Shamubeel Eaqub wrote an article a few years ago saying it was better to rent in Auckland than buy. Considering he went out and bought about a year later, I wonder if he still stands by that advice?
In ten years time with Aucklands population set to increase, the median house price will probably be getting close to $1.5m. IMO now is a good time to buy (assuming you can get a deposit which is the hard part as interest rates never lower). I do not see the supply of new housing being enough for the next few years.
I think the young are told, but its one thing to be told and another to understand…and there is the factor of immediacy, the future will take care of itself (or optimism) and the (mistaken) belief that 'the gov' will always step in to assist.
Could someone with more knowledge of this subject please explain why that precipitous drop in 2008-2010 happened..?…with the obvious follow-up questions of could it go up again as fast…?…and what would the circumstances be that would cause that to happen..?
GFC caused banks to tighten the screws on mortgage lending significantly at a time when finance companies and other non-bank mortgage lenders were going under, so a lot of forced sales when there weren't as many qualified buyers.
Should inflation mean that interest rates increase pay rates would follow to compensate. Though I must note pay rates follow inflation so the worker does lose out, those holding assets benefit AGAIN with assets appreciating faster than pay.
thenonly time I can recall this not happening was proceeding the GFC when mortgages were 10% and pay increases were marginal, but we had massive net migration into Auckland then
It depends …if the RBNZ can keep the ponzi scheme afloat long enough then there is a possibility the asset inflation will force wage/consumer inflation, but as you note there are counter forces…but if they are unable to maintain the asset prices (or offshore events) then we could expect deflation….and ultimately there will be deflation at some point as the debt is unsustainable but the question is can it be propped up one more time?….personally I think not for very much longer when you look at the amount of debt being added and interest rates at zero in much of the world.
Many workers locally already getting pay rises. As employers cannot use the standard response, of bleating for more cheap labour from overseas, at the present time.
Have mortgage rates in NZ ever been as low as they are now? Going by that nice graph (@10:25 am), not during the last 56 years.
Given the low (~1%) and very flat term-deposit interest rates that major banks in NZ are currently offering (basically no difference between 1-year and 5-year terms), maybe interest rates won’t rise anytime soon.
Heck, maybe the mortgage interest rate cycle is now longer than the 25 years it might take to pay off a mortgage. For example, the 30-year fixed rate mortgage average in the US has been falling since it last peaked (at ~18%) in the early 1980s (and falling from 7% over the last two decades), Japan's mortgage rates haven't been much above 4% since the mid-90s, and except for a short-lived spike in 2008, even Australia's mortgage rates have been below 7% for ~25 years.
“It shows how scared investors are of the current situation in the financial markets, and that they expect it to take a very long time before things improve.”
Whoops: ‘even Australia's mortgage rates have been below 7% ~8% for ~25 years.’
A rise in interest rates can now only occur if there is massive wage inflation at the same time. It takes no brains to work out that any significant interest rate increases when the world is flooded to the top of the mast with debt, that increasing interest rates to even 5-6% would result is widespread debt default.
which may be defaulted without an increase in interest rates…its taking some pretty serious measures currently to avoid it…..and many of them have just expired or are destined to shortly.
Modern day land grab aka how to put poor people back in their place.
I don't get how people can take large sums of low interest money without long term fixed rates, especially when prices are so exorbitant. A scenario exactly as you wrote is staring them in the face.
Neat, thanks – Westpac’s calculator says a minimum payment of $1,552 per fornight for a 30-year, 3% mortgage, not "$1,745 a fortnight". I must be using it wrong; the total number of payments isn’t changing when the loan term is changed?
If you use the mortgage calculator of a NZ-owned bank, e.g. TSB, at their current best rate if you paid "$1,745 a fortnight" you'd pay off the mortgage in 23 – 24 years. Similar result at Kiwibank.
Re-reading that post I probably came across as a bit blunt and a prick tbf.
Basically by your calculations yes you are correct and are paying the interest.
But you are not paying off the 800k the bank owns on your house.
So the bank is basically the majority owner of your own house.
So unless you are paying off the 800k you are kind of just paying rent to the bank to live there.
And if interest rates suddenly rise, which is inevitable, going by historical trends, the bank still owns 800,000k of your house and if you cant afford the interest rises, they will say. "Tough luck mate. We still love you as a customer, but as we own 80% of your house we have decided to auction it. Please move out by next month"
If it helps we can give you a credit card at 19% interest.
