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

[Wayne Potgieter]

Oh I completely agree, the workforce has been hit hard in both public and private sectors and whilst pay increases are unlikely in either. If they said "no increases this year, we'll review next" it would be more understandable. But to come out with a blanket 3yrs (on top of the 1yr prior) was a bit of a punch in the gut.

 

Employees with private sector equivalents (especially engineers and others in the construction industry) are in high demand and the private sector pays better. Soon enough those 5 extra days of public servant leave and the "ideals of being able to shape the industry" will be cast by the wayside in favour of competitive pay packages that enable one to keep up with the cost of living. I wouldn't be surprised if there's an exodus in the near future.

 

I feel for those in the emergency services or education who have little other option with limited private sector equivalencies.

you are 100% correct.

 

I also think some organisations are using it as a convenient excuse as well.

[davetapson]

Just going back to the 'property here is so expensive moan moan' thing...

 

We've got a couple of English friends and school parent acquaintances (i.e. from England, not souties) and when I discuss properties and what they did when they emigrated, they never much complain about prices.  Like for like, they seem to do ok.

I think part of the problem is that the ZAR/SA property has become so devalued in real terms that Saffas can't play in the realms of those with hard cash to spend, and that shapes our view here.

Which is not to say it's not expensive, but not as expensive as it feels to Saffas.

Another thing - I seem to remember when Rich Dad Poor Dad was taking off (late 1990's?), (i.e. buy property to make money, leverage them on each other to buy more property) NZ had gone great guns on the concept, and that had driven property prices up even then.  I suspect that what we have now is to some extent (I suspect largely) based on that.  

[patches]

Just going back to the 'property here is so expensive moan moan' thing...

 

We've got a couple of English friends and school parent acquaintances (i.e. from England, not souties) and when I discuss properties and what they did when they emigrated, they never much complain about prices.  Like for like, they seem to do ok.

 

I think part of the problem is that the ZAR/SA property has become so devalued in real terms that Saffas can't play in the realms of those with hard cash to spend, and that shapes our view here.

 

Which is not to say it's not expensive, but not as expensive as it feels to Saffas.

 

Another thing - I seem to remember when Rich Dad Poor Dad was taking off (late 1990's?), (i.e. buy property to make money, leverage them on each other to buy more property) NZ had gone great guns on the concept, and that had driven property prices up even then.  I suspect that what we have now is to some extent (I suspect largely) based on that.  

 

Definitely a factor. I remember the amazing townhouse my boss in SA had. Dunkeld West, new build with all the luxuries. He paid around R5m off plan (circa 2010/2011). It seemed insane! He sold in 2016 for about R5.5m. Again, in SA a property THAT nice and "expensive" seemed like it was only for the big wigs. (even in 2016 R5.5m wouldn't get you much in Auckland)

 

Then (as mentioned previously) friends-of-friends in Perth earning a decent wicket (talking around $300k+ between a couple) were saying that they couldn't possibly afford or conceive spending $600k+ on a house in Western Aus. The Aucklanders in the group laughed at them.

 

And then there's me... a Saffer who is horrified by Auckland house prices (even just NZ in general), but partnered to an Aussie who grew up in Sydney's Northern Suburbs, so for her they "seem cheap"

[davetapson]

PSA for those that brought LG tv's with them and can't get Netflix / Disney+ / TVNZ on demand etc.

(We had this discussion before...)

Borrowed a Logitech Harmony One IR contoller from a friend - you set up the controller for your TV, it then knows how to get into the service menu - pin is 0413, set area code to 4833. 

Done.

[patches]

Anyone going to Rotorua on Saturday? (shot in the dark)

I foolishly got caught up in the hype of a TradeMe auction and won an item that is "Pick-up Only" ????

Happy to contribute towards fuel for anyone that is able to assist.

[Steven Knoetze (sk27)]

 

Anyone going to Rotorua on Saturday? (shot in the dark)

I foolishly got caught up in the hype of a TradeMe auction and won an item that is "Pick-up Only" ????

Happy to contribute towards fuel for anyone that is able to assist.

If I was onshore I would join;(

[patches]

I was running some housing numbers again the other day (as the housing crisis is always a hot topic in NZ). More numbers around that move from 1 property to 2.

Here's what the scenario is based on

• 1st Property Purchase Price of $1,000,000 (Low for Auckland, but high for most other places)
• 20% deposit and $800,000 loan amount
• 3.5% of principle paid off each year
• 40% deposit requirement for 2nd property, and based on equity only (dangerous as that is, it's all the rage in NZ)
• Based on purchase of 2nd property at equal value to 1st.
• Serviceability of 2nd mortgage not taken into account (as it varies based on income, intent for 2nd property, ie rental, etc).

