Charismatic

So we are now housing last place in affordability by price to income according to the IMF.

Bo-Jangles

She'll be right!

"The warning lights are starting to flash ... so I think at the moment we're on what's called 'amber alert' rather than red alert."

NZ tops IMF's housing unaffordability list | Stuff.co.nz

Charismatic

I think we've been driving around for years with the check engine light on.

Interestingly banks also got a downgrade recently for having a higher proportion of lending on interest only terms. Interestingly Bloomberg ran a story about how interest only loans where just making their way back into the US market (with strict caveats outlining eventual full repayment) after the housing crisis.

jmh

The chart is a bit deceptive. It shows the greatest change since 2010. Comparing actual prices to actual wages, the latest data shows Auckland 4th equal with Melbourne and San Jose, behind Hong Kong, Sydney and Vancouver.

Charismatic

Awesome! Can only go higher if rates get lower.

Basically however house prices aren't factored into CPI inflation which the reserve bank targets.

Angeshirl

Trying to explain to people who already own homes in the Auckland market just how bad it is, is becoming nigh on impossible. They just say get in NOW NOW NOW!! Um, with what? My measly deposit which actually is a h*ll of a lot of money to have sitting around.
What happens when the average price hits $2mill? (which I'm more than sure it will) What actually happens to a place when only millionaires can afford it?

Charismatic

Then they don't live in Auckland? Businesses love Auckland because the wages are really no higher than the rest of New Zealand (Wellington is really the home of wealth and power in New Zealand) but there is a large population to draw skills from and the associated issues like transport are costs employees incur in lost time. If you where doing the math properly you might reason that an Auckland employee should be earning perhaps 1.5-2x an employee in another city but generally that's just not the case.

Kotare

London springs to mind

scrubbedexpat094

We own a home here ( in partnership with the bank ) but I get your frustration. House prices are just silly in Auckland in most areas. We are reasonably unlucky in that we bought in the previous market height in March 2007, so our house hasn't risen a huge amount. Plus the fact that Penlink hasn't happened has further stymied us.
But at least we have a house. I see younger friends who are really struggling to try and get on the housing market. One couple has bought in Maungaratoto, north of Wellsford. They couldn't have done it without the help of their parents. They are currently living in little more than a glorified shed. I was horrified when I saw it. I don't know what the answer is for you but I do feel for you.

BEVS

Not the same issue. Charismatic's post shows why .

Agree & that will curl your toes Mister.

We know one businessman that chose not to rebuild in Christchurch and decided that Auckland was the far better option .

A4Ron

Buy now and be in negative equity down the line? No chance

Angeshirl

Ha! Unfortunately Auckland price will continue to go up from now on. There will be no negative equity for anyone already on or who will get on the property ladder from now on. I missed the boat, and no, I'm no resentful of the capital gains nor would I ever consider having an investment property I just wanted the chance to have a home.
Getting shunted around rentals for the rest of my life is something I have to accept. Trust me, I'd leave Auckland if I could but I can't.

A4Ron

Hang on in there. Another major global recession is just around the corner, four of the five world's largest banks are Chinese and they've got crazy levels of debt you wouldn't believe. They're already starting to reduce lending to Chinese nationals buying in foreign countries.

The warning signs are there already. Sit back and watch property investors pump and dump... ensuing domino effect. There will be lots of tears, especially from those with high debt-to-income ratios and mortaged up to the hilt

2008 will be like a walk in the park

Angeshirl

In that case I worry about my savings and investments. Seems like a no win!

Thanks for the reply though

Charismatic

If unemployment picks up (the Reserve Bank of New Zealand isn't duel mandate, they just target CPI stability and not employment) then debt servicing could get difficult. Doesn't take a genius to figure out that if half your household income goes towards repaying your home loan you'll be in a pickle if your income is reduced or you are unemployed. My feeling is most people don't have a couple of years worth of savings to keep the repayments up if we go through a period of high unemployment.