Looked it up and got slightly different translation
"You’ve undoubtedly heard the word “mortgage” thrown around a million times. But you may not know that in the literal sense, it is defined as a “death pledge” in the French language.
Ironically, the French don’t actually use the word themselves (they use hypothèque, while Spanish speakers use the similar word hipoteca).
Broken down, the mort part (pronounced more) means death and the gage part (pronounced gahj) means pledge."
House buyers and banks always bet on the House and the House usually ‘wins’.
Let’s take your example and assume they fix for 3 years for a Loan Term of 25 years. After these 3 years, they can no longer service the mortgage for whatever reason and are forced to sell. Over that period, they’ll have paid $69,093 in Interest to the bank, which is their ‘loss’. They’ll also have paid $67,480 in Principal, which they’ll ‘get back’ upon sale. So, their house would need to have increased in value by $69,093 to ‘break even’, which is an annual increase (appreciation) of 2.25% over the 3 years. This does not take into account one-off costs incurred such as moving costs, real estate agent fees, lawyers, loan fees, etc. Also, in real dollar terms they’ll go backwards although inflation is quite low. If they sell the house for more than $1,069,093, they’ll come out in ‘positive territory’, more or less. Seems doable.
During that time, they won’t have to pay rent, only insurance and general upkeep of the house, which they can call ‘theirs’ for the time their name is on the Title.
The interest cost averaged over 3 years equates to $441 per week or $883 per fortnight (with some rounding).
"Why do you think it is better to buy than to rent?"
I've always thought it better to be paying towards eventually owning than paying rent and effectively paying some one else's mortgage. In example above: $1m house; Couple have $200k deposit and $800k mortgage. Should be able to get 2.65% with bank (or less at moment and rates likely to fall again next year as Reserve bank talking possible negative rates). Paying P'pal and interest weekly is approx $840 a week, whereas you could easily be paying $700 -$800 in rent per week. I would rather pay the bit extra and get on the ownership ladder (assuming couple can afford the higher mortgage v rent payments).
Is “the ownership ladder” a euphemism for tax-free CG, by any chance?
I think many people would rather live in something they can call ‘their own’ even though the bank tends to co-own it. In Europe, tenancies can be very long-term and tenants treat ‘their’ rental as their own; very different attitudes over there compared to over here.
Looking at the formulae on my rates bill, on a $1million house the annual rates would be around $2500. Of that, $141 pays for recycling and other general waste services.
Household rubbish is charged separately at $4something per 120litre wheelie bin. Water and wastewater are charged separately at $231/year for the connection plus $3.75 per cubic metre for the water (nominally it's $1.59/cubic metre for the water and $2.16 to take it away after it's been filled with piss and shit).
Don't know about Auckland, but in Palmerston North my annual rates bill (based on a Land Value of $355,000, and not including the $416.18 Regional Council annual rates bill) is $3,308.19. PNCC does take sewage and rubbish away though.
Trump is trying, very trying, but will never be top Windsor Davies stage presence and gyrations, here he is with Don Estelle who lived in NZ for a while later.
I dont give a tinkers toss about cars, houses, accumulating consumer goods or fulfilling my destiny by going somewhere exotic and coming back. What I care about is the freedom to smoke a joint without the door being bashed in or the neighbours narking. I beseech everybody to use the break to write to their mp's and asking them to do something about the inequitable laws at presented enacted to criminalise and imprison otherwise innocent people. I know there are some sanctimonious, self righteous reactionary members of the NZLP caucus but they must be neutralised and not allowed to impose their views on the rest.
R.P. Mc, the majority spoke on the marijuana referendum. It voted against. BTW, I voted for it- the arguments persuaded me, though I am not a user.
The majority imposed its view. That is what happens with referenda.
Would it have been better tactically to have sought decriminalisation?
Did all that supported legalisation and were entitled to vote in the referendum do so, especially amongst younger voters? There's a lesson in citizenship there.
She won $100,000 plus some costs. That's just for the entitled sick leave.
There's no way it will rebuild her life as it ought to have been.
The Canterbury Westland Kindergarten Kindergarten Association, the Manager who bullied her, and the HR Manager Karyn Willets (quoted in article) should simply be required to pick up rubbish for the rest of their professional lives.
"Premier Gladys Berejiklian wants to use a third of the state's hotel quarantine slots to bring in international students and skilled migrants, starting in as soon as six weeks, in a move that would cut the number of overseas Australians able to come home through NSW."