Here's what my limited financial acumen managed to deduce ????

At 2.5% Growth PA (very conservative)

One would be able to leverage to buy a similar value house (subjected to the same growth) after approx 9yrs.

At 5% Growth PA (fairly conservative)

One would be able to leverage to buy a similar value house (subjected to the same growth) around approx 6.5yrs.

At 7.5% Growth PA

One would be able to leverage to buy a similar value house (subjected to the same growth) around approx 5yrs.

At 10% Growth PA

One would be able to leverage to buy a similar value house (subjected to the same growth) around a little after 4yrs.

At 12.5% Growth PA (not far off in current climate)

One would be able to leverage to buy a similar value house (subjected to the same growth) around a little after 3.5yrs.

I know the NZ property ladder and the lucrativeness of multiple property ownership is no secret. And the old saying "it takes money to make money" always rings true.

I just thought it was interesting to visualise how feasible/possible it really is. It's crazy and just begging for a capital gains tax ????

[BaGearA]

21 hours ago, patches said:

I was running some housing numbers again the other day (as the housing crisis is always a hot topic in NZ). More numbers around that move from 1 property to 2.

Here's what the scenario is based on

• 1st Property Purchase Price of $1,000,000 (Low for Auckland, but high for most other places)
• 20% deposit and $800,000 loan amount
• 3.5% of principle paid off each year
• 40% deposit requirement for 2nd property, and based on equity only (dangerous as that is, it's all the rage in NZ)
• Based on purchase of 2nd property at equal value to 1st.
• Serviceability of 2nd mortgage not taken into account (as it varies based on income, intent for 2nd property, ie rental, etc).

Here's what my limited financial acumen managed to deduce ????

At 2.5% Growth PA (very conservative)

One would be able to leverage to buy a similar value house (subjected to the same growth) after approx 9yrs.

At 5% Growth PA (fairly conservative)

One would be able to leverage to buy a similar value house (subjected to the same growth) around approx 6.5yrs.

At 7.5% Growth PA

One would be able to leverage to buy a similar value house (subjected to the same growth) around approx 5yrs.

At 10% Growth PA

One would be able to leverage to buy a similar value house (subjected to the same growth) around a little after 4yrs.

At 12.5% Growth PA (not far off in current climate)

One would be able to leverage to buy a similar value house (subjected to the same growth) around a little after 3.5yrs.

I know the NZ property ladder and the lucrativeness of multiple property ownership is no secret. And the old saying "it takes money to make money" always rings true.

I just thought it was interesting to visualise how feasible/possible it really is. It's crazy and just begging for a capital gains tax ????

I wish I was smart enough to understand what you said here 

[Bundu Ric]

27 minutes ago, BaGearA said:

I wish I was smart enough to understand what you said here 

I liked the colours though.... ????

[hayleyearth]

23 hours ago, patches said:

I was running some housing numbers again the other day (as the housing crisis is always a hot topic in NZ). More numbers around that move from 1 property to 2.

Here's what the scenario is based on

• 1st Property Purchase Price of $1,000,000 (Low for Auckland, but high for most other places)
• 20% deposit and $800,000 loan amount
• 3.5% of principle paid off each year
• 40% deposit requirement for 2nd property, and based on equity only (dangerous as that is, it's all the rage in NZ)
• Based on purchase of 2nd property at equal value to 1st.
• Serviceability of 2nd mortgage not taken into account (as it varies based on income, intent for 2nd property, ie rental, etc).

Here's what my limited financial acumen managed to deduce ????

At 2.5% Growth PA (very conservative)

One would be able to leverage to buy a similar value house (subjected to the same growth) after approx 9yrs.

At 5% Growth PA (fairly conservative)

One would be able to leverage to buy a similar value house (subjected to the same growth) around approx 6.5yrs.

At 7.5% Growth PA

One would be able to leverage to buy a similar value house (subjected to the same growth) around approx 5yrs.

At 10% Growth PA

One would be able to leverage to buy a similar value house (subjected to the same growth) around a little after 4yrs.

At 12.5% Growth PA (not far off in current climate)

One would be able to leverage to buy a similar value house (subjected to the same growth) around a little after 3.5yrs.

I know the NZ property ladder and the lucrativeness of multiple property ownership is no secret. And the old saying "it takes money to make money" always rings true.

I just thought it was interesting to visualise how feasible/possible it really is. It's crazy and just begging for a capital gains tax ????

The start amounts of your 2nd property is a bit unclear to how you get that value.

I guess this is more made up to leveraging off your 1st property to be able to buy your 2nd one and nothing to do with what % of income you are actually putting on on the bond of the 1st one, life expenses etc.

