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Issues to consider when buying a home

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  • Issues to consider when buying a home

    Issues to consider when buying a home
    By BRUCE SHEPPARD Last updated 15:59 24/06/2010
    OPINION: As one respondent to the last blog said, the main thing to consider is the community in which you want to live, ie where do you want to live?
    Every suburb will have a redeeming feature, based on one of four selection criteria, some will have more than one. There are suburbs that are sited for work, leisure, education and health all have shopping more is the pity.
    If you follow a traditional life cycle from cradle to grave, when you are young and without children you will initially favour suburbs close to work, when you get more money you will migrate into leisure, and when your plumbing starts to pack up you will want to live next door to a large base hospital. If you have kids and care about them education will come after work and before leisure.
    Now Auckland I know quite well, so out-of-towners, if you like, add your rating of your own suburbs if you wish. My ratings are as of today - these change over time.
    For example, Pt Chevalier where I was brought up got a big fat zero when I was a kid on education. It was a suburb designed for work with a small amount of leisure chucked in so long as you liked coastal mud. Health was a negative due to the nut house up the road at Carrington. It was, however, close to town, but 50 years ago not that close. The North Western Motorway was only put in around 10 years earlier.
    Now Seddon Tech - a rubbish school when I was a kid - has become Western Springs College and is sought after, most of the nuthouse has become Unitec, (you could argue no change really) and the beaches have been made accessible, public transport is good so it now has moved from a less than one (due to the nut house) to an education hub as well with a bit of leisure thrown in, say a score of 2.5.
    Grey Lynn and Arch Hill where my dad was brought up was a working class, suburb until the blue collar workers were moved out. Mount Albert Grammar and Auckland Girls Grammar were not good schools, and still are not top of the pile by a long way. Auckland city was never thought of as a leisure amenity, it was close to Auckland Hospital but so was Remuera, and the quality of its housing stock was run-down junk that leaked and filled your cup with Bora dust (by the way they still do that).
    The schools have a better reputation now but they are not a reason to buy in those suburbs. Nor is health, judging by the nature of the types who live there. At its essence nothing has changed, those suburbs are still working class, and still get a score of 1. It is just that the workers are white collar and better paid, yet they trade at implicit scores of 3. Why? Because for some reason we are in love with old character. Fine, but not for a first home team. You want something that works, is warm, gets the sun has a bit of land for the kids and enough privacy that you can fart without the neighbours wishing you a good morning in reply.
    You won’t get any of that in the Parnell Ponsonby, Grey Lynn Arch Hill Freeman’s Bay or St Mary’s bay type suburbs at a price that represents value so don’t even bother looking. When you get old, you change, you will appreciate being heard on the toilet by your neighbours as I kid you not it is the most common scene of death (after in bed of course).
    Now take Epsom for example, it has always had a full score for education with Epsom Girls Grammar and Auckland Boys Grammar and it is unlikely to change over time. It also gets a good score on proximity to work, being close to the CBD, Penrose and Mount Roskill. It doesn’t do badly on amenities either with One Tree Hill and the Domain in close proximity. Health is sorted as well with Green Lane and Auckland Hospital close by. So about as close to a perfect score of 4 as you can get.
    The higher the score the more the land will cost and the better the improvements will be so the more the house will cost.
    If you are childless, you need a home, a first home, that is as close to as many work opportunities as possible. If you are in Auckland, these will be suburbs close to places like Auckland City, Takapuna, Glenfield Albany, Penrose, East Tamaki, Mount Wellington, Manukau and Henderson.
    If the area produces highly paid work opportunities the housing price will reflect that, so houses close to Auckland City will be more expensive and houses to the east of work will be more expensive that those to the west , simple really, sun strike.
    So for your first home you will get the best value by picking one close to where you work, if your job is settled, and if it is not, close to as many likely employments hubs as possible and preferably on accessible public transport. For your first home, live with the sun strike, you will get better value west of work.
    Why is this important? Simple really if you are travelling 50kms each day to work it is the equivalent of around a $100k mortgage in terms of travel costs. It will get worse as energy costs are likely to rise faster than mortgage interest rates. You can buy a better quality house if you choose to live close to your work because you can service more of your mortgage, because you are not filling your car’s gas tank.
    If you have kids you will want to think about education and the community in which they are growing up, who you want your kids playing with. Choose a suburb with great schools.
    Reason one: you won’t need to consider private education which is the equivalent of up to a $150k mortgage per child. Thus areas with good schools are worth up to $150k more than areas with rubbish schools. That is why there is so much debate around school zoning.
    Reason two: you will be living in an area where people are thinking and caring about their kids, there will be organised scouts groups, and sports. In general, you will be living in a community that gets interdependency more than in any other area. Work, leisure and health are all about self, while education focused areas are more about community.
    Enough general background on how to categorise areas. The start point for you is to pick an area you need to live in based on your circumstances, and I say need not want. It is your first home.
    Before you buy you need to know the area backwards, you need to know every street, when an agent quotes you a house you need to be able to visualise the location immediately and eventually you will come down to targeted streets,. Look at everything that comes up for sale in your target area.
    Start looking around a year before you plan to buy, know it backwards, forwards, sideways. Know the prices and know when a bargain comes up. Try to buy well, not impulsively.
    Pick a home that either has everything you need for your family - enough bedrooms and bathrooms, and so on. If it doesn’t have these, factor in what it will cost to create these over time. Make sure you can create them. Understand the building restrictions, visit the council before you go buying and understand the building envelopes and restrictions in the areas you are shopping in.
    Have a budget to spend based on the amount you have saved and the amount of borrowing you are prepared to service. Under no circumstances be upsold, remember the days of buying a car.
    If you are going to an auction, do not bid on anything other than the property you went to the auction to view. Don’t get distracted. Do not bid until the end. If it goes above your budget stay out of interest in the market but do not bid by saying to yourself “it is ‘only’$20k more than our target, we can stretch to that”, do not do this.
    Always stand at the back so you can watch the other bidders, and make sure you take your cheque book as if you are successful you will have to pay a 10 percent deposit.
    For first home buyers, auctions are difficult but if you have prepared yourself well following the last few blogs you will cope. Now, while it is illegal, sometimes auctions get gamed by the vendor, and/or the agent. I personally do not like buying or selling at auction I prefer tenders to buy or to sell.
    So now you are ready to buy, you have picked a suburb based on your needs and you have an idea of what is important to you in a house – aspect, layout, construction etc it’s time to go shopping.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx