[tdmg]

I might still be a little young, but I'm old enough to be confused by the NZ housing market.

Just I little background: I'm a university student in Massachusetts USA, and I grew up in an upper middleclass city outside of Boston. Housing prices in the 70s and 80s were pretty good here. You could find almost anything you ever wanted for under USD$200,000, even a lot of pretty large houses in nice locations were under that. Since then the prices have simply exploded here, and in Massachusetts it has been the worst.

My family moved here in 1988 and got a nice house 3 bed, 2 bath, 520 sq meters of land, 280 sq meter house (estimates) for around USD$190,000. Towards the end of 1994 our neighbors got divorced suddenly and we bought their house before it even went on the market for USD$300,000 (cheap at the time) with 4 bed, 2 bath (3.5 now after renovations in 1996), 750 sq meters of land, 440 sq meter house, and a furnished basement w/extra kitchen (not included in sq meterage). We sold our old house three days later for around USD$260,000.

However, the prices have kept going up. Our old house is valued at around USD$600,000, and ours at probably around USD$750,000 to USD$800,000. The average house in my town is over USD$700,000. This isn't unusual at all. A friend of mines family purchased their house for USD$170,000 in 1978 (5 bed, 2.5 bath, half acre, 800 sq meter) and how it's worth almost USD$2,000,000 (they almost sold it, because their property tax was too much). Down south or in the midwest the prices are better, but not here.Now, granted, this is upper middle class, but it's not just here. You can't find a place you'd want to live in for under $300,000 (and if you do, then you're lucky). A lot of people have to pay crazy high prices for rent. Friends of mine pay USD $1100 a month for 40 square meter apartment, and it's not even in the city. Our neighbors pay $2400 for their 3 bed, 1 bath, 140 square meters, and they rent at a reduced price from their parents! This is why there are so many trailor parks in America or people are forced to live in shabby houses. To a large chunk of people living in America, owning a house is just dream. It's rare to find anyone coming out university and earning enough to buy a house until usually around their late 20s to early 30.

This is where I get confused with NZ prices. I know that the per capita in NZ is lower than America, but it's not just that. Are down payments really large? Do mortgages have extreme rates or something? Because if the average American makes USD$40,000, and the average Kiwi makes NZ$40,000, then how is NZ$200,000 a target price?

This is the cheapest "house" (condo) in the town next to mine, Watertown and average blue collar middle class suburb:

http://re.boston.com/sales/View_Ulisting.asp?lid=232-70426526

and it's already over USD$200,000!

I kept on getting condos in Watertown, so I looked at Waltham, what use to be lower-middle class run down mill town, blue collar, it's moving up, but the schools are still mediocre. Here is the cheapest house I could find, take a look at some of the pics:

http://re.boston.com/sales/View_Ulisting.asp?lid=458-70386097

and they're asking almost USD$300,000!

Maybe you guys understand why I'm so confused.....I just don't get it....is this how real estate is suppose to be?

[Oregonkiwi]

hi tdmg,
welcome to the forum! Are you thinking about moving to New Zealand?

I'm sorry I can't help you with your confusion - to be honest I'm not sure what you're confused about. Are you saying that NZ houses seem cheap compared to MA? Or are you wondering why housing is expensive where you are? Where did you get the "$200,00 target price" figure? If you read other threads on real estate - like this one: http://www.emigratenz.org/forum/showthread.php?t=7168 - you'll see that $200K is too low for Auckland, although rural areas are cheaper.

[tigerlily]

Mortgages are quite different in NZ than they are in America- most have some part being flexible rates, with shorter terms. In America, a 30 year fixed mortgage was the norm and standard until just a few years ago- but now things have changed (lots of buying a home with a first and second mortgage and just the bare minimum down). I think you'll find a lot of people on this board stating that real estate in NZ is out of line with the low wages that people earn (and the high taxes they pay on them- there are almost no deductions and you pay tax on the first penny you earn). This is especially noticeable in the large cities like Auckland where $400,000 and up seems to be more normal. Actually, I've seen very few houses close in to the city of Auckland listing for as low as $400K, and if they were, it seemed to being a fairly dodgy neighborhood. But I'm not there yet, so these are all just impressions.

