can hopefully get ourselves a nice house down there for a fraction of the price, and benefit from renting the Auckland house out to someone hellbent on the school zone 

 

My only question. How are people affording these prices?

 

I have a good job; I think. As part of life, my wife took 9/12 months off this year to be with our son. Earnings have been significantly reduced because of this. But despite two full years of very good saving ethic, we are still likely two years away from having a deposit. And I'm only talking about a $700,000 place.

 

So my second question. Am I doing something wrong?

 

It's a combination of things.

 

1. Not all are affording them. Many people that would have been first home buyers, if they could go back a year-or-two are now being locked out of the market.
2. As davetapson said, money is cheap (for now), so people are borrowing to the hilt.
3. Cashed up expats are returning to NZ
4. It's mindset/perspective to a degree. As a Saffer I find it hard to stomach the prices. My partner is from Sydney, so these prices seem reasonable (or even cheap) to her.Last October I was at a wedding in Perth and while chatting to some of the other guests (young professionals in a similar industry, similar age), they were saying that they could never see themselves paying over $600,000 for a house as it's unaffordable. Funny enough they are likely on better salaries in Perth than someone from Auckland (especially those working FIFO on mines/roading projects etc). So yeah, realistically they could afford, just instinctively they don't think that they can. My guess is that many Aucklanders will easily spend 6-7x a household income on a home. Based on the people I met in Perth, they're aiming more towards the 2-3x mark.

As for affordability, somehow it works. We have decent jobs, but are paid market rates, and are by no means coining it. Currently 40% of my net income goes into my half of the mortgage. This seems high, but we are paying at about a 17yr rate for now, so that when kids come along we can kick it back to a 30yr rate, and still cover the full mortgage while my partner is on maternity leave.

 

So yeah, it is doable, despite how ludicrous it may seem.

Edited December 21, 2020 by patches

[patham]

My only question. How are people affording these prices?

 

I have a good job; I think. As part of life, my wife took 9/12 months off this year to be with our son. Earnings have been significantly reduced because of this. But despite two full years of very good saving ethic, we are still likely two years away from having a deposit. And I'm only talking about a $700,000 place.

 

So my second question. Am I doing something wrong?

 

Hey Ross

 

In Aus, I think it is a case of a two speed economy demographic developing. People who are already in the property market get the boost from the higher prices from what they are selling. People who have yet to buy their first property just get to see that entry level price escalate further and further out of reach.

 

And at the moment, assuming you have a good deposit you avoid the interest rate penalisation and mortgage lenders insurance and hence the interest rates and hence repayments are cheap, which is a strong factor in why the prices are rising.

 

I do think some people speculate to try and get ahead, by building up a buy to let portfolio starting in places where $350k will buy a place - but that is time and effort. Others just say full steam ahead and damn the torpedos and buy with the lowest deposit a bank will accept, and pay the surcharge every month after (and pray interest rates do not rise). Both these strategies would not suit someone who is risk-adverse. 

 

The other key factor is that Australia is not budget friendly for a family on a single income, you can get by but it's hard to get ahead. Not that it's necessarily budget friendly for a dual income with kids, in their first few years before school childcare costs can suck up a lot of cash.

[patches]

Hey Ross

 

In Aus, I think it is a case of a two speed economy demographic developing. People who are already in the property market get the boost from the higher prices from what they are selling. People who have yet to buy their first property just get to see that entry level price escalate further and further out of reach.

 

 

Wasn't there a statement in Aus 2yrs ago where de Brenni that said more people bought their 7th house than their first.

 

Whilst it was later determined that his statement was not entirely correct, I'm sure it didn't come outta nowhere and the ratio of multiple home owners to first time buyers is likely pretty close.

[RossW]

Hey Ross

 

In Aus, I think it is a case of a two speed economy demographic developing. People who are already in the property market get the boost from the higher prices from what they are selling. People who have yet to buy their first property just get to see that entry level price escalate further and further out of reach.

 

And at the moment, assuming you have a good deposit you avoid the interest rate penalisation and mortgage lenders insurance and hence the interest rates and hence repayments are cheap, which is a strong factor in why the prices are rising.

 

I do think some people speculate to try and get ahead, by building up a buy to let portfolio starting in places where $350k will buy a place - but that is time and effort. Others just say full steam ahead and damn the torpedos and buy with the lowest deposit a bank will accept, and pay the surcharge every month after (and pray interest rates do not rise). Both these strategies would not suit someone who is risk-adverse. 

 

The other key factor is that Australia is not budget friendly for a family on a single income, you can get by but it's hard to get ahead. Not that it's necessarily budget friendly for a dual income with kids, in their first few years before school childcare costs can suck up a lot of cash.

I agree completely with the two-case economy. I used to tease myself by browsing Domain with a price range filter applied; <= $650,000. I had some good options pop up about 12 to 18 months ago. Now, I can only find houses which are clearly rentals with >20 years of neglect in them or wood cutters cottages more than 15km from the city.

 

And you're quite right about living on a single income. We manage fine but there is no saving for holidays and luxuries and certainly nothing going to property deposits. It perhaps makes me feel a bit more normal to hear that it's not all in my head because I can't shake the feeling of being left behind.

[patham]

 

 

And you're quite right about living on a single income. We manage fine but there is no saving for holidays and luxuries and certainly nothing going to property deposits. It perhaps makes me feel a bit more normal to hear that it's not all in my head because I can't shake the feeling of being left behind.

 

On arrival here, we were a single income family for about 8 months whilst my wife got her paperwork, exams and approvals for her professional qualifications in place. As a result I had all the accounts, debit orders, rent etc. coming off my bank balance. It wasn't end of the month Salticrax time, but I needed to run a tight budget. And a house purchase was only possible with funds brought in from SA, not built up locally.

 

So you are in the normal range, - the silent majority. Unfortunately, the boiler room tactics of the estate agent industry and the press in general only focus on the hype and the "I was a 18 year old Macca's worker and I was able to grow a 25 house property portfolio" stories.

[Wayne Potgieter]

"I was a 18 year old Macca's worker and I was able to grow a 25 house property portfolio" stories.

Good to see thats not an exclusively Kiwi thing either.

[DJR]

We have just put UPVC windows and double glazing in all the windows in the CT apartment.

It makes a huge difference.

I always marvel that Cape Town in particular has not adopted double glazing. Says the guy who lives in an old Victorian wind tunnel.

Edited December 21, 2020 by DJR

[Kranswurm]

I always marvel that Cape Town in particular has not adopted double glazing. Says the guy who lives in an old Victorian wind tunnel.

It's the answer.Very expensive.R100K for a two bedroom apartment and we still need to do the storeroom.Maintenance free apart from the hinges and latches.

Warm in winter and cool in summer.

I really can recommend it.