| interest.co.nz | |||||||||||
| Home Loan Affordability Report | |||||||||||
| January 2024 |
There was some good news for aspiring first home buyers last month, with house prices at the bottom of the market and mortgage interest rates both declining, while wages continued rising.
Altogether that made getting into a home of their own significantly more affordable for typical first home buyers in most parts of the country.
According the Real Estate Institute of NZ, the national lower quartile selling price was $566,000 in January, down $20,000 compared to December last year.
The lower quartile price is the price point at which 25% of sales are below and 75% are above, representing the cheaper end of the market that is of most interest to first home buyers.
The regions where lower quartile prices declined in January compared to December were Auckland -$47,500, Waikato -$45,000, Taranaki -$45,000, Wellington Region -$50,000, Nelson/Marlborough -$27,500 and Canterbury -$10,000.
Four regions showed an increase in their lower quartile prices in January - Northland +$66,000, Bay of Plenty +$20,000, Hawke's Bay +$26,000 and Southland +$7000, while the lower quartile prices were unchanged in Manawatu/Whanganui and Otago.
Over the same period mortgage interest rates declined slightly, with the average of the two year fixed rates offered by the major banks slipping from $6.98% in December to 6.89% in January.
That combination of mostly lower prices and lower mortgage rates combined to reduce the mortgage payments on a home purchased at the national lower quartile price with a 10% deposit from $907 a week in December to $869 in January. That's a saving of $38 a week.
If the same property was purchased with a 20% deposit the mortgage payments would have reduced by $31 a week.
In Auckland, where prices are much higher, the mortgage payments on a lower quartile-priced home would have declined by $84 a week if it was purchased with a 10% deposit, or $68 a week if purchased with a 20% deposit.
And there is more good news for first home buyers with wages continuing to creep up.
Interest.co.nz estimates the median after-tax pay for couples aged 25-29, assuming both work full time, would have increased from $2048 a week in December to $2059 in January.
That combination of lower mortgage payments and rising wages meant a significant improvement in housing affordability in January.
The tables below give the main measures of affordability for typical first home buyers with either a 10% or 20% deposit, in all of the main urban regions throughout the country in January.
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| Home Loan Affordability | ||||||
| For Typical First Home Buyers with a 10% Deposit | ||||||
| for a home purchased at the REINZ's lower quartile selling price in each region/district | ||||||
| January 2024 | ||||||
| Region | Amount required for a 10% deposit | Years to save a 10% Deposit | Mortgage required with a 10% deposit | Weekly payments on a 90% mortgage | Median weekly after-tax pay | Affordability: Mortgage payments as % of after-tax pay |
| Mortgage payments equivalent to more than 40% of after-tax pay are considered unaffordable | ||||||
| Northland | $56,500 | 3.0 | $508,500 | $868 | $1,930 | 45.0% |
| Auckland | $77,250 | 3.8 | $695,250 | $1,186 | $2,105 | 56.4% |
| Waikato | $58,000 | 2.9 | $522,000 | $891 | $2,024 | 44.0% |
| Bay of Plenty | $65,500 | 3.4 | $589,500 | $1,006 | $1,984 | 50.7% |
| Hawke's Bay | $57,500 | 3.0 | $517,500 | $883 | $1,965 | 44.9% |
| Taranaki | $47,000 | 2.4 | $423,000 | $722 | $1,964 | 36.7% |
| Manawatu/Whanganui | $42,500 | 2.2 | $382,500 | $653 | $1,964 | 33.2% |
| Wellington Region | $60,000 | 2.8 | $540,000 | $921 | $2,162 | 42.6% |
| Nelson/Marlborough | $57,000 | 2.9 | $513,000 | $875 | $1,960 | 44.7% |
| Canterbury/Westland | $52,500 | 2.6 | $472,500 | $806 | $2,024 | 39.8% |
| Otago | $48,500 | 2.5 | $436,500 | $745 | $1,987 | 37.5% |
| Southland | $35,600 | 1.8 | $320,400 | $547 | $2,065 | 26.5% |
| All of Aotearoa | $56,600 | 2.8 | $509,400 | $869 | $2,059 | 42.2% |
| City/District | ||||||
| Whangarei | $56,500 | 2.8 | $508,500 | $868 | $2,055 | 42.2% |
| Rodney | $89,500 | 4.4 | $805,500 | $1,375 | $2,105 | 65.3% |
| Auckland North Shore | $88,750 | 4.3 | $798,750 | $1,363 | $2,105 | 64.8% |
| Auckland Waitakere | $75,500 | 3.7 | $679,500 | $1,160 | $2,105 | 55.1% |
| Auckland Central | $70,000 | 3.4 | $630,000 | $1,075 | $2,105 | 51.1% |
| Auckland Manukau | $79,500 | 3.9 | $715,500 | $1,221 | $2,105 | 58.0% |
| Papakura | $74,000 | 3.6 | $666,000 | $1,136 | $2,105 | 54.0% |
| Franklin | $65,000 | 3.2 | $585,000 | $998 | $2,105 | 47.4% |
| Hamilton | $62,800 | 3.2 | $565,200 | $964 | $2,017 | 47.8% |
| Tauranga | $72,500 | 3.8 | $652,500 | $1,113 | $1,959 | 56.8% |
| Rotorua | $52,800 | 2.7 | $475,200 | $811 | $2,010 | 40.4% |
| Gisborne | $50,000 | 2.9 | $450,000 | $768 | $1,770 | 43.4% |
| Napier | $60,500 | 3.1 | $544,500 | $929 | $1,972 | 47.1% |
| Hastings | $53,000 | 2.8 | $477,000 | $814 | $1,965 | 41.4% |
| New Plymouth | $55,000 | 2.9 | $495,000 | $845 | $1,935 | 43.7% |
| Whanganui | $38,700 | 2.1 | $348,300 | $594 | $1,823 | 32.6% |
| Palmerston North | $53,500 | 2.6 | $481,500 | $822 | $2,047 | 40.1% |
