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It's basically last chance to get into the property market before that train well and truly leaves the station. The crazy thing is my mortgage is cheaper than

It's basically last chance to get into the property market before that train well and truly leaves the station. The crazy thing is my mortgage is cheaper than the rent I used to pay, so now I'm building equity and can get further ahead, yet ironically those who can't get a loan to buy a home can't save their way there either because the rent is too expensive and there's nothing left. I can sense it's becoming quite a bit trickier for those at the bottom end of society. Still a fantastic place to live, but housing is likely to follow the same trend as other major desirable urban areas. It's basically regression to the mean.

abhinav22 6y ago
Wow! My escape plan was to leave Sydney and chill out in NZ with a remote job, looks like it’s getting on par with Australian cities? Makes sense
- postingawayonhn 6y ago
  Outside of Auckland, Wellington, and Queenstown it's not too bad. NZ's population is also a lot more evenly distributed than most Australian states. NSW has 4 urban areas with over 100,000 people while NZ has 7 despite a smaller population. https://en.m.wikipedia.org/wiki/List_of_New_Zealand_urban_areas_by_population https://en.m.wikipedia.org/wiki/List_of_New_Zealand_urban_ar...
  - abhinav22 6y ago
    Yep agree. Queenstown is gorgeous though! But that tourist premium will apply. Maybe one of those towns near Queenstown I should consider..
    - gnat 6y ago
      If you're used to Australia, almost anywhere in NZ will offer beautiful surroundings. And, thanks to the broadband rollout, most towns have fibre and those without fibre have cellular that's fast enough for most things. I look out over a harbour, about 75m from Auckland. Microwave gets me Internet access. Life is good.
WalterBright 6y ago
> The crazy thing is my mortgage is cheaper than the rent I used to pay, That's the normal state of affairs. When you buy something to rent out, there's no profit unless the rent is higher than the time value of the money. There's nothing inherently wrong with renting rather than owning. Fiscally it doesn't make sense to buy a home unless you plan on living in that location at least 3 years, and probably more. Heck, just selling the house will cost you 6%. Having the house sit empty between renters costs a fortune.
- mkingston 6y ago
  Yes, that is definitely how it should be. Unfortunately the normal state of affairs is not the state of affairs in much of suburban New Zealand. I left Auckland eight years ago, and at the time rent was cheaper than mortgage payments with a ~20% deposit. The housing market is speculative, profits are on capital gains, which until recently were untaxed on land, and still "enjoy" exemptions. I understand for example, that if one holds a property for more than five years, it becomes exempt from capital gains tax. This seems far too easy a loophole to exploit. I suspect, although I'm not certain these days, that there is also a considerable supply problem driven in part by (1) the Christchurch earthquakes (2) a subsequent reassessment of building safety in Wellington resulting in many buildings being deemed unsafe and consequently closed (3) zoning policies.
  - WalterBright 6y ago
    Real estate is not guaranteed to always rise, as I've lost a lot of money doing that. Also, most people don't seem to figure in the cost of owning property when they calculate their gains, for example, omitting the 6% commission when you sell.
    - mkingston 6y ago
      I agree that investment in an already very overvalued property market is unwise (except perhaps as part of a diversified strategy..?). Unfortunately, the capital gains tax status of real estate in NZ, and the leverage on your deposit (the bank charges 5% interest, you make 30% gains) and fast-rising real estate prices made and still makes it favorable to pay the 6%, rather than investing in the stock market, for example. This further inflates real estate prices as a speculative asset until you end up in a dangerous bubble that is difficult to escape from. In a sane system, this wouldn't be the case. It's a problem the NZ government has repeatedly failed to solve, presumably because it would be politically risky. Instead it appears we've chosen by inaction to continue the course toward a real estate collapse. I guess perhaps then we'll learn hard lessons about diversification and tail risk..
dzhiurgis 6y ago
> crazy thing is my mortgage is cheaper than the rent I used to pay How is that possible. Did you relocate or downsized? My impression of Auckland was it's 30-50% cheaper to rent. Maybe with new rates it's on par. Last I checked house in North Shore rents for $700 while valued at some $1.3M - at current rates thats ~$1100 a week for mortgage.
- nullsense 6y ago
  We actually moved to a bigger house when we bought, but different suburb. Depends on how much you borrow I suppose. Our loan was smaller than typical most probably, so we wind up paying about 30% less. But we were renting for $2k a month just 2 bedroom place. Would have been millions to buy that place too. Just getting to the point it's stupid. I don't really know how we did it but we managed to get a decent place for under 700k, but average price is now about 1.1 million or something crazy. My sister has been looking and for what they want it's all north of 900k and incredibly competitive. So, I'd imagine the loan on that would be quite a bit more, and 30% more expensive month to month might be realistic depending on your situation. At one point we were on a single income when I was just starting my career and paying that high rent with a new born baby in the house. It was tough. I can't imagine what it's like in single income households with multiple kids. The math just doesn't check out. It's definitely a great place to live if you can afford it though. Insulated from a lot of the worlds bullshit.

