We're living beyond our means...

[Boob Johnson]

Is the title of this herald article. A fantastic read & extremely informative for those wishing (or needing) to be more prudent with their finances, especially in these changing times


Some fantastic advice & it's free

[scumdog]

Fark!! I wish they would tell me something I DIDN'T know....

[Boob Johnson]

Fark!! I wish they would tell me somethign I DIDN'T know....

You're a quick reader

[Mully]

Bit simplistic, I thought. Also disagree about telling that couple to sell the house and save. Once you are out of the property market, especially in Auckland, its hard work getting back in.

Mate of mine is selling up, and renting, but buying two rental units with the money he is paying on "his" mortgage. The units will be negatively geared and will reduce his personal tax, and if it all turns to shit, he can sell one and live in the other, and stays in the market.

[Number One]

Some good basic lessons in there. Do they actively teach this sort of stuff in schools yet? They didn't in my day

[Mully]

Some good basic lessons in there. Do they actively teach this sort of stuff in schools yet?

That's a great idea. I think part of kids problems with money comes from plastic cards. They don't click that the money comes from an account

[justsomeguy]

Thanks for the article Boob.

Always wondered about the property thing. Even if I do find a buyer for one of my kidneys and get a deposit together, I need at least 300,000 for a decent hut (liar/lawyer fees, etc, etc all inclusive). At an interest rate of around 9% thats 27,000 for the 1st year in interest alone. Sure it gets a little less the next, but still it's years before it starts eating into the principal. Also I need to come with $4-500 a week to pay the mortgage which means if I want to have any kind of a personal life I may have to eat on alternate days.

Now paying cheap rent at $150/week - that's less than $8,000 a year, better than paying $27,000 a year or so isn't it? So isn't it better renting until one can save a 30%+ deposit or is it worth buying at all?

Hate maths and happy to be corrected with good advice.

[Mikkel]

Good article - I wonder how much common sense it'll take before people are willing to face the fact that they are living beyond their means and then stop blaming the rising petrol and food costs.

They had a spot on this subject on close on where that fella from Wellington who's quite good at economics (can't remember the name) pointed out that the salary index was going up faster than the food price index and that the reason that people felt a squeeze was the rising interest rates.

It sucks - but every party has to stop at some point... It's always up AND down!

I do think however, that if you're looking to buy a house in a couple of years there is going to be plenty of good deals on the market

[Winston001]

Now paying cheap rent at $150/week - that's less than $8,000 a year, better than paying $27,000 a year or so isn't it? So isn't it better renting until one can save a 30%+ deposit or is it worth buying at all?

Hate maths and happy to be corrected with good advice.

In a word, Yes. House prices are still way above the longterm average. Prices do go down. Its happened before and it will happen now. Harcourts already have a separate category for mortgagee sales and I've had a friend lose two houses through mortgagee sale. Both houses sold about $100,000 under market valuation.

Be patient and save.

[Papa Bear]

Hope this thread carrys on... might learn some tips on along the way

[RantyDave]

I need at least 300,000 for a decent hut (liar/lawyer fees, etc, etc all inclusive). At an interest rate of around 9% thats 27,000 for the 1st year in interest alone.

Yes, yes it is. Frightening eh?

Nothing at all wrong with renting and saving up a pot of cash for when you actually want/need your own place.

Dave

[Mully]

It's interesting looking at overseas markets. In a lot of cities, its unusual to own your own property. Mainly cos it's cheaper and more convenient to rent. I think it's the NZ mentality that you have to own your own home. I know several people that don't own the house they live in.

You can, if you do it right, get a more consistent return from other investment year-in year-out. (of course, you want to stay away from finance companies at the moment....)

[Winston001]

It's interesting looking at overseas markets. In a lot of cities, its unusual to own your own property. Mainly cos it's cheaper and more convenient to rent. I think it's the NZ mentality that you have to own your own home. I know several people that don't own the house they live in.

Yes but somebody does own the house and they do very well out of it in the longterm. We also need to recognise that many cities and indeed nations are heavily populated whereas in NZ we are pretty sparse. Added to that is an ethos of very longterm renting - for a lifetime often. Plus there are particular laws and rent controls which make renting attractive.

Owning a house in NZ is realistic - except for the last 3 years. It will be again. Lots of land and only 4 million people. Compare that with England and Japan.

[Mully]

Yes but somebody does own the house and they do very well out of it in the longterm. We also need to recognise that many cities and indeed nations are heavily populated whereas in NZ we are pretty sparse. Added to that is an ethos of very longterm renting - for a lifetime often. Plus there are particular laws and rent controls which make renting attractive.

Dose anyone have the figures on long term per annum gain on property in NZ?? Just curious about whether or not the gains in owning rentals are actually there with the capital if you take all the market swings and the hassle of tenants (say you spend X hours per month sorting things out).

Owning a house in NZ is realistic - except for the last 3 years. It will be again. Lots of land and only 4 million people. Compare that with England and Japan.

Agreed, but we also need to factor in the cost of building here (RMA, etc) and the fact that our primary industry (farming) is land intensive which will restrict the availability of land (try buying a section in Waitakere and getting permission to clear it to build on for example)

[Max Headroom]

Dose anyone have the figures on long term per annum gain on property in NZ??

I recall reading a book written by a guy called Dolf de Ruis in the mid-90's about this. Dolf was a well-known property guru in the 90's who is in the USA now. In the book he quoted the example of a home in Christchurch that had been built in the early 1920's and was still there 70 years later. It hadn't been structurally altered or modified or subdivided, it had simply been repainted, maintained and renovated when required. Importantly it had changed hands every 5 - 10 years and never under mortgagee instruction, so it could be used as a fair example of price trends. The study found that the property had increased at an average rate of 10% per annum.

Now, that's not going to apply to any and every property in NZ. There are way too many variables, including the obvious such as location, presentation and vendor circumstances. And that's without considering the prevailing economic climate.