| Wairarapa | $49,500 | 3.0 | $445,500 | $760 | $1,678 | 45.3% |
| Kapiti Coast | $61,700 | 3.3 | $555,300 | $948 | $1,927 | 49.2% |
| Porirua | $60,000 | 3.0 | $540,000 | $921 | $2,049 | 45.0% |
| Wellington Hutt | $61,943 | 3.0 | $557,484 | $951 | $2,103 | 45.2% |
| Wellington City | $61,000 | 2.5 | $549,000 | $937 | $2,454 | 38.2% |
| Nelson | $57,000 | 2.9 | $513,000 | $875 | $1,960 | 44.7% |
| Christchurch | $54,000 | 2.7 | $486,000 | $829 | $2,016 | 41.1% |
| Timaru | $42,000 | 2.3 | $378,000 | $645 | $1,852 | 34.8% |
| Queenstown | $97,000 | 5.0 | $873,000 | $1,490 | $1,987 | 75.0% |
| Dunedin | $47,800 | 2.6 | $430,200 | $734 | $1,864 | 39.4% |
| Invercargill | $39,000 | 2.0 | $351,000 | $599 | $1,974 | 30.3% |
| Notes: Calculations based on buying a home at the REINZ's lower quartile selling price in each region/district. Mortgage interest rate used is the average of two year fixed rates offered by the major banks for a 30 year term, with a loading for a low equity loan. Weekly income is based on the combined, median rates of pay, after-tax, for couples aged 25-29, assuming both work full time. Years to save is based on saving 20% of after-tax pay each week into an interest bearing account, | ||||||
| Home Loan Affordability | ||||||
| For Typical First Home Buyers with a 20% Deposit | ||||||
| for a home purchased at the REINZ's lower quartile price in each region/district | ||||||
| January 2024 | ||||||
| Mortgage payments equivalent to more than 40% of after-tax pay are considered unaffordable | ||||||
| Region | Amount required for a 20% deposit | Years to save a 20% deposit | Size of mortgage required with a 20% deposit | Weekly mortgage payments with a 20% deposit | Median weekly after-tax pay | Affordability: Mortgage payments as % of after-tax pay |
| Northland | 113,000 | 5.8 | $452,000 | $686 | $1,930 | 35.5% |
| Auckland | 154,500 | 7.3 | $618,000 | $937 | $2,105 | 44.5% |
| Waikato | 116,000 | 5.7 | $464,000 | $704 | $2,024 | 34.8% |
| Bay of Plenty | 131,000 | 6.6 | $524,000 | $795 | $1,984 | 40.1% |
| Hawke's Bay | 115,000 | 5.8 | $460,000 | $698 | $1,965 | 35.5% |
| Taranaki | 94,000 | 4.7 | $376,000 | $570 | $1,964 | 29.0% |
| Manawatu/Whanganui | 85,000 | 4.3 | $340,000 | $516 | $1,964 | 26.3% |
| Wellington Region | 120,000 | 5.5 | $480,000 | $728 | $2,162 | 33.7% |
| Nelson/Marlborough | 114,000 | 5.8 | $456,000 | $692 | $1,960 | 35.3% |
| Canterbury/Westland | 105,000 | 5.1 | $420,000 | $637 | $2,024 | 31.5% |
| Otago | 97,000 | 4.9 | $388,000 | $589 | $1,987 | 29.6% |
| Southland | 71,200 | 3.4 | $284,800 | $432 | $2,065 | 20.9% |
| All of Aotearoa | 113,200 | 5.5 | $452,800 | $687 | $2,059 | 33.4% |
| City/District | ||||||
| Whangarei | 113,000 | 5.4 | $452,000 | $686 | $2,055 | 33.4% |
| Rodney | 179,000 | 8.5 | $716,000 | $1,086 | $2,105 | 51.6% |
| Auckland North Shore | 177,500 | 8.4 | $710,000 | $1,077 | $2,105 | 51.2% |
| Auckland Waitakere | 151,000 | 7.2 | $604,000 | $916 | $2,105 | 43.5% |
| Auckland Central | 140,000 | 6.6 | $560,000 | $849 | $2,105 | 40.4% |
| Auckland Manukau | 159,000 | 7.5 | $636,000 | $965 | $2,105 | 45.8% |
| Papakura | 148,000 | 7.0 | $592,000 | $898 | $2,105 | 42.7% |
| Franklin | 130,000 | 6.2 | $520,000 | $789 | $2,105 | 37.5% |
| Hamilton | 125,600 | 6.2 | $502,400 | $762 | $2,017 | 37.8% |
| Tauranga | 145,000 | 7.4 | $580,000 | $880 | $1,959 | 44.9% |
| Rotorua | 105,600 | 5.2 | $422,400 | $641 | $2,010 | 31.9% |
| Gisborne | 100,000 | 5.6 | $400,000 | $607 | $1,770 | 34.3% |
| Napier | 121,000 | 6.1 | $484,000 | $734 | $1,972 | 37.2% |
| Hastings | 106,000 | 5.4 | $424,000 | $643 | $1,965 | 32.7% |
| New Plymouth | 110,000 | 5.6 | $440,000 | $667 | $1,935 | 34.5% |
| Whanganui | 77,400 | 4.2 | $309,600 | $470 | $1,823 | 25.8% |
| Palmerston North | 107,000 | 5.2 | $428,000 | $649 | $2,047 | 31.7% |
| Wairarapa | 99,000 | 5.9 | $396,000 | $601 | $1,678 | 35.8% |
| Kapiti Coast | 123,400 | 6.4 | $493,600 | $749 | $1,927 | 38.8% |
| Porirua | 120,000 | 5.8 | $480,000 | $728 | $2,049 | 35.5% |
| Wellington Hutt | 123,885 | 5.9 | $495,542 | $752 | $2,103 | 35.7% |
| Wellington City | 122,000 | 5.0 | $488,000 | $740 | $2,454 | 30.2% |
| Nelson | 114,000 | 5.8 | $456,000 | $692 | $1,960 | 35.3% |
| Christchurch | 108,000 | 5.3 | $432,000 | $655 | $2,016 | 32.5% |
| Timaru | 84,000 | 4.5 | $336,000 | $510 | $1,852 | 27.5% |
| Queenstown | 194,000 | 9.8 | $776,000 | $1,177 | $1,987 | 59.3% |
| Dunedin | 95,600 | 5.2 | $382,400 | $580 | $1,864 | 31.1% |
| Invercargill | 78,000 | 3.9 | $312,000 | $473 | $1,974 | 24.0% |
| Notes: Calculations based on buying a home at the REINZ's lower quartile selling prices in each region/district. Mortgage interest rate used is the average of the two year fixed rates offered by the major banks for a 30 year term. Weekly income is based on the combined, median rates of pay, after-tax, for couples aged 25-29, assuming both work full time. Years to save is based on saving 20% of after-tax pay each week into an interest bearing account. | ||||||
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128 Comments
House prices overall will see a decrease over the next few years
Good to get a first home when they're more affordable......
