Don’t get your hopes up yet, say property commentators

[summadayze]

I just don't buy the "average wage versus average house price" argument.

I tend to agree aswell Rolf, times have changed and both partners are normally working fulltime now, so if you take that combined income into account then house prices aren't majorly out of whack like some people say.

Just did a check on TradeMe and the fact is there are currently 514 average 3brm houses for sale in Auckland between $200k and $250k. Or you can get a 3brm unit in Henderson for $179k, not exactly overpriced I'd say.
Surely those are not mansions in the poshest suburbs, but honestly it's only a matter of priorities to get onto the housing ladder. The problem is that the average house price quoted in the media is something like $480k which certainly disports the picture. However, as the facts shows, if first home buyers are willing to compromise a bit then there seems to be plenty of opportunities for everyone.

I admit it wasn't that long ago i was moaning how North Shore property prices seemed ridiculous but looking on trademe recently there are some ok starter properties around 300k. For first home buyers it's definately doable and i'm beginning to think Auckland esp N. Shore house prices will remain strong.

But from an investment perspective it doesn't look that great, yields are generally crap. What do you guys think? Will low yields be the norm for a while or do you think rents will gradually increase?

[Fingers]

Spot on Rolf!

I am 37. I bought my first place in Wellington for $27,000 back in 1997! Cheap or what! It was a 2 bed company share flat near upper hutt, I would live there again, its not too bad. I had good neighbors and people were generally friendly.

Its the best way to start, thats the idea of a ladder, you start at the bottom and slowly climb up!

Cheers

Fingers

[SuperDad]

I tend to agree aswell Rolf, times have changed and both partners are normally working fulltime now, so if you take that combined income into account then house prices aren't majorly out of whack like some people say.

I think that new measures do take into account household income as opposed to individual income. The 5th annual Demographia International Housing Affordability Survey, for example, employs household income in calculating that the average house in NZ costs 5.7 years annual household income. Similarly, the Massey Home Affordability Report uses household income in its calculations.

I have been saying for some time (on this forum) that I don't think that affordability as measured by average household income provides a baseline against which to measure housing values. When I have a bit more time I might give that argument here.

Paul.

[Keys]

Prefer your previous Avator Paul.

[Winston001]

I just don't buy the "average wage versus average house price" argument.

Just did a check on TradeMe and the fact is there are currently 514 average 3brm houses for sale in Auckland between $200k and $250k. Or you can get a 3brm unit in Henderson for $179k, not exactly overpriced I'd say.
Surely those are not mansions in the poshest suburbs, but honestly it's only a matter of priorities to get onto the housing ladder. The problem is that the average house price quoted in the media is something like $480k which certainly disports the picture. However, as the facts shows, if first home buyers are willing to compromise a bit then there seems to be plenty of opportunities for everyone.

Well said and good information. You make an excellent point about average prices distorting the picture. We need to know median prices, and ideally by suburb to get an accurate picture.

[AndyB]

The thing is Rolf in the past generation (generally) our parents were working at the age of 15. Or, they were earning money in apprenticeships. There wasn't the same difference in wealth as most everyone then was working class. And a man's wage after an apprenticeship or tertiary study and a few years hard work and saving could provide a brand new three bedroom on 800 sqm in Akld as well as a car in the garage.
In this generation, many young adults often don't start work until after tertiary or trade school. Many actually go into substantial debt before they earn. If they go straight to work youth rates and award wages mean there are no savings. So, almost no savings or earning power until at least mid-twenties.

It is possible as you say, from then for a couple to get to start a mortgage and live in a small house/unit in one of the outer suburbs, even with just one working. But, there still may be debt from the student loans - a debt incurred to pay for school fees, which btw, the older generation didn't have to pay for, but which severely restricts the younger adults now in getting mortgage approval and also for saving a deposit.

You say they want to start from where their parents finish, yet I think they may see it as their parents had paid a chunk of the mortgage by early-thirties and would be looking at moving up to a better house with two children by then, whereas the young adults by thirty now are just managing to get the deposit together. No children as both are working.

I think it is very, very disconcerting for a younger person today.
There are higher risks of divorce and family break-ups these days - never ending materialism and new gadgetry (often made like crap so have to fully replace it when it breaks) - get rich quick schemes - much greater and discernable disparities between social classes - having to carry tertiary/trade school study debt into their thirties - less secure employment ....... all these things that weren't a problem thirty-forty years ago.
Yet, all these things add up to a skewed and distorted psychology compared to yesteryear.

I think, Man, perhaps they are entitled to something a bit better.

[Bulldog]

AndyB makes some good arguments, certainly our lifestyles (as parents) have changed too. We mortgaged a property we owned to buy a unit for our daughter (she serviced mortgage) until she had enough equity to refinance. If not she would have been in a smiliar situation. Whilst kids should not have any expectation that parental assistance is a right, I think it makes for a happier society if parents went the extra mile for their kids. I do despair for some of the younger people I know who have ambitions of owning their own home but never seem to get out of the rut they are in.

Of course helping kids is based on the premise they will occasionally come visit when you are resident in the Rest Home.

[k1w1]

Of course helping kids is based on the premise they will occasionally come visit when you are resident in the Rest Home.

Class line, bulldog. You wish.

And back to Rolf's quote about affordability. He quotes Henderson. Henderson. There are limits, you know, to what "starting out" entails. :-)

[freezinhot]

Of course helping kids is based on the premise they will occasionally come visit when you are resident in the Rest Home.

Of coarse you would like this to happen but there are no gaurantees!

The best you can hope for is to give your children the happiest upbringing you can with happy memories, teach them to work hard and take responsability, and give them good values/princibles to go on.

There is no doubt I will help my children when they get older, why not, but hopefully I have taught them enough life skills that if I didnt help them they would have the strength and wisdom to go help themselves. Most parents want the best for their children, unfortunately some dont give them the keys to help themselves.

FH