Yesterday Winston Peters focussed his attention on the important matter at hand. Tweeting. Like the former, and quite possibly next, orange POTUS, from whom he takes much of his political strategy, Winston is an avid X’er.His message didn’t resemble an historic address this time. In fact it was more reminiscent ...
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The government's decision to reintroduce Three Strikes is a destructive and ineffective piece of law-making that will only exacerbate an inherently biased and racist criminal justice system, said Te Pāti Māori Justice Spokesperson, Tākuta Ferris, today. During the time Three Strikes was in place in Aotearoa, Māori and Pasifika received ...
Cuts to frontline hospital staff are not only a broken election promise, it shows the reckless tax cuts have well and truly hit the frontline of the health system, says Labour Health spokesperson Ayesha Verrall. ...
The Green Party has joined the call for public submissions on the fast-track legislation to be extended after the Ombudsman forced the Government to release the list of organisations invited to apply just hours before submissions close. ...
New Zealand’s good work at reducing climate emissions for three years in a row will be undone by the National government’s lack of ambition and scrapping programmes that were making a difference, Labour Party climate spokesperson Megan Woods said today. ...
The Minister Responsible for RMA Reform, Chris Bishop, today released his decision on twenty recommendations referred to him by the Wellington City Council relating to its Intensification Planning Instrument, after the Council rejected those recommendations of the Independent Hearings Panel and made alternative recommendations. “Wellington notified its District Plan on ...
Rape Awareness Week (6-10 May) is an important opportunity to acknowledge the continued effort required by government and communities to ensure that all New Zealanders can live free from violence, say Ministers Karen Chhour and Louise Upston. “With 1 in 3 women and 1 in 8 men experiencing sexual violence ...
Associate Education Minister David Seymour has today announced that the Government will be delivering a more efficient Healthy School Lunches Programme, saving taxpayers approximately $107 million a year compared to how Labour funded it, by embracing innovation and commercial expertise. “We are delivering on our commitment to treat taxpayers’ money ...
New research on the impacts of extreme weather on coastal marine habitats in Tairāwhiti and Hawke’s Bay will help fishery managers plan for and respond to any future events, Oceans and Fisheries Minister Shane Jones says. A report released today on research by Niwa on behalf of Fisheries New Zealand ...
Deputy Prime Minister and Foreign Minister Winston Peters will lead a broad political delegation on a five-stop Pacific tour next week to strengthen New Zealand’s engagement with the region. The delegation will visit Solomon Islands, Papua New Guinea, Vanuatu, New Caledonia, and Tuvalu. “New Zealand has deep and ...
There has been a material decline in gas production according to figures released today by the Gas Industry Co. Figures released by the Gas Industry Company show that there was a 12.5 per cent reduction in gas production during 2023, and a 27.8 per cent reduction in gas production in the ...
Defence Minister Judith Collins tonight announced the recipients of the Minister of Defence Awards of Excellence for Industry, saying they all contribute to New Zealanders’ security and wellbeing. “Congratulations to this year’s recipients, whose innovative products and services play a critical role in the delivery of New Zealand’s defence capabilities, ...
Welcome to you all - it is a pleasure to be here this evening.I would like to start by thanking Greg Lowe, Chair of the New Zealand Defence Industry Advisory Council, for co-hosting this reception with me. This evening is about recognising businesses from across New Zealand and overseas who in ...
It is a pleasure to be speaking to you as the Minister for Digitising Government. I would like to thank Akolade for the invitation to address this Summit, and to acknowledge the great effort you are making to grow New Zealand’s digital future. Today, we stand at the cusp of ...
New Zealand is urging both Israel and Hamas to agree to an immediate ceasefire to avoid the further humanitarian catastrophe that military action in Rafah would unleash, Foreign Minister Winston Peters says. “The immense suffering in Gaza cannot be allowed to worsen further. Both sides have a responsibility to ...
A new online data dashboard released today as part of the Government’s school attendance action plan makes more timely daily attendance data available to the public and parents, says Associate Education Minister David Seymour. The interactive dashboard will be updated once a week to show a national average of how ...
Foreign Minister Winston Peters has announced Rosemary Banks will be New Zealand’s next Ambassador to the United States of America. “Our relationship with the United States is crucial for New Zealand in strategic, security and economic terms,” Mr Peters says. “New Zealand and the United States have a ...
The Government is considering creating a new tier of minerals permitting that will make it easier for hobby miners to prospect for gold. “New Zealand was built on gold, it’s in our DNA. Our gold deposits, particularly in regions such as Otago and the West Coast have always attracted fortune-hunters. ...
