Posts by Yamis
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I learn all my life lessons from watching the Sopranos.
"Buy land AJ, cos god ain't making any more of it".
.... well unless we all bugger off to live on that new planet they've found. -
Right I've done my re.... cue baby crying and go to sort it out.... right back again..... done my research (which involved finding the Metro magazine I was looking for after scouring the wrong ones.
Metro March 1991 Peter Ellison:
"More people own their own homes these days than they did in the "good old days". Fifty years ago, just over half of New Zealand homes were owner-occupied; by the mid-1950s the proportion had climbed to over 60 percent; nowadays, 74 per cent of New zealand houses are owned by their occupiers - about half outright, half with a mortgage. Only 23 per cent are rented, the other three per cent are rent-free.
Buying in Auckland has always been more difficult than elsewhere in the country: the median house price is $145,000 compared to the national median of $105,000. Even so, home ownership figures for Auckland are almost identical to the national figures - except that slightly more properties are mortgaged, slightly fewer owned outright.
It's a myth that houses were easier to buy 20 or 30 years ago. Sure, mortgage rates were lower back then - as low as six per cent. But, says Garth Barfoot, a director of Barfoot and Thompson and a former Auckland branch president of the Real Estate institute, you needed a bigger deposit - as much as one third of the total price - and getting a mortgage was harder.
Borrowing money required long-term loyalty to a lending institution: when you got your first job you took out building society shares or insurance policies to put you in the front of the queue for a mortgage 10 years later, Barfoot says. these days you can walk in straight off the street and borrow up to 85 per cent - but the catch is that still wicked 14 pointsomething per cent interest rate".
The obvious bits that interest me are the $145,000 median house price in Auckland in 1991 (probably figures from late 1990). These days it somewhere around 380,000? 400,000? That would go along with the experts statements that house prices roughly double every 8 years or so. Obviously not always the case.
The other bit interesting me is the 14.? per cent interest rates on mortgages. They make the increases these days seem like not all that much to put up with.
Still, would be nice to have been earning 13% on savings which the article goes on to mention.
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So I guess you don't need any money as a gift now then Josh. Thanks for the heads up. I'll spend it where most of my disposable income goes... grog. ;)
PS Have kids. You'll get accomodation supplement and the working for families package. I suggest 12 kids give or take 10.
And yes, I wouldn't get near a house now if I was shopping on what I had 3 years ago. Our mortgage would be at least 100,000 more and so the repayments would be miles beyond us.
It was purely getting rid of the student loan quickly and then teaching in Korea and saving my butt off there for 3 years wot did it. On 35,000 a year over there you get taxed about 7%... plus of course the other erm... work which is available which is taxed at about 7% less than that.
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I probably exaggerate a little but it would be under 100 bucks after their monthly fee comes out.
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It's all in the leverage. You could have made that in other investments,if you were prepared to borrow to the extent that you have against your house. (Also, is 45000 your deposit + all your payments? Your deposit + all payments is the appropriate base figure).
I'll have to ponder this over an instant coffee and a drive in my 3,500 dollar Nissan.
I'm sitting typing here to avoid planning for my year 13 geo class tomorrow. If I get out of the house altogether I'll be far more successful.
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I have 2,500 in an ASB managed retirement investment fund or whatever the hell they are called.
Does that make me an investor?
Very nice of the govermment to match my 3% input each pay :)
So far ASB has made me about 40 dollars in nearly a year. Thanks guys. I'd probably make more than that selling my toe nail clippings on trade me.
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One other thing before I threaten to take over the thread. I was actually going to blog on it but maybe not now.
One thing I love about owning is being able to do whatever we want with the place. We've added a deck and I've planted about 250 plants on the section. It's all painted how we want, we put in a ventilation system which is going great guns, the gardens are looking nice etc. It all costs money (but not a hell of a lot considering the difference it makes) but if it's being done in the right way it helps the resale value and ability. If we were renting we would have been stuck in the same crappy house we bought.