When interest rates start tracking down, house prices will rise - as savvy people are aware.
TTP
It doesn't look like interest rates are going to track down like the market was expecting.
There have to be a few owners/investors holding out for lower rates who are nearing the end of their ability to get by. There will also still be owners rolling off covid low fixed mortgages. Couple that with the expected supply due to bright-line changes and it's not nearly as rosy an outlook as I picked only 2 months ago.
Great to see that you are prepared to change your view depending on how you see things chance, many on here cannot....
The balance of probability is that sales will be low for the remainder of summer... stall big time in winter, and the spring is going to see 10% falls....
I still see another 20% to the bottom 10% this year and 10% next , only then will the affordability start to stack up
Thanks, yes turnover is very, very low. So low it's hard to get a feel for what's happening. I inquired about a place in Queenstown, was told there were multiple bidders, second viewings etc etc. Two week later price cut by $200k and still on the market. I know what I'm doing, the carry is poor and people need to get on with their lives eventually. Just wait them out.
Helped someone buy a house in Manawatu last month, first home. Multi-offer with 2 other offers. Sold over asking price, ours wasnt the highest offer but the best terms. Savvy agent who pitchs them just right. First homes selling fast here if priced right.
Interesting. There is an intersting dynamic between shortage of accom and pricing of rent/buy. For some buying makes sense if their personal circumstances require long term in a given location. Some just can't get the finance though.
Sorry to drive a wedge into your pub-economics narrative but savvy people are also aware that Auckland House prices flatlined between 2016 and RBNZ inspired covid madness in 2020.
And between 2016 and 2020 interest rates were actually falling.
Two graphs for the real savvy people ...
https://www.interest.co.nz/charts/interest-rates/fixed-mortgage-rates
https://www.interest.co.nz/charts/real-estate/median-price-reinz
Stats and damned lies as well..... Big sites big house kept going up, lots of chippy choppy crap was built then holding averages down, best to look on a suburb by suburb basis if you want to really be savvy... right now the best land you can buy will be subdividable with a rentable on it, from a stressed developer , no longer termed mortgagee in aussie now they talk DISTRESSED SALE
It really took a massive injection of taxpayer welfare via RBNZ stimulus handouts to power the market in the last couple of years. What, roughly $11-12 Billion of cost to taxpayers, to subsidise property...of course, now it's important we crack down on the poorest to make some savings! They're the real bludgers, not the subsidised wealthy!
Except this time will be different due to a little thing called DTI kicking in….
Yep, those on lower middle incomes will be excluded from ownership.
Can you clarify your thoughts Dgm. Do you believe house prices will fall in real terms only or nominal terms as well?
It’s nowhere near good news
Yeh, is it good news for yet to be FHB or is it good news for recent FHB?
Depends if the discount on the house exceeds a few years extra rent.
Then that gets taken away paying 7% interest.
More affordable housing at the entry point, why is that a bad thing?
It’s not affordable! Needs to drop another 20-30% then it’s just affordable, but still overpriced.
NZ property = ripoff (everyone knows it)
Because it’s a tiny drop, it’s nowhere near affordable, and interest rates are punishingly high.
It beggars belief, for me, that this can be construed as ‘good news’ for FHB
interest rates are punishingly high
Interestingly, it's not the interest rates which are too high - they're rather in line with the long term trend. It's the prices which are insane
Normal percent times insane is high, hence interest is too high, but because of the other factor, not the rate
Because more than half the population have incomes below the median of two full time couples at median income. Kinda thought that was obvious but I guess they don't teach what a median is and they also don't teach how babies are made or how you are not automatically provided a partner and full time job.
"BOTTOM OF THE MARKET" .. Well if you say so..
Stalled, Stagnant, Stuffed!
Screwed
...more falls to come I suspect, with interest rates higher for longer, house prices will be lower for longer.
is the number correct?
take wellington city for example, median weekly after tax take home pay is $2,454? so the median take home pay in wellington city is $127,608 a year? I find it hard to believe. even if this is household income, divided by two, it still means the median salary is a $84,000 before tax a year per person.