Minister for Trade Todd McClay today announced that New Zealand and the United Arab Emirates (UAE) will commence negotiations on a free trade agreement (FTA). Minister McClay met with his counterpart UAE Trade Minister Dr Thani bin Ahmed Al Zeyoudi in Dubai, where they announced the launch of negotiations on a ...
New Zealand Sign Language Week is an excellent opportunity for all Kiwis to give the language a go, Disabilities Issues Minister Louise Upston says. This week (May 6 to 12) is New Zealand Sign Language (NZSL) Week. The theme is “an Aotearoa where anyone can sign anywhere” and aims to ...
Six tertiary students have been selected to work on NASA projects in the US through a New Zealand Space Scholarship, Space Minister Judith Collins announced today. “This is a fantastic opportunity for these talented students. They will undertake internships at NASA’s Ames Research Center or its Jet Propulsion Laboratory (JPL), where ...
New Zealanders will be safer because of a $1.9 billion investment in more frontline Corrections officers, more support for offenders to turn away from crime, and more prison capacity, Corrections Minister Mark Mitchell says. “Our Government said we would crack down on crime. We promised to restore law and order, ...
The OECD’s latest report on New Zealand reinforces the importance of bringing Government spending under control, Finance Minister Nicola Willis says. The OECD conducts country surveys every two years to review its members’ economic policies. The 2024 New Zealand survey was presented in Wellington today by OECD Chief Economist Clare Lombardelli. ...
The Government has delivered on its election promise to provide a financially sustainable model for Auckland under its Local Water Done Well plan. The plan, which has been unanimously endorsed by Auckland Council’s Governing Body, will see Aucklanders avoid the previously projected 25.8 per cent water rates increases while retaining ...
Foreign Minister Winston Peters discussed the need for an immediate ceasefire in Gaza, and enhanced cooperation in the Pacific with German Foreign Minister Annalena Baerbock during her first official visit to New Zealand today. "New Zealand and Germany enjoy shared interests and values, including the rule of law, democracy, respect for the international system ...
The Minister Responsible for RMA Reform, Chris Bishop today released his decision on four recommendations referred to him by the Western Bay of Plenty District Council, opening the door to housing growth in the area. The Council’s Plan Change 92 allows more homes to be built in existing and new ...
Thank you, John McKinnon and the New Zealand China Council for the invitation to speak to you today. Thank you too, all members of the China Council. Your effort has played an essential role in helping to build, shape, and grow a balanced and resilient relationship between our two ...
The Government is modernising insurance law to better protect Kiwis and provide security in the event of a disaster, Commerce and Consumer Affairs Minister Andrew Bayly announced today. “These reforms are long overdue. New Zealand’s insurance law is complicated and dated, some of which is more than 100 years old. ...
The coalition Government is refreshing its approach to supporting pay equity claims as time-limited funding for the Pay Equity Taskforce comes to an end, Public Service Minister Nicola Willis says. “Three years ago, the then-government introduced changes to the Equal Pay Act to support pay equity bargaining. The changes were ...
Structured literacy will change the way New Zealand children learn to read - improving achievement and setting students up for success, Education Minister Erica Stanford says. “Being able to read and write is a fundamental life skill that too many young people are missing out on. Recent data shows that ...
Trade Minister Todd McClay says Canada’s refusal to comply in full with a CPTPP trade dispute ruling in our favour over dairy trade is cynical and New Zealand has no intention of backing down. Mr McClay said he has asked for urgent legal advice in respect of our ‘next move’ ...
The rights of our children and young people will be enhanced by changes the coalition Government will make to strengthen oversight of the Oranga Tamariki system, including restoring a single Children’s Commissioner. “The Government is committed to delivering better public services that care for our most at-risk young people and ...
The Government is making it easier for minor changes to be made to a building consent so building a home is easier and more affordable, Building and Construction Minister Chris Penk says. “The coalition Government is focused on making it easier and cheaper to build homes so we can ...
New Zealand lost a true legend when internationally renowned disability advocate Sir Robert Martin (KNZM) passed away at his home in Whanganui last night, Disabilities Issues Minister Louise Upston says. “Our Government’s thoughts are with his wife Lynda, family and community, those he has worked with, the disability community in ...
Good evening – Before discussing the challenges and opportunities facing New Zealand’s foreign policy, we’d like to first acknowledge the New Zealand Institute of International Affairs. You have contributed to debates about New Zealand foreign policy over a long period of time, and we thank you for hosting us. ...
