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  1. #1
    Join Date
    Sep 2003
    High up above and deep down under

    Default Renting now half the cost of buying a house

    Renting now half the cost of buying a house
    By ROELAND van den BERGH - The Dominion Post | Thursday, 20 December 2007

    EXPENSIVE EITHER WAY: The cost of renting is now half the cost of buying a house.

    The cost of renting a house or apartment is now typically half that of buying a house, despite average rents rising more than 7 per cent in the last year, a new Massey University study shows.

    During the past three months, the national median rent increased from $280 a week in September to $290 a week in November.

    On an annual basis the national median was up 7.4 per cent compared with November last year.

    The rate of rent increases remained ahead of inflation, rising 3.5 per cent in the past three months to November, alone. The survey results were issued yesterday.

    Massey University professor of property studies Bob Hargreaves said recent increases in the national median rental appeared to be driven mainly by the lower half of the North Island and the South Island.

    Increases in rents in the last quarter were probably partly due to demand pressure from net migration and potential first home buyers staying in the rental market longer than expected.

    "On an annual cash flow basis, excluding capital gains, renting is now typically half the cost of owning," Professor Hargreaves said.

    This took into account the higher interest costs and opportunity benefits of investing money saved for a house deposit, among other factors.

    When house prices were static or falling, renters were under much less pressure to buy, Professor Hargreaves said.

    Porirua had the strongest annual increase in the Wellington region, gaining $60 to $300 a week, followed by Lower Hutt rents, up $40 at $290, Kapiti up $25 to $275 and Wellington city, which was up $20 to $350.

    Upper Hutt was the cheapest place in the region in which to rent, at an average cost of $220 a week, up $10 from a year ago.

    Hastings had the biggest annual increase of 13.6 per cent, followed by Christchurch with 11.5 per cent, Whangarei 10.2 per cent and Rotorua 10 per cent.

    Increases in the Auckland region were generally in the more modest 3 per cent to 6 per cent range.

    This week the latest Fairfax Media home-loan affordability index showed that an average New Zealand worker on a single income could no longer afford to buy an average house, even with a 20 per cent deposit, in any region in the country.

    In five years, soaring interest rates and doubling house prices have seen home affordability go from marginal - with loan repayments being 44 per cent of the average take-home pay, compared with the comfort threshold of 40 per cent - to an unaffordable 83.4 per cent.

    TO LET

    Weekly residential property rents in the Wellington region rise up to 25 per cent in a year.

    Nov 06 - Nov 07

    Wellington $330 - $350

    Kapiti $250 - $275

    Porirua $240 - $300

    Upper Hutt $210 - $220

    Lower Hutt $250 - $290

    Gisborne $212 - $220

    Hastings $220 - $250

    Napier $260 - $270

    New Plymouth $242 - $240

    Wanganui $180 - $190

    Palmerston North $240 - $250

    Nelson $250 - $270

    All NZ $270 - $290

    "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

  2. #2
    Join Date
    Aug 2006

    Default Successful Landlords Buy Right and for a Rainy Day

    Hi all - I remain Andrew Waite publisher - Personal Real Estate Investor Magazine USA.

    There has been a massive collapse of fair weather real estate investors and their advisors in the US as they were mis-advised in three areas:

    1. How predictable appreciation would cover any bad buyer math.
    2. How highly leveraged property would always be able to be refinanced to be able to stay ahead of payments, and
    3. Reserves for when cash flow went negative were not necessary as this was improbable.

    It has gotten so bad a number of Western states attorney generals are considering requiring real estate and investment educators (The principles, not surrogates) to have a state business, investment and real estate license for every state they wish to advise in.

    Our so called real estate investment educators offered no accountability on the back end as they did not care. They made their money on seminars, books, tapes and the commissions they made for tipping students into property and loans. We applaud this strategy as it is long overdue.

    We just ran a teleconference ramping up to a nationwide seminar series Real Estate Investor 911. We have been overwhelmed by the response because so many investors are concerned about the mis-advice and how to repair any portfolio damage.

    It's always on the advice of the same real estate spruikers.....Whitney, Sheets, Allen, Reddick et al who do not make their money investing but marketing seminars, books, tapes, mentoring, buying clubs and insider experiences versus real investing and executing core investor skills.

    Happy Christmas all - "Weasel Driver"

  3. #3

    Default More like 40%

    I just rented a brand new 4 br 2 ba 190 sqm brick SFR in Kerikeri for $400 a week. Interesting that the investor didn't even try to sell this new house, but placed it directly into the rental market.

    The wishing prices for similar houses in the area are in the 500s . The mortgage payments on this house alone would be around $1000 a week without counting insurance and tax rates. God only knows why the investor is happy with a (theoretical) 4% return on the property when a six month government bond pays 7.5% with zero risk and no landlord headaches.

    I am not going to spend the rest of my life renting. I am also not going to spend the rest of my life paying a mortgage on a ridiculously overvalued asset. If things aren't looking better next year, I'm going overseas. My sister lives in Florida where a generic middle class house like this can now be purchased for NZD 200k (USD 150k).
    Last edited by Bitter Renter; 22-12-2007 at 05:16 PM.

  4. #4
    Join Date
    Sep 2004


    Quote Originally Posted by Bitter Renter View Post
    I am also not going to spend the rest of my life paying a mortgage on a ridiculously overvalued asset.
    As always, there are two sides. One of which BR stresses in another post/
    thread. If wages are paced to the "values" of other things, the numbers
    contra, or become irrelevant. But when wages and values and tax and
    conditions all get as far out of kilter as they are, now, then the "half-gallon,
    quarter acre, pavlova paradise"
    loses its hitherto warm, glowing attraction.

    I think this is actually part of the Comrade Commissariat's secret plan for
    permanent power / employment.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!


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