Sounds about right to me. Not sure if it still holds but Wellington City has traditionally been the highest-paid area in NZ, and $84K isn't a huge salary these days.
You might be right, just checked Stats website, median salary national wide for men is $72,800, so 84K salary in wellington city sounds about right.
and yes, it seems people's income has jumped along with inflation.
Wellington is higher because of the higher proportion of Govt/Public Service salaries
And because they have to pay you well to brave the weather
Sure, but houses are so much cheaper in Wellington with much better commutes.
I'd prefer to buy in Welly and add a second home in Coro or Qtown, than spend the same total amount on a dump in a souless suburb in Auckland. Who cares sbout the weather when your grinding at work, Welly is under-rated vs Auckland.
It depends where you live in Auckland. I would never live anywhere other than the central Isthmus, we don't really have all the problems people associate with Auckland such as traffic.
I don’t think the commutes are that much better. I am a Wellingtonian and travel back there quite a bit, for family and work.
Sure the housing is a bit cheaper, but not that much.
I love my hometown but that’s more of a sentimental thing. The weather is lousy, a lot of homes don’t get much sun (or if they do, they get the wind), and there’s a real bureaucratic vibe to the place. Large chunks of the CBD look like they never left the ‘90s.
And don’t get me started on the ‘Cultural Capital’ crap. The food scene is overrated.
However….The waterfront is beautiful, and some great and highly accessible parks and reserves.
Pretty good summary. Lived and frequent both.
Wellington climate & earthquake risk tips the balance for me. It should be a lot less expensive to buy/live there like it used to be pre 2010.
Auckland weather is not great either, windy and wet. Yes warmer, but I think it's close than it used to be.
Wellington has great diving and mountain biking on it's door step, you can walk to the CBD from a lot of places. Don't forget, we are comparing Mt Vic with papakura or Drury for relative pricing.
Also this is context of higher average salarys in Welly.
Auckland weather not good? Wow you must be hard to please. Its awesome by most measures, temperate and gentle. Why would you compare papkura and Mt Vic? Mt vic is more like Grey Lynn.
Auckland weather sucks
- humid
- rains almost every day
- summer starts a month or two late
Least it's not Hamilton or Invercargill I guess
Humidity in Auckland is appalling if you are into fitness. I used to track it after every workout, 70 to 80% up there was "Normal". These days I see the humidity in the low 30's and probably in the 50's is normal. Intense cardio is so much better now.
It’s a pretty good climate. Not a fan of the winters but hey.
I said price wise. Grey Lyn is double Mt Vic.
The Wairarapa Line is certainly having its fair share of issues. Fortunately I only travel in once a week at most, and don't need to be at the office at specific time.
Hi Huttman,
Wellington City traditionally has the highest wage rates in the country, higher even than Auckland's. I make no comment on whether they are providing value for money.
I make no comment on whether they are providing value for money.
*Chortle*, thats the most loaded non comment i've seen for a while.
It's just due to the mix of jobs in Wellington. The data doesn't imply that Wellington workers are paid more than elsewhere for the same roles.
Are we at the bottom though? Maybe, maybe not? We have a lot of stock coming on to the market, interest rates are set to stay higher for longer, unemployment will likely tick upwards this year, China + Germany + Japan + UK + most of Euro in significant slowdowns or recessions, lots of global risks. All eyes on migration, will it stay at high levels? The market will be in for a bumpy ride at the very least. No major upswing on the horizon for 2024 that's for sure.
Interest rates are not high. 20% like we were paying in the 80's is what I would call high. We are approaching normal of around 8%.
Interest rates are high relative to the debt levels mortgage holders now have compared to the 80's. Mortgages were a lot lower in the 80's.
You mean debt to income. If the supply of money was like it was in the 80's then house prices would be much lower and the DTI lower.
I don't think many appreciate how hard it was to borrow many back then.
The 80s were before central bank philosophy of 2%. So calculating an average or norm doesn't tell you much.
"central bank philosophy" is a red herring & nothing to do with the comparison made in the previous comments
It's apt when anyone tries to claim what they think an interest rate should be, based on historic averages.
No one was claiming "what they think an interest rate should be", only what they were
We are approaching normal of around 8%.
People do it on here all the time.
Ok, boomer
The deposit amount young people have to fork out relative to incomes is not far off what would have bought them a home outright in the early 80s, so reckons like these are irrelevant. The fact that the average income family could get a mortgage at all should tell you enough about the change in dynamics.
It's interesting isn't it, how frivolous people were back then that they'd take out multiple mortgages at ridiculous interest rates when all they had to do was save a little harder. I mean, what was a term deposit paying those days 15%? Embarrassing.
My NZPO savings account was earning 15% briefly, before it was split off into PostBank.
Debt levels are high relative to the interest rates.
So many people have it backwards, because they drank the Kool-Aid of abnormally low interest rates.
I bought my first home for $69k in 1984, debt less than 3 times income. Paid off in 3 years. Sold and bought in 1987 for $135k, debt close to 1 times income. Sold for $310k in 1996 and bought our current home for $490k with debt less than 1 times income. That home now around $3m. It was bloody easy for us boomers. Debt was never huge. Interest rates in the 20’s was only for months. The young ones today face far bigger financial obligations when buying their homes than we ever faced.
Same - Future performance should not be based on this experience.
Yes I agree it was way easier, hopefully we get back to something near that some time in the future. From memory of the 1990s, $490,000 would have bought a pretty good property … the $3 million now is probably the problem, I think most expensive houses need to correct. May be in your case the value of developable land is inflating values of property with large sections? As a note I don’t know anyone from back then that had the ability to pay off property in a few years, most I know are still paying mortgages down now, perhaps from topping up over the years.
We lived off my salary for three years, saved my wife’s salary and paid off the first loan in three years. It was only $45k. No overseas trips during that time. Set us up for the life we have now. Our best asset. Our grandchildren
Never feel guilty ex agent, the movies and music they are making is trash, along with influencer culture - so this is their punisment
Heck, the US has even elected a president (and may even re-elect him) who was a perfect encapsulation of influencer culture.
Oh I though they had introduced 50 year mortgages.....my bad......lol
All this data is irrelevant, you know why?!
cause there's a clear separation between an apartment owner who's desperate to sell his property and an owner of a good house on the Shore with dozen of potential buyers who are interested to buy it, and don't mind to pay above the market value.
Two of neighbours sold their houses recently 10% above what they paid in 2023
If you're looking for an apartment 20% off the market value, you may find some/many.
A good house/area with 5/10 off?! in your dreams
The market is getting distorted by the type of "Houses" that are being built now. In a road I used to live in the people are up in arms, a house has been demolished and they are building multiple 3 storey townhouses on the site. Like you pointed out, far more sophisticated data is now required to truly see what is happening in the market. You need to start looking at the amount of land the "House" is sitting on as this is such a large component of the overall price.
"Two of neighbours sold their houses recently 10% above what they paid in 2023"
The short ownership period (i.e at most 14 months) would suggest that they might be property traders. Property traders and owner occupier buyers are very different in:
1) their motivations (one is short term profit motivated) and
2) the prices that they are willing and can pay.
Commissions are 3%, financing costs at 7%. Did the sales proceeds cover all their costs (incl the renovation)?
Here's a recent comment from a property trader
"I made one sale this week. Purchased $1.3mil Jan 2022. Got it done at $1.1mil--loss on top of the $200k would be selling fees and the upgrades -painting etc that went into the sale. Today I will be presenting $1.2mil Unco versus a May 2021 Purchase at $1.4 mil. Likewise the further loss would be as above. I'm expecting it will only get worse over the winter. There was a November blip that change of Government would stop the fall-think Affordability will rule in the end."
Northshore house.
Bought 2021 for $1.2m, asking price $650.000.
https://www.trademe.co.nz/property/residential-property-for-sale/auctio…
"Bought 2021 for $1.2m"
Records here suggest that the last transaction was 1996 and price was $175,000.
https://www.qv.co.nz/property-search/property-details/266532/
Was there a contemporaneous purchase with deferred settlement by the buyer which wasn't completed / settled?
Cross lease
Currently owned by different people.
Correction a gottage granny flat selling for 650k (yikes that is mental) next to the actual house (holding the 1.2mil valuation). Easy to see the confusion when they could not even be bothered to do a proper subdivison so the addresses are a mess in homes data
Here's the record for the other property
Purchased Oct 2021 for $1,232,500
https://www.qv.co.nz/property-search/property-details/266531/
So the owners are trying to sell the 1 BDRM granny flat on a cross lease basis, asking $649,000. Perhaps use the proceeds to reduce the mortgage debt on the initial purchase.
Renovate or detonate, nest or invest, I love NZ real estate agents.
Actually maybe I can help them with some te reo ???
Try and make it funny/catchy or don't bother :) kiwis will struggle
Homes estimate $1.05 million, lol
That is for the actual house, not the granny flat next to it being sold 650k with poor land rights.
agnostium so buy it and make a 500K profit.
They wouldn't for the granny flat, but maybe if they tried to buy the whole house and land they might find it is obtainable for over 1mil now.
Er that was not the house that is selling, that is someone wanting to sell off the 1 bedroom gottage granny flat separate from the expensive house & land because it is past the point they can legally rent it and they are too cheap skate to do a proper subdivision (probably cant with the tiny scrap the gottage is on and limited options for separate drive entrance).
agnostium I can see how you can be confused, by not reading the information and looking at the pictures & address. After all garbage in garbage out (homes algorithm cannot handle these types of properties because it confuses the original section, house & land, and then has someone who claimed it, likely agent, add only the building dimensions of the gottage for the sale to tie in with their marketing, so the algorithm just fails hard) and this kind of property makes for a 'you have to read the info before posting' mistakes.
Like the folks who post that there are houses for sale for 50k only to post ads of houses for removal (that were only fit for demolition and the owners are cheap skates and cant be bothered to do it themselves).
I think that those who can afford buying a house with land and buy apartment/townhouse instead are making a BIG mistake, cause over time the value of their property is exposed to a significant decrease, unlike homeowners with land.
True, like most leasehold apartments in the city, even without the remediation issues the leasehold & body corp costs can inflate to annual costs more then they paid for the original deposit. There is also huge risk and costs associated with maintenance. Such that even trying to get maintenance arranged on mixed lease, and adjoined properties is a nightmare in itself and scaffolding costs are a rort these days.
Just to do paint and surface checks on the second level of a townhouse are a nightmare. Add in dodgy internal gutters with leaking pipes and it is a kettle of fish you cant easily fix or even do maintenance checks on.
Sorry, I was trolling.
Hopefully the migration flow to Australia will slow down.
We have a new fellow kiwi couple moving in down the street, arriving from Tauranga. They are looking to buy and unit price in Brisbane is going nut!
Are you living there (Bris). How do the costs of homes there differ, are they comparable to say Wellington? Harder/easier for fFHB?
So even with big increases in interest rates, its only Auckland that is unaffordable once you've saved 20% deposit.
This is the best house price report IMO, but the use of percentages skews reality. For example in Auckland (44.5% of income for a 20% deposit house) you have $1,168 a week left over, and in Gisborne (34.3% of income for a 20% deposit house) you have $1,163 a week. So you are actually better off in Auckland!
You are better off in Auckland until you have moved out of Auckland and at that point you realise you are better off anywhere else other than Auckland.
