How do Kiwi's afford homes here?

[globetrecker]

We see the high prices of homes here in New Zealand and look at the salaries/types of jobs in our area and it just does not seem to match. How can Kiwis afford to buy homes on their salaries? I understand if you're from the UK and purchase with the advantageous exchange rate, but what about the Kiwi's who don't have that option?

For example, we live in a town of about 8,000 people. The only employer to speak of is a hospital but most of the doctors are locums from a bigger city, so they don't live here. We have Pak n' Save, a few schools, the Warehouse and dozens of small shops and a few small banks. That is it. Yet the housing on the market here starts at a minimum of $300,000 and quickly goes up from there. (Not to mention these $300k homes are often very old and junky, and the new ones average $500k). How are people affording even a $300k home on their salaries? Is there something we're missing about the cost of home loans here?

So curious!

[Madoxen]

I think you will find that this is the case in a lot of places, If you look at devon in the UK the average household income (hustband and wife joint earnings) is £25,000 and yet housing in the area is starting from £150,000 going up to £500,000 (excluding the real nice houses ). if you think that bank mortgages work on a multiple of 3.5 times your earings to work out what you can get for your mortgage = £87,500.


I have read that the mean average houshold in NZ earns 55000 NZD ( meaning that half the population housholds earns less than this and the other half of them earn more) i have also read the actual average accross the board is 65000, and if you work out a mortgage on the same multiples 192,000 for 55k and 227500 for the 65 k.

So when you look at it no mater where you are if you are a 1st time buyer the odds are realy stacked against you :-( unless you can gain with your deposit money on a faverable exchange rate, or your family has paid off there mortgages and can aid their children in the perchase of a house.

hmmm come to think of it when you think that when people leave univercity these days they can have arount £15000 debt around their neck before they even get a job and even think of saveing up for a deposit on a property, makes you think realy doesnt it

[ellenmelon]

A lot just plain can't..cost of living, pretty bad wages, huge student loans (mines going to be around 27,000 I think..I graduate next week!) mean people rent rather than buy. People are apparently deciding to have kids before buying a house rather than waiting to buy before having kids.

[Chiba]

OE

[Flutterby]

personally i think it was harder to get a house in the UK on a low salary.
There are things in place to help here like the recent Kiwisaver scheme which attracts help from the government.

[Super_BQ]

If you pull up some historical data, it would be safe to assume a lot of the quick rise in housing prices were caused by an influx of wealthy immigrants mostly from Asia and abroad.

The reason why NZ wages/salaries don't match with other developed nations is because kiwi's contribute more of their income towards houses / mortgages than those living abroad. The dual income culture has become the norm here or, perhaps a requirement to live say Auckland city life. Another-words you could say that the disposable income for kiwis after mortgage payment is less.

Some things to think about:

I believe NZ's tax structure is geared towards kiwis to buy up properties for investment. Previous generations for most, have made their wealth on the backs of new home buyers having to pay the high price - it's vicious cycle that continues on and on. The lack of capital gains tax to discourage speculation in NZ housing market probably makes NZ the best country in the world for foreigners to own property here. Virtually every developed nation has barriers of some sort to limit direct foreign investment into home residential property (though not limited to commercial properties).

There were times when NZ had greatly suffered from a housing crash not much different than what the US is experiencing now (gov't intervention of own "state housing"). I can't pick which exact decade but probably during the 70s, my relatives told me a time when NZ experienced massive migration to Australia.

Currently, the biggest cause for rising home prices is more to do with gov't regulation. Standards have been lifted and tradesmens are required to be gov't registered and qualified. The extra red tape and compliance is not to be confused with say Australia or Canada that have had a gov't regulated building scheme from the start. It's this transitional phase from going unregulated to regulated that is pushing the prices even higher.

A guy at a local building company told me that with rising costs, people in NZ "just live it" meaning, they don't put up much of a fight with higher prices and just live by day by day until they are forced to ask for a pay rise.

Also to top things off, small country means small resources. When resources are more scare, the prices must go higher to achieve the same result; issues such as buying power and externalities from other countries.

BQ