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My opinion only: (as someone still looking at buying first home who has a pretty good understanding of current economic environment we are in).
1. Someone without a deposit should NOT be able to buy a house. Easy to answer that one. see year to date for why.. I don't think we should be simply giving people houses to live in. What concerns me is our affordability index (see Don Brash's Pdf).
2. First home buyers should be able to buy a house with an affordability index of 3.
In other words a house they can pay off in a reasonable time frame without the excessive pressures of high mortgage repayments. On this point I'm speaking for MOST of my friends. Hardly any have been able to buy a house. They're not stupid people. They've done the sums. It's cheaper to rent than buy. (see consumer website for calculator).
The argument is that you're 'paying someone elses mortage off' if you rent.
So what? If it means we can afford to drive our cars and sleep without stomach ulsers then that's a pretty good deal!
3. Yes it is very reasonable for first home buyers to buy a smaller place in a less affordable location. Less debt= more hair
4. Educating people is important.That type of assistance is invaluable. The kind of education you DON'T get at school. basic economics. Lots of debt=ulcers and frowny bank manager. I'm not advocating free houses but my perception (which I'm quite proud of) is that houses are not affordable in NZ.
I don't have the answers to the housing market. Prices are not what they should be. I often feel that real estate agents must stand in the mirror for hours to practice their 'it's only $500k and a real bargin' faces.
Finally- there is no need to 'try to reduce the market price of houses' as it's happening anyway.
Thanks for your polite reponse.
Regards
Paul
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Originally posted by pjimmyinahouse View Post
2. First home buyers should be able to buy a house with an affordability index of 3.
It's all about changing the mindset. Pretty hard in a country as tunnel-visioned as NZ.
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Originally posted by pjimmyinahouse View Post2. First home buyers should be able to buy a house with an affordability index of 3.
In other words a house they can pay off in a reasonable time frame without the excessive pressures of high mortgage repayments.
It appears that some apartments in Auckland have dropped in price - is it reasonable for first home buyers to consider apartments?
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Originally posted by tricky View PostCan you give some figures - I'm not sure what "an affordability index of 3' means.
It appears that some apartments in Auckland have dropped in price - is it reasonable for first home buyers to consider apartments?
4th annual demographia international housing affordability survey
Demographia Housing Affordability Ratings
Rating Median Multiple
Severely Unaffordable 5.1 & Over
Seriously Unaffordable 4.1 to 5.0
Moderately Unaffordable 3.1 to 4.0
Affordable 3.0 or Less
In recent decades, the Median Multiple has been remarkably similar among the nations surveyed,
with median house prices generally being 3.0 or less times median household incomes where
demand and supply are balanced (3.0 is considered the “Median Multiple ceiling”). This historic
affordability relationship continues in many housing markets of the United States and Canada.
However, the Median Multiple has escalated sharply in Australia, Ireland, New Zealand and the
United Kingdom and in some markets of Canada and the United States.
Basicall the index tells you how long it will take to pay off your house.
I don't see a problem with concept of an apartment myself. -I'm in Welly but I'm sure the standard of apartments in Auckland would far surpass the poor quality of affordable apartments here...
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If I had no kids and was in my 20's and worked in the city, I would love to live in an apartment.
But I do, I'm not, and I don't, so would rather have the 1/4 acre and McMansion in the 'burbs, thank you very much.
Surely a rating like that must apply differently within each city or region? A factor of 6 in some rural location would be the same as a 3 in posh locations near the city, surely.
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Originally posted by k1w1 View PostIf I had no kids and was in my 20's and worked in the city, I would love to live in an apartment.
But I do, I'm not, and I don't, so would rather have the 1/4 acre and McMansion in the 'burbs, thank you very much.
Surely a rating like that must apply differently within each city or region? A factor of 6 in some arse-end location would be the same as a 3 in posh locations near the city, surely.
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Originally posted by k1w1 View PostYou cannot compare Tokyo with Auckland though, in regards to space, cost, expectation nor lifestyle. Chalk & cheese.
Expectations are the key I think. Both the Japanese and Kiwis would have bought anything during the respective bubbles. Based on the Japanese experience, I can't see that continuing in NZ (buying low quality apartments at a premium).
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I think we're arguing slightly different points.
My point was that in Tokyo, particularly, you have an awful lot of people who have no choice but to live in high rise apartments. Some of them are dog rough too (the apartments, not the people). In NZ, even 1st buyers have the choice. If you want some grass under your feet you can have it. In Tokyo that's nearly impossible without some serious dinero.
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Originally posted by tricky View PostSo if a young couple were earning $40k each (total of $80k) then they need to be able to purchase at around the $240k mark?
I would have thought that was possible.
-article is no longer correct.
-they calculate figures differently.
But your figures seems sound to me on face value.Last edited by pjimmyinahouse; 10-11-2008, 02:44 PM.
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Originally posted by pjimmyinahouse View PostNormally I'm fairly mild mannered- but I DO believe everyone should be able to afford a house to live in. Greed has (and still is) making this impossible.
My apologies for being overly negative.
Regards
Paul
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Originally posted by tricky View PostSo is it impossible to afford a house?
I love pretty graphs-check some out if you love them too. See the big upslope for housing prices and the relatively conservative other graphs such as GDP.
That shouts correction to me. I'm afraid I don't have any pretty graphs on me to post
I was wrong- it's not impossible
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