We're living beyond our means...

[pete376403]

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).)

I've been in the same place all my life (apart from a few years renting) - I bought the house from my parents estate. It's a very ordinary 3 bdrm stucco on 1/4 acre in Upper Hutt
They paid 3000 pounds for it in 1952. I paid $16000 in 1982 (bought from my two brothers, so each of us had an $8k share). The current valuation for it is $300,000. I have no idea how 3000 pounds would relate to a 1950s electricians annual income. This what you're asking?

[Boob Johnson]

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

Oh hell yes, plenty already & a whole lot more to come.

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....)

Absolutely, but like anything you need to do your home work......throughly!!!

The average everyday people like you are I understand property better than foreign markets etc.

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).

The average is around 10% when stretched out over the long term. You should expect to see the average house double in value every 10 years.

Interesting to note, I read in Forbes a few years back that an estimated 90% of the worlds wealthiest people have gained the bulk of their assets in property. So be careful of any fund manager who outright "poo poos" property.

McDonalds: Are they in the fast food business? No. They are the biggest property owners in the world, they own almost every site, flippin burgers is for the tenant to make money on

[Boob Johnson]

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.

Dolf =

What a legend that man is, if anyone wants to know exactly how he amassed a LARGE fortune, read his books. He was studying to be an engineer, him and a few buddies were broke ass students so they put their head (and finances) together & did a property deal that netted them a cool $30,000 which was about the same as his starting salary for his new profession. Dolf has never held a convention job in his life

[Winston001]

I personally have lost out in a big way by saving a large deposit before buying my home. For several years the amount I have been able to save each year hasn't even kept up with property price increases. The more I saved, the further away from owning a home I became!

Far better off are the people who jumped straight into the property market on 100% mortgage and capitalised on the rising prices. Even better off are those who mortgaged themselves up to the eyeballs to buy more than one home.

Good post and an echo of my own experience 20 years ago. I saved while my friends partied, enjoyed holidays, cars etc, they bought homes with minimum deposits......and passed me on the wealth ladder.

Why does that matter? Today I have children approaching university, retirement is looking a lot closer, and the capital gains I missed years ago don't exist to retire on. It will be ok, won't starve, but holidays on the Gold Coast which a lot of retired people are doing, won't be a choice.

So this is a good time to start looking for house bargains. Two reasons - sad market, and inflation. Inflation always translates into land values rising.

Finally, the longterm capital gain on land is about 10%. And never ever forget - LOCATION.

[Jez]

I was lucky enough to get into the property market in chch in 2003, paid $170k (absolute max of budget) for a modest 3 bdrm house in a good area of chch, sold it 08/2008 for $290k ... all i did to the house was put up a shade sail over the deck which the purchaser quickly ripped down ...

now own a house in Invercargill while im studying and living on a student allowance with my wife and 2 kids, money is tight, but the fishing is awesome! ...

If you really want to own your own home then Invercargill is one of the last bastions of affordability left ... and we dont get hit by the storms you north islanders get

[Boob Johnson]

Staying in the market is only important if values are rising. I think everything is pretty flat everywhere at the moment so if you are able to sell up and realise some cash gains from the growth over the last few years then you've taken the pressure off making ends meet and it allows you to invest the surplus somewhere it will continue to grow.

Couldn't agree more

However that tactic isn't always suited to everyone. Some property guru's say NEVER sell, hold ya properties till retirement. I think the most important thing is identifying a personalised road to success & sticking to it!

The best monetary solution is probably to rent and invest the difference between your rent and what would be a mortgage in the sharemarket (better long term growth than property). The problem is this takes a hell of a lot of discipline and you don't have the advantages of living in your own place and being able to do what you like to it or improve it. Don't forget wages go up over the years so the payments become easier whereas your rent will only go up.

Each to their own, it's not a competition after all.

Nice one SP, great advice but again not for every person. Some people are just not suited to the volatility of that the sharemarket can bring.

Don't forget wages go up over the years so the payments become easier whereas your rent will only go up.

Quoted for emphasis

[Boob Johnson]

ohh thank you Boob! .. this article is definitely a reminder for me to tighten things up .. Ill admit it I get a lil wayward when it comes to money .. Iv realised that I do not monitor my money the way I need to in order to make it work for me, I put money away into a specific account but the rest well its a bit of a free for all .. and then I complain about petrol hikes? lol .. hmmmm .. wake up slap .. so thankx for posting this! tis timely

Your welcome sweet pea

My wife and I bought a house in central Auckland 8 years ago and paid off the mortgage last year. We are often asked how we did it.

The answer is simple - we did without.

Damn straight!!! Me dear old ma paid off her house in a super quick time on a pathetically low wage. Even the bank manager used to shake his head, im sure he was convinced mum was a drug dealer lol. She just went without a lot of things, but now she can sit back & cruise, she has since traveled the world & life is pretty damned good for her, it came at a price, like anything worth while. But now she helps look after her grand kids on a daily basis. Ask her today if it was worth it?

[Subike]

so you guys all get into housing or property and either lease it out or rent it out whilst living yourself in a rental.
Tax advantages....ok.....
so who are the people you are going to rent it out to? Each other? Your family?
If we all have rentals to rent out
do we all live in each others rentals which we rent to each other
so that we all get that a tax advantage...
really?
This is a numbers game, true? well person one. owning three rentals, whislt living in one rental himself...um, is that three families that should be owning their own homes, and paying a mortage, not renting?
This thread was about budjeting to live in todays market...... how the fuck did it become an avisory into housing, rentals and mortages, investment in futures retirements and pot of gold when you retire?????
So we can all, well suposedly, buy a home....but thats not what is being discused at the beginning, or am I blind,
Where in the article linked to was the housing?
Its , How to survive in an economy that is costing us more to live in than the wages we earn?
So how is that done?
Go buy a house and get further into dept?
OR STOP BUYING ALL THOSE THINGS WE DONT NEED, LIKE AN EXTRA HOUSE!
opps
I better shut up now, Im only totally dept free person, so dont know jack about budjets, property, business, investments, or even the share market, (which at the moment, if you had loose cash would be the best time tio buy stocks)...but um no, propertys safer yeap, just aint got the expendabile cash to service the loans needed to get one. Bugger

[fire eyes]

so you guys all get into housing or property and either lease it out or rent it out whilst living yourself in a rental.
Tax advantages....ok.....
so who are the people you are going to rent it out to? Each other? Your family?
If we all have rentals to rent out
do we all live in each others rentals which we rent to each other
so that we all get that a tax advantage...
really?
This is a numbers game, true? well person one. owning three rentals, whislt living in one rental himself...um, is that three families that should be owning their own homes, and paying a mortage, not renting?
This thread was about budjeting to live in todays market...... how the fuck did it become an avisory into housing, rentals and mortages, investment in futures retirements and pot of gold when you retire?????
So we can all, well suposedly, buy a home....but thats not what is being discused at the beginning, or am I blind,
Where in the article linked to was the housing?
Its , How to survive in an economy that is costing us more to live in than the wages we earn?
So how is that done?
Go buy a house and get further into dept?
OR STOP BUYING ALL THOSE THINGS WE DONT NEED, LIKE AN EXTRA HOUSE!
opps
I better shut up now, Im only totally dept free person, so dont know jack about budjets, property, business, investments, or even the share market, (which at the moment, if you had loose cash would be the best time tio buy stocks)...but um no, propertys safer yeap, just aint got the expendabile cash to service the loans needed to get one. Bugger

awwwwww .... would you like a huge & a cuppa tea????? I do not own a house. Actually I have no intention of owning a house I have no interest in the Property Market at all .. people have told me time and time again that renting is dead money .. that is one way of looking at it .. to me .. and only in my humble mind .. renting means I am not bound or obligated to anything long term .. I know I might get shot down for my opinion but so be it! I do not like to shoulder any more responsibility than is absolutely neccessary .. stability comes in so many forms ... it's nice to sometimes look outside the square of conditioning ..

[fire eyes]

*hug + 10 characters

[RantyDave]

I survive on that comphy as, and ride a bike, prob one of the most exspensive hobbies I can have..

I used to live in Southampton, the UK one. Shithole in case you're wondering. A mate there used to live on a yacht in a poncy marina. He had a part time job helping out at some education institute and was as broke as fuck. He'd pick up odds and sodds - he had a particular speciality in scoring the job to drive cars onto the big carriers, would spend an evening driving 100 jaguars and getting paid for it.

He also got astoundingly good at blagging things. He would get left over antifouling from a boatyard somewhere, persuade a crane driver to lift his boat out for a few cans of beer and do his winter maintenance. He made this amazingly good stove out of left over bits of pipe too. His boat was never perfect, but always seaworthy and *always* ready to go.

He was a top bloke and it gained from me the respect for people who do shit on fuck all dollars. So, nice one

Dave

[RantyDave]

entering the sharemarket? To me (a layman) it seems something for people with lots or moneys or who are very intelligent. Since I'm not really one of them... what do normal folks do?

It's a reasonably safe very long term investment. If you chuck a shitload into it, once, and don't piss about for about (at least) twenty years you'll probably get a solid 8-10% return. If you jockey about buying shares here and there you'll be lucky to come out even (once the trading fees are accounted for).

What ordinary people do is put it into a unit trust. This basically means that a few hundred/thousand people get together and trust their savings to single (or team of) investment manager who is professional, expert at their job and enormously well paid. Or a 28 year old phallus snorting cocaine off the bonnet of his Ferrari. Only 3 out of 10 fund managers out perform the market - i.e the average performance you would get by just throwing a dart at a list of the top 500 companies - so draw whatever conclusions you want.

Don't enter into it now, anyway. The oil thing is going to kick in soon and I think we in the midst of another tech bubble. Not as big as the last one, but it's there.

Dave

[justsomeguy]

I think we in the midst of another tech bubble. Not as big as the last one, but it's there.

Dave

Care to elaborate Dave? I work on finding the IT chaps jobs. The market seems to be rather cautious at the moment. Most of the larger companies have hiring freezes on.

Any one able to give me some real life sample weekly/monthly mortgage payment numbers? E.g 300k, 25 years, 700/week (imaginary figures).

[RantyDave]

Care to elaborate Dave? I work on finding the IT chaps jobs. The market seems to be rather cautious at the moment.

Ah, that's different. By tech bubble I mean that tech company valuations are kinda high right now and a lot of it is built around hype rather than true value. Hiring freezes are caused by a worsening of general global conditions, fuel prices etc. etc. Big companies just have less money, basically.

Dave

[firefighter]

"Take the example of a couple in their early 30s, earning $155,000 between them. They owe $360,000 on a $370,000 house, and $40,000 on other debts. They are struggling to pay the mortgage, leaving little room for bills."

A couple earning $155000 between them struggling with a $360000 homeloan, a $40000 debt on top of that, and struggling to pay bills??? they must be absolutely rediculous with their money......shit i'd love to see them pay my mortgage on our joint salary, un-believeable, absolutely absurd, that pisses me off what they have to cut back on the caviar and opera? FFS! how rediculous, ok we aren't living great but wer'e young, paying a mortgage on A LOT less than that,and not struggling with bills..... how much is my business but believe me when I say I cannot understand how this couple made thier money in the first place with such bad money skills.