Sure. I guess that's why Auckland continues to be the most popular city in New Zealand. Jealousy will get you nowhere.
Internal migration has been negative for Auckland for quite a few years, without overseas migrants it would have a declining population.
That's predominantly retirees moving out. If you are working age and not a farmer, Auckland is by far the best city to live in, it's not even debatable. If you don't need or want to live in a major urban centre, then it becomes a different discussion.
Lived in Auckland for most of my life, over 40 years so I feel I'm in a position to judge it. Its totally gone down the toilet and although you could say that about anywhere in NZ really its just in Auckland they just keep pumping the flush button far more times than anywhere else.
There are still things I like here, and it’s the only city that has a halfway global vibe to it, but I tend to agree.
I thought it had a much nicer / better standard of living when I first came to the city for university in the mid 90s
It’s hard to think of anything that’s really improved. Perhaps the food culture a little bit, although that was already pretty good in the mid to late 90s
From when I moved to Auckland 25 years ago:
- The central city has improved a lot (except for all the CRL work which will be done soon). It used to be a real dive. No Viaduct / Wynyard quarter / Britomart.
- Public transport. Last train used to be at 6 o'clock, no HOP card etc.
- Eden park used to be crappy wooden stands.
- Restaurants used to be crap
- Our area used to be a dry area!
- Lots more for kids these days, Auckland is a great city for kids.
- Better motorways / Waterview which work well off peak (I never use them on peak).
- There are some pretty good cycle paths that didn't used to exist
- central city improved? Yes and no. Maybe some of the streetscapes and the waterfront. The crime and safety is worse. Retail and cafe culture more generic and less interesting
- public transport, fair point
- Eden Park is a horrid concrete jungle
- There were lots of excellent Asian food places by the mid 90s, I can’t speak for find dining I was too poor then
- kids, yes and no. I think it’s worse in some respects, in terms of personal and transport safety
- motorways, yeah nah. Maybe the system
is better, but it’s much more congested
- I don’t really cycle
how about:
- beaches more crowded and harder to get to, water quality?
- cost of housing much much worse
The beaches probably have better water quality now? Its just made more public?
Yes the cost of housing is much worse. It would be much better if Auckland was more crap!
Agree the crime and dodgy people is worse in the city. That seems to be everywhere though, I saw worse in Rotorua and Napier recently. I do hope National are harder on crime.
Sadly access to the beaches for families is worse. So the days of the easily accessible beach with the family is less that now with over development & more population but even worse weekend timetables and cut bus services to those stops (favouring the central routes over local connecting areas & local attractions to each suburb). Most the parking has been removed and sold with nothing to replace it so families travel to the beaches less. Unless you are wealthy enough for a 2+million home the beaches are not for you most the time.
With the over development in those areas with no funds going into improving the capacity of pipes for the higher load it is probably a good thing to skip the beaches. Sewage overflows happen more frequently but hey you get a website to see most the beaches are unswimmable for young kids and elderly now.
Not sure central Auckland is less safe than the 90s, actually. There was quite a lot of violence in central Auckland back then. I had multiple friends caught up in it. Strewth, Commerce Street and Fort Street were pretty dire.
Actually for most the people living there (aka over 90% outside of the CBD) Auckland is pretty crap. The public transport reach is actually worse (they cut the western line completely where over 10000 houses were put in on a one main road system, and pushed development outside of most bus routes so it is an hours drive even to a busstop), and the more money they pump into only the CBD only hastens the demise and degradation of most the city where the kids actually play and families actually live outside the CBD.
You go to the CBD for work but only if you have to and late nights there the vibe has changed with most the local music venues closed down, many of the great multicultural restaurants closed down and the Vileduct only being a place of street violence and bad djs. Even kroad has gone far downhill and the vibe is far more dangerous (family is no longer a good place to be). But hey they opened up a new strip joint to manipulate the wages of the workers even worse. Perhaps that is all that the vileduct & Britomart is, a cheap seedy strip joint that sucks up all the cash and has casual violence outside and causal abuse of women inside. Perhaps that's why you like it so much while most young families have left Auckland, many for overseas, no matter their previous cultural connection to the area.
But I am sure you will find another 20 or so migrants to fit into a single house that will take up all the below minimum wage jobs in the CBD and put up with the lack of accessible public transport outside the CBD and the lack of funds to spend at the Vileduct bars and bistros that serve oh so cliche food to drunken louts with bad taste. https://www.nzherald.co.nz/nz/vietnamese-migrants-sold-everything-to-pa…
Good points.
I thought the Auckland CBD was great in the mid 90s. High Street was buzzing with cool cafes and clubs. Good music stores and shops. Some good Asian eateries. K Road was edgy but fun. Some great Asian food courts
I disagree aside from the roads and water view tunnel.
auckland was a lot more fun back in the 80s 99s.
Agreed, Auckland was very cool in the 80s. Very artsie and lots of good nightlife….the start of dance clubs with edgie clubs popping up around town….. one was in Fort street I remember. Auckland seems pretty ordinary now but the waterfront is lovely for a visitor. I used to like lunch at the Soul bar but haven’t been there since before covid times.
It’s a fairly handy report, but it presents a rosier picture than reality, which I have pointed out before:
- Many young people, especially those on median incomes or higher, have student loans. This impacts on ability to save a deposit, as well as ability to service a mortgage
- In the bigger cities, lower quarter properties are usually townhouses or apartments. These often have not insignificant BC fees, again affecting ability to service
Also I was always under the impression that the 40% of income line for affordable housing included all associated costs. So rent OR mortgage plus rates, maintenance and insurance.
Good point
For many in 2025 and 2026 any reduction in interest charges may well be eaton by rate increases and water bill increases... oh and insurance.... 1% on 500k is only 5k easy for those bills to go up big time for many.