From today, passengers travelling internationally from Auckland Airport will be able to keep laptops and liquids in their carry-on bags for security screening thanks to new technology, Transport Minister Simeon Brown says. “Creating a more efficient and seamless travel experience is important for holidaymakers and businesses, enabling faster movement through ...
People with an interest in the health of Northland’s marine ecosystems are invited to a public meeting to discuss how to deal with kina barrens, Oceans and Fisheries Minister Shane Jones says. Mr Jones will lead the discussion, which will take place on Friday, 10 May, at Awanui Hotel in ...
Kiwi exporters are $100 million better off today with the NZ EU FTA entering into force says Trade Minister Todd McClay. “This is all part of our plan to grow the economy. New Zealand's prosperity depends on international trade, making up 60 per cent of the country’s total economic activity. ...
There are heartening signs that the extractive sector is once again becoming an attractive prospect for investors and a source of economic prosperity for New Zealand, Resources Minister Shane Jones says. “The beginnings of a resurgence in extractive industries are apparent in media reports of the sector in the past ...
The return of the historic Ō-Rākau battle site to the descendants of those who fought there moved one step closer today with the first reading of Te Pire mō Ō-Rākau, Te Pae o Maumahara / The Ō-Rākau Remembrance Bill. The Bill will entrust the 9.7-hectare battle site, five kilometres west ...
Energy Minister Simeon Brown has announced 25 new high-speed EV charging hubs along key routes between major urban centres and outlined the Government’s plan to supercharge New Zealand’s EV infrastructure. The hubs will each have several chargers and be capable of charging at least four – and up to 10 ...
The coalition Government will not proceed with the previous Government’s plans to regulate residential property managers, Housing Minister Chris Bishop says. “I have written to the Chairperson of the Social Services and Community Committee to inform him that the Government does not intend to support the Residential Property Managers Bill ...
The Government has announced an independent review into the disability support system funded by the Ministry of Disabled People – Whaikaha. Disability Issues Minister Louise Upston says the review will look at what can be done to strengthen the long-term sustainability of Disability Support Services to provide disabled people and ...
Justice Minister Paul Goldsmith has attended the Universal Periodic Review in Geneva and outlined the Government’s plan to restore law and order. “Speaking to the United Nations Human Rights Council provided us with an opportunity to present New Zealand’s human rights progress, priorities, and challenges, while responding to issues and ...
The Government and Rotorua Lakes Council are committed to working closely together to end the use of contracted emergency housing motels in Rotorua. Associate Minister of Housing (Social Housing) Tama Potaka says the Government remains committed to ending the long-term use of contracted emergency housing motels in Rotorua by the ...
Analysis by Dr Bryce Edwards – Democracy Project (https://democracyproject.nz)Political scientist, Dr Bryce Edwards. “Follow the money” is the classic directive to journalists trying to understand where power and influence lie in society. In terms of uncovering who influences various New Zealand political parties and governments, it therefore pays to ...
RNZ News As Israel presses ahead with strikes in Rafah and seizing the Rafah crossing from Egypt, aid agencies are sounding the alarm of a “catastrophic humanitarian situation”. Rafah was “significant” because it was the only part in Gaza that had not been terribly damaged by the conflict, United Nations ...
With funding set to be scrapped for the Hamilton-Auckland commuter train, Te Huia enthusiast Georgie Dansey argues for it to be thrown a lifeline. It’s 5.45am and the chain of my crappy old bike falls off slugging up the one hill in Hamilton. I contemplate yeeting the bike into the ...
Source: The Conversation (Au and NZ) – By Anna Cooke, Honorary Fellow, School of the Environment, The University of Queensland We feel ecological grief when we lose places, species or ecosystems we value and love. These losses are a growing threat to mental health and wellbeing globally. We all see ...
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Responding to an Auditor-General's report slamming failures in the administration of the 2023 General Election, Taxpayers’ Union Policy and Public Affairs Manager, James Ross, said: ...
Productivity apps now make up a big chunk of the software market. But do they work? And why do they all have AI integrations?Despite being firmly on the record as a physical planner fan, I sometimes dream of something better than my pretty diary and its scrawled, ugly, interior ...
The Taxpayers’ Union says the Beehive need to lead by example, following reports of more than $50,000 spent upgrading video conferencing equipment and furniture in the Prime Minister’s office. Taxpayers’ Union Campaign Manager, Connor Molloy, ...
