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So, if the average person can save 10% of their income, it takes 8.8 years to save a 10% down payment? Factor in tax and the time it takes to save a down paymen

So, if the average person can save 10% of their income, it takes 8.8 years to save a 10% down payment? Factor in tax and the time it takes to save a down payment is starting to look close to the time it took my parents’ generation to own a house free and clear.

throwaway3b03 4y ago
> if the average person can save 10% of their income, it takes 8.8 years to save a 10% down payment Not according to this article, where it mentions the average household income, not the average per-capita income. So you can expect it to take quite a bit longer than that to save for that down-payment, for the average person.
- dzhiurgis 4y ago
  Sun article half year ago said 27 years assuming no price change
- sgt 4y ago
  Then the average person just needs to leverage some pre-existing wealth. Sell some property that you already have, make a decent profit! /s
edf13 4y ago
Most mortgages (At any reasonable %) will require more than 10% these days... you're looking at 20-25% in many cases.
- beardedetim 4y ago
  In USA this isn't true. We bought a house using an FHA loan and put down less than 5% and our interest rate was lower than 3% if I remember correctly. Maybe not as reasonable as you are imagining but it was really low in our mind.
  - edf13 4y ago
    Over here in Europe larger deposits are in and getting larger.
    - graftak 4y ago
      Not in the Netherlands, just recently the mortgage-to-value ratio went from 102% to 100%, the additional 2% could be used for notary and tax costs. When my parents bought their first house in the 90s you were able to loan ~120% of your home value so you could finance a new kitchen or even a car.
  - bluedays 4y ago
    Same
nikanj 4y ago
This is assuming the priced don’t increase. In many places, the prices increase so fast your downpayment grows faster than your savings. Home value goes up 10%, from 1 million to 1.1 million, 20% downpayment goes up from $200k to $220k. If you’re saving under $1666 per mo, you’re actually further away than you were last year. In Vancouver, the average price is $1.36 million and it went up 21% in a year. For detached, $2.12 million/25% yoy. Waiting and saving money is no longer a feasible housing strategy, unless you can save at least a few thousand every month.
- chii 4y ago
  you don't save money by merely keeping it in your savings account (at least, not for the past decade and a half). You "save" by investing that savings in stocks (and may be some mix of bonds too if person is more fiscally conservative).
  - PickledHotdog 4y ago
    Ah yes, I'm sure that's what my parents had to do in the late 70s to get their deposit together. I'm not saying your wrong or that it's not a bad idea, but should you have to take risks by investing your deposit just so you can have the chance to take a bigger risk in the housing market? It's mental that that's the case these days
    - vba616 4y ago
      Has NZ taken steps to ban foreigners from owning property, particularly if vacant? I thought I read something about that.
    - chii 4y ago
      > should you have to take risks by investing your deposit yes. There cannot be ways to obtain risk free returns that out-performs inflation. Where would that return come from if it was risk free? It must come, at some aggregate level, via other people's productivity growth. But this means it's a free lunch, and more and more people would try to take advantage of it, thus lowering the expected return of such a deposit scheme (however it is funded). > the chance to take a bigger risk in the housing market? A house is not a bigger risk than the stock market tbh. It's why the lender for the mortgage is willing to give some 5x leverage (20% deposit) vs a margin loan in the stock market (which at most they're gonna lend you 50% LVR), and at a higher interest rate even! It's the fact that real estate is such low risk that so many people, esp. the poorer/middle income people who cannot take the risk of stock market, want to buy real estate.

throwaway3b03 4y ago

> if the average person can save 10% of their income, it takes 8.8 years to save a 10% down payment Not according to this article, where it mentions the average household income, not the average per-capita income. So you can expect it to take quite a bit longer than that to save for that down-payment, for the average person.

dzhiurgis 4y ago
Sun article half year ago said 27 years assuming no price change
sgt 4y ago
Then the average person just needs to leverage some pre-existing wealth. Sell some property that you already have, make a decent profit! /s

edf13 4y ago

Most mortgages (At any reasonable %) will require more than 10% these days... you're looking at 20-25% in many cases.

beardedetim 4y ago
In USA this isn't true. We bought a house using an FHA loan and put down less than 5% and our interest rate was lower than 3% if I remember correctly. Maybe not as reasonable as you are imagining but it was really low in our mind.
- edf13 4y ago
  Over here in Europe larger deposits are in and getting larger.
  - graftak 4y ago
    Not in the Netherlands, just recently the mortgage-to-value ratio went from 102% to 100%, the additional 2% could be used for notary and tax costs. When my parents bought their first house in the 90s you were able to loan ~120% of your home value so you could finance a new kitchen or even a car.
- bluedays 4y ago
  Same

nikanj 4y ago

This is assuming the priced don’t increase. In many places, the prices increase so fast your downpayment grows faster than your savings. Home value goes up 10%, from 1 million to 1.1 million, 20% downpayment goes up from $200k to $220k. If you’re saving under $1666 per mo, you’re actually further away than you were last year. In Vancouver, the average price is $1.36 million and it went up 21% in a year. For detached, $2.12 million/25% yoy. Waiting and saving money is no longer a feasible housing strategy, unless you can save at least a few thousand every month.

chii 4y ago
you don't save money by merely keeping it in your savings account (at least, not for the past decade and a half). You "save" by investing that savings in stocks (and may be some mix of bonds too if person is more fiscally conservative).
- PickledHotdog 4y ago
  Ah yes, I'm sure that's what my parents had to do in the late 70s to get their deposit together. I'm not saying your wrong or that it's not a bad idea, but should you have to take risks by investing your deposit just so you can have the chance to take a bigger risk in the housing market? It's mental that that's the case these days
  - vba616 4y ago
    Has NZ taken steps to ban foreigners from owning property, particularly if vacant? I thought I read something about that.
  - chii 4y ago
    > should you have to take risks by investing your deposit yes. There cannot be ways to obtain risk free returns that out-performs inflation. Where would that return come from if it was risk free? It must come, at some aggregate level, via other people's productivity growth. But this means it's a free lunch, and more and more people would try to take advantage of it, thus lowering the expected return of such a deposit scheme (however it is funded). > the chance to take a bigger risk in the housing market? A house is not a bigger risk than the stock market tbh. It's why the lender for the mortgage is willing to give some 5x leverage (20% deposit) vs a margin loan in the stock market (which at most they're gonna lend you 50% LVR), and at a higher interest rate even! It's the fact that real estate is such low risk that so many people, esp. the poorer/middle income people who cannot take the risk of stock market, want to buy real estate.