Property in NZ

[piroska]

eg sell the big home wherever for $500k and buy a small one for $200k.
.

I moved out of Auckland Twice.
I moved back too.

It doesn't work unless as you say, you have NO mortgage or you move to some nowhere cheap as dirt place.
These are now scarce. Even the West Coast is going up.

Now my mum could potentially get $400,000 for this place. Where can she go? Remembering to deduct fees and move costs....
A unit in Napier? Nope, that was half the point of me coming here, my brother gets this place, how can he afford to live on his own? He can't.
Sell it and......not in Napier, i looked.

Anyway even if he did find some unit somewhere obscure, rates, power, food, insurance, all that, he couldn't do it on his benefit. Leaves him short.
Oh yes, he needs a flatmate!!

[tweak'e]

I
It doesn't work unless as you say, you have NO mortgage or you move to some nowhere cheap as dirt place.
These are now scarce. Even the West Coast is going up.

Now my mum could potentially get $400,000 for this place. Where can she go? Remembering to deduct fees and move costs....
A unit in Napier? Nope, that was half the point of me coming here, my brother gets this place, how can he afford to live on his own? He can't.
Sell it and......not in Napier, i looked.

Anyway even if he did find some unit somewhere obscure, rates, power, food, insurance, all that, he couldn't do it on his benefit. Leaves him short.
Oh yes, he needs a flatmate!!

exactly.

you have to move out to a cheaper area.
it also only works if you have actually invested in your home and climbed the ladder profiting off every rung. but of course many of us cannot do that, especially those who started late or started with a very high price. or those who have to move for other reasons and take a loss.

what i'm saying is the effect of so many people using their homes to make money adds to the price of homes.
doesn't help when councils add huge costs to new builds which means people sit on their homes for longer until the price goes up before they build new. pushing house prices up means even more people jump on the wagon to make money from homes.

[B.M.]

I am not so much a property type person myself. To me it is a more functional use. Do NZders mainly go for a house because they want appreciation? I question this because if many of them ever only have 1, they could downsize but they lose out b/c the houses down the ladder cost proportionally more for the same size, but they also can't just sell it because they have to live somewhere. Maybe pass it down as a inheritance?

They gone thru Kiwibuild etc but those are like $500k for a 1 room apartment haha. So I was thinking what about homes via government leasehold, indexed to inflation? Given the horror stories we have heard about leasehold that can skyrocket up. So it meets the purpose of you live in it, when you are done flick it off. You could still sell it should circumstances change. Something like a 99yr lease right of use from new and then it goes from there ....

Thoughts?

Unfortunately Nomad there is no simple answer, and a great deal of thought should be given to each individuals circumstances.

I read a book about 30 years ago titled “Why I would never buy a house. (or similar) and did it shed some light on the matter.

But for my worth, I would arm myself with a “Amortization Spreadsheet” and have a play with different scenarios.

For instance, take a look at below where borrowing $400k in the first 12 months you have paid $4912.01 off the principal but $23,866.39 in interest.



Rule of thumb is if you purchase a $500k home with $100k deposit and $400k loan it will wind up costing you $1M without Rates, Insurance, Maintenance etc.

[tweak'e]

Unfortunately Nomad there is no simple answer, and a great deal of thought should be given to each individuals circumstances.

I read a book about 30 years ago titled “Why I would never buy a house. (or similar) and did it shed some light on the matter.

But for my worth, I would arm myself with a “Amortization Spreadsheet” and have a play with different scenarios.

For instance, take a look at below where borrowing $400k in the first 12 months you have paid $4912.01 off the principal but $23,866.39 in interest.



Rule of thumb is if you purchase a $500k home with $100k deposit and $400k loan it will wind up costing you $1M without Rates, Insurance, Maintenance etc.

yes,
however in 30 years time you could be sitting on a house worth 2-3 million.
but its also how you play the game.
average home ownership is 7 years, so in 30 years you might have sold/bought 4-5 times and if done right made profit each time.
and thats tax free profit.
of course inflation helps along the way.

of course there is the issue that you need someone to pay that which puts the burden on the next generation.

[piroska]

exactly.

what i'm saying is the effect of so many people using their homes to make money adds to the price of homes.
doesn't help when councils add huge costs to new builds

Totally agree with that.
I hate that term "Property ladder". What was wrong with "home"? Used to be once, now it seems you're a loser unless you do the buy and flick

[tweak'e]

Totally agree with that.
I hate that term "Property ladder". What was wrong with "home"? Used to be once, now it seems you're a loser unless you do the buy and flick

i could not agree more.
sadly no govt has the balls to ever fix it. profiting from housing has become a kiwi staple.

the other side effect is that most booming property markets also have major issues with poor construction. funny that people want cheap crap done as fast as possible so they can get more profit out of it.
failure of govt to manage the industry.
so some poor person gets left holding a rotten house thats way overvalued that will take them a lifetime to pay the buy price let alone the repair bill.

[Nomad]

I have used various calculators and the Westpac home loan calculator online just because they did a lot of TV promotions so I thought they may have some tools online haha. Even if one has the deposit you need a very decent salary to afford a 50% income ratio to the bank. Unless one has a 40% deposit or something like that. Ie one has no equity, no other real estate all they have is maybe the 20% deposit as a starting point. 30yr mortgage with 6% as your spreadsheet - for that which may be more accurate over the 30yrs than the current 2 or 3% we have now. It means a modest $900k might cos you a total of $1.8M. Or a $600k in the suburbs in Wellington prob cheaper than Auckland on a 120m squared house or something advertised to FHBs...

For FHBs it raises a point maybe just simply rent and then put as much as possible towards maxing out the Kiwisaver to get the max benefits and then into something like a NZX50 Index.

Even looked at Wellington smaller units like a 1 room apartment. Kiwibuild one here, 1 room $500k If one then looks at a small unit like a 65m squared used, then one might still be looking at a $450k plus on top there are body corp fees etc. A city pad apartment isn't that much less than a house.

[kenj]

Mind you, things have changed over the years. When I was a kid we used to live in a cardboard carton in the middle of the road........

Ken

[gary67]

When my parents bought a home way back in the 60's in England Mum didn't work and Dad could borrow the equivalent of 1 years and 1 weeks wages as a maximum

[gary67]

Mind you, things have changed over the years. When I was a kid we used to live in a cardboard carton in the middle of the road........

Ken

We lived in the polystyrene you threw out of the box so you could move in,