abhinav22 6y ago

Wow! My escape plan was to leave Sydney and chill out in NZ with a remote job, looks like it’s getting on par with Australian cities? Makes sense

postingawayonhn 6y ago
Outside of Auckland, Wellington, and Queenstown it's not too bad. NZ's population is also a lot more evenly distributed than most Australian states. NSW has 4 urban areas with over 100,000 people while NZ has 7 despite a smaller population. https://en.m.wikipedia.org/wiki/List_of_New_Zealand_urban_areas_by_population https://en.m.wikipedia.org/wiki/List_of_New_Zealand_urban_ar...
- abhinav22 6y ago
  Yep agree. Queenstown is gorgeous though! But that tourist premium will apply. Maybe one of those towns near Queenstown I should consider..
  - gnat 6y ago
    If you're used to Australia, almost anywhere in NZ will offer beautiful surroundings. And, thanks to the broadband rollout, most towns have fibre and those without fibre have cellular that's fast enough for most things. I look out over a harbour, about 75m from Auckland. Microwave gets me Internet access. Life is good.

WalterBright 6y ago

> The crazy thing is my mortgage is cheaper than the rent I used to pay, That's the normal state of affairs. When you buy something to rent out, there's no profit unless the rent is higher than the time value of the money. There's nothing inherently wrong with renting rather than owning. Fiscally it doesn't make sense to buy a home unless you plan on living in that location at least 3 years, and probably more. Heck, just selling the house will cost you 6%. Having the house sit empty between renters costs a fortune.

mkingston 6y ago
Yes, that is definitely how it should be. Unfortunately the normal state of affairs is not the state of affairs in much of suburban New Zealand. I left Auckland eight years ago, and at the time rent was cheaper than mortgage payments with a ~20% deposit. The housing market is speculative, profits are on capital gains, which until recently were untaxed on land, and still "enjoy" exemptions. I understand for example, that if one holds a property for more than five years, it becomes exempt from capital gains tax. This seems far too easy a loophole to exploit. I suspect, although I'm not certain these days, that there is also a considerable supply problem driven in part by (1) the Christchurch earthquakes (2) a subsequent reassessment of building safety in Wellington resulting in many buildings being deemed unsafe and consequently closed (3) zoning policies.
- WalterBright 6y ago
  Real estate is not guaranteed to always rise, as I've lost a lot of money doing that. Also, most people don't seem to figure in the cost of owning property when they calculate their gains, for example, omitting the 6% commission when you sell.
  - mkingston 6y ago
    I agree that investment in an already very overvalued property market is unwise (except perhaps as part of a diversified strategy..?). Unfortunately, the capital gains tax status of real estate in NZ, and the leverage on your deposit (the bank charges 5% interest, you make 30% gains) and fast-rising real estate prices made and still makes it favorable to pay the 6%, rather than investing in the stock market, for example. This further inflates real estate prices as a speculative asset until you end up in a dangerous bubble that is difficult to escape from. In a sane system, this wouldn't be the case. It's a problem the NZ government has repeatedly failed to solve, presumably because it would be politically risky. Instead it appears we've chosen by inaction to continue the course toward a real estate collapse. I guess perhaps then we'll learn hard lessons about diversification and tail risk..

dzhiurgis 6y ago

> crazy thing is my mortgage is cheaper than the rent I used to pay How is that possible. Did you relocate or downsized? My impression of Auckland was it's 30-50% cheaper to rent. Maybe with new rates it's on par. Last I checked house in North Shore rents for $700 while valued at some $1.3M - at current rates thats ~$1100 a week for mortgage.

nullsense 6y ago
We actually moved to a bigger house when we bought, but different suburb. Depends on how much you borrow I suppose. Our loan was smaller than typical most probably, so we wind up paying about 30% less. But we were renting for $2k a month just 2 bedroom place. Would have been millions to buy that place too. Just getting to the point it's stupid. I don't really know how we did it but we managed to get a decent place for under 700k, but average price is now about 1.1 million or something crazy. My sister has been looking and for what they want it's all north of 900k and incredibly competitive. So, I'd imagine the loan on that would be quite a bit more, and 30% more expensive month to month might be realistic depending on your situation. At one point we were on a single income when I was just starting my career and paying that high rent with a new born baby in the house. It was tough. I can't imagine what it's like in single income households with multiple kids. The math just doesn't check out. It's definitely a great place to live if you can afford it though. Insulated from a lot of the worlds bullshit.