But that is all by the by. What I was really wondering is what is going to happen to places like placemakers and mitre 10 as we get less and less people owning their own home??
People renting aren't down at Mitre 10 mega buying paint, timber, plants, no more gaps, nails etc all that often. Long term will it also mean a downgrade in the quality of our houses as landlords do the bare minimum to keep the house livable?
I dunno. Just wondering.
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Here's a few things to consider, Yamis.
1. Your profit is unrealised. You can only see that return on your investment if you sell the house, or borrow against it. When you say "at worst it will stall for a bit", that's glossing over the reality of being unable to realise your profit when you want to, or having to sell at far less than you want to.
Isn't that like any investment? Fair enough though that it is a much bigger pain in the arse selling a house than it is to call your stokebroker and tell him to sell those shares.
But saying I can't realise my profit when I want to is stretching it a bit. I could sell the place in roughly a month and be renting an apartment in Korea by the end of the year with money to burn in my bank account. It's not like I'm trying to get money out of a Nigerian through the internet. And even if I sell for less than I want to I'm already being conservative. The 100,000 in 3 years profit is probably closer to 150,000 judging by the house prices of our neighbours up and down the street in the last year.
2. Your investment is in one house. There is no diversification there.
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Yes, indeed. But if the housing market bottoms out we have no urgent need to move. In 5 years, or 8 years or whatever the market will be doing what it does.
3. Your return is high because you are highly geared (ie you have a mortage and not that much equity). If you were not geared, you could have got the same return or better in the New Zealand or Australian sharemarkets over that period.
Knowing what we had and what we have, and what I earn and whats left over you'd need to be a miracle worker to have done that well on the sharemarket. But what I know about the market could be written on the back of the preverbial postage stamp.
4. Because you are geared, you are vulnerable to rises in interest rates or changes in your ability to service the debt. And if these things happen in a period of market decline, you will be forced to sell at the worst time.
We are on a 5 year fixed rate. The interest rates aren't changing anytime soon for us. Even when they do it's not a major amount we are looking at. You are raising some good points but they are kind of assuming the worst which can be done for anyone.
5. "I'm not quite sure where I could have invested a few thousand dollars a year of disposable income to earn a few thousand percent on it a year." But it's not just a few thousand dollars a year that you have invested. A correct accounting of your investment includes your deposit.
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That's true. We could have put the deposit in shares or something but we would have needed truly phenomenal luck with where they went. I assume turning 45,000 into close to 150,000 in 3 years is not all that easy. And if it is then people doing it are probably .... buying houses ;)
I happily accept that your choice has worked out for you, but in fact you are exposed to a number of risks that we non-owners don't worry about.
trust me. I don't worry about the risks ever. I didn't buy it to make money, I bought it so we could get a foot in the market before it got too big.
Cheers for the breakdown of it all though.
I've got a metro mag from about 1992 floating around with an article on Auckland house prices which I'll try and dig up and maybe chuck a quote or two in from it.
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To add to that. We will pay about 170,000 in interest over the next 22 years or thereabouts to pay the mortgage off. By that time the house will probably (based on the increases in house values over the decades) be worth several times that.
We could sell tomorrow and I would be roughly 100,000 dollars better off than I was 3 years ago for virtually no effort. Doesn't sound that dumb to me. That's more than I could save at the current rate in well over a decade.
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dammit. stephen got there first.
i was going to say to yamis, don't count your chickens.
plus, you're not including the cost of serving the mortgage, including rates.
most $200k houses will cost over $200k in interest over the lifetime of the mortgage. what most people don't do is subtract that cost from the "profit" on their investment.
I don't factor the amount of interest into the equation anymore than a family paying 300 dollars a week in rent factors that into the void that it enters. Or rather the landlords pocket minus expenses.
Like I said, if we rented the same house we would be paying 300 a week. Our mortgage is also 300 a week.
I can't see how we are losing out anymore than somebody renting aside from the rates and maintenance which I have already factored in.