[katandbob]

the second house on your selection is so typically NZ it was spooky! :laugh

And you would probably be paying around the same in NZ $ but if it was in Southland it probably be $75+

As of yet we havent looked into mortgages, but they are putting the Fixed rate up :no

the good houses around here that are at a reasonable priced get snatched up quick.

and then there are the sellers that want LOADS of dosh, even when the house is only a rateable value of $700 less than the minimum asking price!

unfortunately its a sellers market!....If we cant find what we want then we will have to take the gamble and sit tight, or buy land and build as cheaply as we can, so that we cover ourselves if the market changes.

Having been through the UK housing market in the 90's I am very wary of high interest rates, and buying a house at an inflated price.

The last thing I want is to get into negative equity.

But the other thing that makes me laugh...just on a visual point is that the amount of house pictures you see with unmade beds, washing on the floor, pots in the sink, etc...gosh some have been shocking....and they still want top brass for them :uhoh

Kat

[tigerlily]

Kat-

I totally agree on the messy photos! That's a huge pet peeve! All I can think is that they are rentals, and that the tenants can't be bothered?

[tdmg]

Thanks everbody for the replies :D

Sorry I didn't respond earlier, but I was away :-/

Oregonkiwi - I'm a long way off from moving anywhere....I'm going to be in undergraduate school for 3 more years (I'm going for a fifth year). Then I'm gonna go to yeshiva in Israel for a year. And then I'll go to graduate school in either physics or philosophy (or hopefully both). I'd love to be a professor some day, but that's another worry. I'd need to be able to get a job at a university in NZ. This is all about ten years down ther road though, and by then I'll have a host of other issues (and hopefully 6+ children :D ). I was just confused as to why how the prices could be so low in a "sellers market." It's more obvious to me now. Real estate is still newish to me and I have to figure it out.

tigerlily - Thanks for explaining the mortgage thing to me. When I look at NZ houses online I really don't have any idea about the neighborhood they are in, so it's not a good measure. I was looking at some websites that listed average wages for a variety of jobs, and they seemed to be more normalized (less polarized) than American wages. I usually think that what I'm putting into taxes is all going to come back to me in the end (transportation, health care, etc), but I can see how it would really put a crimp in everything.

katandbob - I must be looking at the wrong websites (I personally think they are all NZ government fronts :P ), because the houses don't look too shabby. As I said before though, I'm not going to NZ on anything but a vacation for a while, so everything will be quite different in ten years. In the USA, interest rates are super low 5-6% and everyone has (to have) mortgages.

tigerlily - At least you know what you're getting. Messy photos builds trust, and anything that I can point at to lower the price I'm all for! :)

Thanks again everyone for your comments, I am no longer very confused. Only slightly bewildered :P

[tigerlily]

I'd reccomend looking at doing a working holiday visa (since I assume you are under 30- which I think is the limit) or maybe looking at getting your next degree in NZ (if you want one, they cost much less than getting one in the US). It would be low commitment ways to stay for 6 months- 2 years.

[tdmg]

I might try to come for a semester abroad in NZ, but everything else is just too far ahead. There could be a lot of things that could complicate going to grad school in NZ (and yes, I am under 30 :). Right now I'm aiming at going into a double masters program at Columbia University for physics and philosophy (2 years, 2 masters), and if not I'll probably try to get into a top school stateside (very few school have both departments in both fields). I'm also going to want to continue my Judaic studies during grad school, and that will be easiest if I go to school in New York City, and nearly impossible in NZ :-/

Thanks for the advice though! I'll definitely start looking at a semester abroad.