"In Auckland, where prices are much higher, the mortgage payments on a lower quartile-priced home would have declined by $89 a week if it was purchased with a 10% deposit, or $68 a week if purchased with a 20% deposit"
Auckland 10% deposit for a lower quartile property 77K
Assuming you can get your hands on that deposit
695K is the mortgage you will need and it will be $1186 per week to service (mostly interest)
How much could you rent the same house for?
How much is that house likely to increase in value in the short term 1-2 years?
You can rent a $1.6M waterfront property on the shore for $650 a week.
Under $600 a week.
Best case scenario 10% over next 2 years I think.
Entirely as expected.....
Multiple offers on a pretty small house in Berhampore, Wellington last month. Winner was over 1.3m. The difference? The place was actually of good standard with heating and decent windows. A weird rarity In Wellington.
Did it have a garage(s) as well and no stairs to main house access?
These are two qualities we are struggling to find in Welly (granted we also want a nice outlook, i.e., a horizon or bush or sea etc.), that said though I also accept your point about double-glazed windows and (to a lesser degree) good/efficient heating sources. Thing about those things is that they can be remedied.
A reminder for owner occupier buyers - choose your scenario and act accordingly.
Which will the owner occupier regret most:
1) missing out on future potential gains in equity?
2) potential actual loss of their invested equity or even potential negative equity?
For owner occupiers, a reminder of the impact of leverage (it amplifies property price changes both on the up and down):
Scenarios of impact of leverage on equity, assuming an 80% LVR for owner occupier, for a recent $1,000,000 property purchase, $200,000 initial deposit, mortgage $800,000.
A) Scenario - property price rise:
1) property price rises 5% to 1,050,000, mortgage 800,000, equity 250,000, so 25% gain in equity value from 200,000.
2) property price rises 10% to 1,100,000, mortgage 800,000, equity 300,000, so 50% gain in equity value from 200,000.
3) property price rises 15% to 1,150,000, mortgage 800,000, equity 350,000, so 75% gain in equity value from 200,000.
4) property price rises 20% to 1,200,000, mortgage 800,000, equity 400,000, so 100% gain in equity value from 200,000.
5) property price rises 25% to 1,250,000, mortgage 800,000, equity 450,000, so 125% gain in equity value from 200,000.
6) property price rises 30% to 1,300,000, mortgage 800,000, equity 500,000, so 150% gain in equity value from 200,000.
7) property price rises 35% to 1,350,000, mortgage 800,000, equity 550,000, so 175% gain in equity value from 200,000.
property price rises 40% to 1,400,000, mortgage 800,000, equity 600,000, so 200% gain in equity value from 200,000.
9) property price rises 50% to 1,500,000, mortgage 800,000, equity 700,000, so 250% gain in equity value from 200,000.
10) property price rises 100% to 2,000,000, mortgage 800,000, equity 1,200,000, so 500% gain in equity value from 200,000. (i.e property price doubles every 10 years)
Remember, the owner occupier must be able to hold on under ALL economic environments (including any potential significant reduction in household income, higher mortgage interest rates).
B) Scenario - Property price falls:
1) property price falls 5% to 950,000, mortgage 800,000, equity 150,000, so 25% loss in equity value from 200,000.
2) property price falls 10% to 900,000, mortgage 800,000, equity 100,000, so 50% loss in equity value from 200,000.
3) property price falls 15% to 850,000, mortgage 800,000, equity 50,000, so 75% loss in equity value from 200,000.
4) property price falls 20% to 800,000, mortgage 800,000, equity is ZERO, so 100% loss in equity value from 200,000.
5) property price falls 25% to 750,000, mortgage 800,000, equity is NEGATIVE 50,000, so 125% loss in equity value from 200,000.
6) property price falls 30% to 700,000, mortgage 800,000, equity is NEGATIVE 100,000, so 150% loss in equity value from 200,000.
7) property price falls 35% to 650,000, mortgage 800,000, equity is NEGATIVE 150,000, so 175% loss in equity value from 200,000.
8) property price falls 40% to 600,000, mortgage 800,000, equity is NEGATIVE 200,000, so 200% loss in equity value from 200,000.
For OO there's more to it than just the financials though.
And there's a transactional cost of around 3 - 7% to sell and buy back later (REA comms, lawyers, LIM, building reports, movers, etc.)
Owner occupier buyers should be aware of the numbers of properties being listed for sale is likely to increase later this year offering them more choice.
https://www.oneroof.co.nz/news/bright-line-rule-change-58-000-propertie…
Inflation has been about 7% p.a. since Nov 2021. Did leveraged property keep up with inflation?
Here is what the property promoters with their vested financial self interests don't tell you and don't want people to know.
Here is an example of how a potential buyer was saved by their lender. This guy didn't realise it then, but being rejected excessive credit from the bank was actually a blessing in disguise. Being declined for a large mortgage was better than getting approved to buy a house when house price risks are extremely elevated.
Nov 2021 - https://www.newshub.co.nz/home/money/2021/11/first-home-buyer-not-very-…
So what would have happened if this guy bought in Nov 2021? Let's take a look at what could have happened.
A) buying a house
Nov 2021
REINZ median house price in Auckland: 1,300,000
Mortgage at 80% LVR: 1,040,000
Equity: 260,000
Jan 2024
REINZ median house price in Auckland: 975,000 (-25.0%)
Mortgage: 1,040,000 (assumed to be interest only to illustrate impact on equity) - note that the LVR is now over 100%
Equity: NEGATIVE 65,000 (-125% of initial equity, negative equity position)
B) keeping money in bank, and continue saving for a house
Nov 2021
Time deposit: 260,000 (same as house purchase)
Jan 2024
Time deposit with interest (after tax of 33%): 271,000
Now that deposit can be used to buy a house at the current price. This results in a smaller mortgage (704,000 vs 1,040,000 if purchased in Nov 2021), reduced total interest payments over 30 years.