 

We are sitting with the decision currently if we should be saving for the 2nd property or put as much into the current bond as we can. Our pay back are scheduled around the 15-17years mark now, but we can either reduce that or use the money to save (invest in additional shares to us as a 2nd deposit say in 5 years).

[patches]

13 hours ago, BaGearA said:

I wish I was smart enough to understand what you said here 

 

12 hours ago, Bundu Ric said:

I liked the colours though.... ????

 

hahaha sorry gang. I had a random thought in my head one evening, explored where it lead, which was to the colourful graphs, but not to explaining it very well ????

My response to hayleyearth (below) may demystify my random thoughts a bit more.

 

2 hours ago, hayleyearth said:

The start amounts of your 2nd property is a bit unclear to how you get that value.

I guess this is more made up to leveraging off your 1st property to be able to buy your 2nd one and nothing to do with what % of income you are actually putting on on the bond of the 1st one, life expenses etc.

 

We are sitting with the decision currently if we should be saving for the 2nd property or put as much into the current bond as we can. Our pay back are scheduled around the 15-17years mark now, but we can either reduce that or use the money to save (invest in additional shares to us as a 2nd deposit say in 5 years).

Aaha gotcha!

Yeah the grey line tracks what sort of purchasing power one may have at any point in time, but based purely on equity and not on serviceability, because as you noted, life expenses etc vary, and some people may want a 2nd property to rent out while other just want the kiwi dream... "a batch".

So for example, 1yr of mortgage payments (on a proactive payment plan, paying off 3.5% of the $800k capital) combined with the capital growth of the property (lets say at 5%) will give one approx $78,000 of equity, and therefore (at the 40% guideline) would enable one to purchase a 2nd property for around $195,000 (total value. $78,000 deposit/leverage and $117,000 loan).

The point at wheich the 2 lines meet is when property 1 (initially purchased for $1m) builds enough equity to purchase a 2nd property of equal/similar value.

As for the paying off faster, that's a tough one to weigh up if one takes the punt now, especially on emerging markets/areas before the prices get too crazy, or they wait until they carry more equity and make the more expensive purchase down the line.

I'm not ready to be a landlord, and I can't afford to have a batch just sitting there, so I'll wait a while ????

 

[davetapson]

What that does show is why buying multiple properties is so popular. 

The rate of increase of value of property has been so high in the last decade or so, folks have probably jumped the orange line a number of times - you need to add that to your graph...

Edit:
Capital gains tax / not being able to claim interest as expenses on rental properties will pop that balloon tho - esp. for properties leveraged against properties leveraged against properties leveraged against...

Edited May 26, 2021 by davetapson

[patches]

15 hours ago, davetapson said:

What that does show is why buying multiple properties is so popular. 

The rate of increase of value of property has been so high in the last decade or so, folks have probably jumped the orange line a number of times - you need to add that to your graph...

Edit:
Capital gains tax / not being able to claim interest as expenses on rental properties will pop that balloon tho - esp. for properties leveraged against properties leveraged against properties leveraged against...

Exactly! I think the culture and drive towards multiple home ownership is far more prevalent in NZ than I felt in SA. I'm not sure if it is genuinely that way or if I'm just more aware of it now.

I know Mick De Brenni's statement of "Last year [2017], more people bought their seventh home than those buying their first." was fact-checked as false, but the sentiment of what he was trying to say is true. And even more so now.

As for amending the graph to show feasibility of buying 3rd, 4th, 5th etc homes, I'll do that if I ever get there ????

In reality though, 2 would be more than I could ever hope for. One family home down on the South Island to live in. One in Auckland as an investment and to keep a foot on this super slippery ladder, because I fear that if I sell up here and move down south to buy something better and/or reduce debt, I may never be able to get back onto the Auckland ladder should I ever need to return (due to employment or the alpine fault line, hahaha)

 

Edited May 26, 2021 by patches

[hayleyearth]

Any engineers / Project Managers in Australia looking for a job?

Or know of anyone there (Victoria mainly or Sydney willing to travel)? PLEASE let me know!!! 

[hayleyearth]

Christchurch..... urgh, we have flights down for this weekend.

Anyone know how bad it is in town itself and towards Akaroa etc?

[davetapson]

Doesn't seem to serious - 4.2.

We were camping in Rotorua in Jan when the 5.1 or whatever quake hit - lying on the ground during an earth quake is a visceral experience to say the least.

There was no (or very little) damage in that, so one would assume that whatever was gong to fall over in a 4.2 quake in CC would have already fallen over in previous quakes?

Edited May 31, 2021 by davetapson