REINZ median house price in Auckland: 975,000
Equity 271,000
Mortgage : 704,000 (LVR of 72.2%)
So from an equity perspective, keeping money on time deposit at the bank was a far better outcome than buying a house in November 2021.
This is something most people do not realise. The property promoters with their vested financial self interests won't tell you this.
Peaker vs Buyer Today
How does this compare with a Peaker and a Buyer Today (BT) in NZ?
1) Peaker
The median house price at the peak for Auckland was $1,300,000
With an 80% LVR, this is a mortgage of $1,040,000
The 20% equity is $260,000
2) Buyer Today ("BT")
The current median house price for Auckland is $975,000
For a buyer who waited, and used the same $260,000 equity used above, the mortgage at this price would be $715,000 (an LVR of 73%)
The Peaker has a mortgage which is higher by $325,000 (mortgage of $1,040,000 for Peaker vs $715,000 for BT)
As a result of that additional borrowing, at a 6.8% mortgage interest rates over 30 years, Peaker is paying $770,000 more over the 30 years than BT (30 years x $25,667).
Assuming same incomes, and same living costs (food, travel, etc except mortgage), BT can save the $770,000 in payments that Peaker is paying.
The annual payment on the additional mortgage of $325,000 is $25,667 per year.
1) Peaker pays $25,667 more per year than BT.
2) BT instead saves that same $25,667 per year. At a deposit interest rate of 5.8% (after 33% tax is 3.9% p.a). Saving $25,667 per year and earning 3.9% per year in net interest after tax for 30 years comes to a total of $1,415,685.
$1,415,685 - this is money that BT has available for retirement after 30 years that Peaker will not have.
Remember that at the end of 30 years, the house price will be exactly the same for Peaker and BT.
BT will have more money available for retirement than Peaker.
more than half the population have household incomes below a couple of two full time median wage incomes. When over 65% of willing FHB are not in the category used for affordability metric advertising to MPs and public that is not a good thing to start with
Its a good point. My parents bought a reasonable home off one full time income, probably less than average.
Family did too about the same gen although for them it was all mostly 1 below median part time income for homes around 65k (except one who brought a lifestyle farm block, now considered close to the city in silverdale area... millwater needs to be called a money pit). One of the properties sold again just recently for 1.8mil... earning about 56k a year... which is more than the median income (after tax) now... and most the other properties they brought around the same price have sold for above 2mil... Fk NZ is Fked.
That lifestyle block still only has 3 homes on it, lots of good land, sheep, bush & forestry, private waterway that is easy maintenance and current value is now above 10mil. The driveway sucks a bit though in one spot where they decided to leave it metal.
Flip flop articles like this have to be taken with a grain of salt. Across the road from me in a sea side suburb of Tasman a 4 bedroom house sold within a few days of listing $1,000,000 more than Homes. Co valuation.
One of my cheapest investments in Nelson has according to Homes. Co been increasing at about $5000 per week over the last quarter. Generally across the whole region property prices and rents are increasing since the change of government.
Anecdotal evidence should be taken with an even larger or perhaps several large grains of salt.
I've mentioned this before, but what is now important is to understand what it could mean long-term for pricing going forward.
There are always cycles in supply and demand, but in more stable less restrictive markets, these cycles affect the price very little. That is because the supply line in the cycle lies almost on top of the demand line (supply equals demand) no matter what the demand is within the cycle. Developers don't under or over-build. The price stays the same except for a gentle general inflation-adjusted rise.
Remember the days when from 'think to finish' building a house was 6 months? However as NZ changed land use policies to be more restrictive, the cycle took a lot longer. Now that is 12, 16 18 months or more.
Then because of these restrictions, it is far easier for that same supply and demand cycle, even with the same volumes, to get out of sync with each other to the point where they become countercyclical. At certain times this gives a relative excess of demand for the supply, and at other times a relative excess of supply for the demand.
There are lots of combinations and permutations to this, but the present effect is, as demand buttons off, supply that has been lagging behind is now catching up, and giving us an oversupply.
While for some this is good news, all it really is is the reverse side of a bad coin.
We have had our boom, now our bust.
But if we want to change to a more stable system, now is the time to do it at the bottom of a cycle. As they say. never let a good crisis go to waste.
Now is the time for Govt. to implement policies, not to allow a repeat of the cycle with another housing boom, but to stop what in effect becomes a dead cat bounce, so that prices remain stable at this lower level, housing is in real terms more affordable, and income growth continues to make it even more so.
This would start to solve many of the other inequalities that exist in the system, giving more disposable income back into everyone's pocket to pay for the solutions themselves, without needing Govt. subsidies.
We wait and hope.
What are the chances? The PM alone has $20 million plus reasons not to implement such policies.
Running with that logic that would include most politicians and all homeowners.
And if that is the logic, then it would mean with the increases we have had over the last few years, Labour are the most culpable if them all.
But if he looks at his whole portfolio then he knows both him, and the country, will be better of if that happens.
.
Unaffordable In Auckland all red, just wait 24 months once the next phase of crash slows down should be another 20% to 30% down after the already 20% lost from highs..
May I present to you a fine home, a fine fine home due to the outstanding quality of NZ homes this lower quartile dream can be yours for a mere 56.4% of your take home pay. You may ask how lucky you are to come across such a property, well believe us you are very very lucky. Would you prefer destitution, or the most moral bankrupt life choice of all, renting?! No come now, come quick! Before it's over 70% of your take home!
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