An objective list of the 50 most powerful people in New Zealand, as judged by the Spinoff Editorial Board. It’s power list season, baby, and we want in on the action. Sure, there’s the rich list and the powerful “c-suite” list and the young people with power (hmmm) but here, ...
Source: The Conversation (Au and NZ) – By Thalia Anthony, Professor of Law, University of Technology Sydney ShutterstockThis article contains information on deaths in custody and the names of deceased people, and describes ongoing colonial violence towards Aboriginal and Torres Strait Islander people. First Nations people in Australia ...
Source: The Conversation (Au and NZ) – By Alex Simpson, Senior Lecturer in Criminology, Macquarie University Netflix Baby Reindeer’s phenomenal success has much to do with its writer and lead, Richard Gadd, who plays Donny in a tender semi-autobiographical account of sexual abuse, harassment and stalking. Gadd’s story has ...
Source: The Conversation (Au and NZ) – By Clare Collins, Laureate Professor in Nutrition and Dietetics, University of Newcastle KarolinaGrabowska/Pexels If you didn’t have food allergies as a child, is it possible to develop them as an adult? The short answer is yes. But the reasons why are much ...
Source: The Conversation (Au and NZ) – By Paul Moon, Professor of History, Auckland University of Technology Ans Westra, self-portrait, c. 1963. National Library ref AWM-0705-F They try but invariably fail – those writers who believe they are capable of encapsulating in prose or verse the essence of ...
Stewart Sowman-Lund looks at the growing concern around the world in this extract from The Bulletin. To receive The Bulletin in full each weekday, sign up here. What’s all this? When Covid-19 arrived on our shores in early 2020, some argued we were too slow, or crucially, ill-prepared for a pandemic. So ...
Source: The Conversation (Au and NZ) – By Franco Montalto, Professor of Civil, Architectural and Environmental Engineering and Director, Sustainable Water Resource Engineering Laboratory, Drexel University Water runs into a storm drain in a Los Angeles alley on Aug. 19, 2023, during Tropical Storm Hilary.Citizen of the Planet/Universal Images ...
The inquest into the death of Gore toddler Lachlan Jones has turned up a new witness who says he saw two teenagers and a small child in a high vis vest in the area where the boy’s body was found the day he died. Lachie’s body was discovered face up ...
Stories from the tenancy trenches, featuring spider infestations, cupboard rats and same-sex discrimination. Lucy’s brother was living in a damp 1930s building in Mt Eden where “he had to tie the cupboard doors closed so the rats didn’t get in”. Although he shared custody of his six-year-old son, his property ...
Simeon Brown, Chris Luxon, and Wayne Brown climbed into a hole and announced a plan to solve Auckland’s water woes. This is how it’ll work. New Zealand’s pipes are munted. They’re cracked and leaking, and struggling to handle all the extra poos excreted by our rising population. It’s a big, ...
Opinion: Nicholas Khoo looks at two key points in the high-stakes foreign policy pact debate – and asks if NZ can engage with as little drama as possible. The post Where to next for the Aukus ruckus? appeared first on Newsroom. ...
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Opinion: ‘Reference-class forecasting’ is at the heart of improving pricing a project and identifying the expected timeframe but it doesn’t appear to be in use here The post ‘Think fast and act slowly’ is failing big projects appeared first on Newsroom. ...
What do a sombrero in Argentina and cognitive driving tests have in common? Don’t worry, we’re not setting up a bad joke. Hinengaro Clinic dementia clinician Gregory Winkelman has the answer on today’s episode of The Detail. “We ask a patient’s spouse or son or daughter: If you went to ...
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Opinion: “As time passes, knowledge of the circumstances of the August 2016 outbreak will fade and its immediate impact will be lost.” This statement is from the 2017 report of the Official Inquiry into the Havelock North campylobacteriosis outbreak. The then National-led government established the inquiry after the outbreak left ...
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Asia Pacific Report The Aotearoa chapter of the Women’s International league for Peace and Freedom (WILPF) has appealed to the New Zealand government to call out Israel over the “cruel and barbaric use of force” in Gaza and demand a permanent ceasefire. The league’s open letter was sent to Prime ...
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Shamubeel Eaqub wrote an article a few years ago saying it was better to rent in Auckland than buy. Considering he went out and bought about a year later, I wonder if he still stands by that advice?
In ten years time with Aucklands population set to increase, the median house price will probably be getting close to $1.5m. IMO now is a good time to buy (assuming you can get a deposit which is the hard part as interest rates never lower). I do not see the supply of new housing being enough for the next few years.
UNTIL the interest rates drift up to 5%, 8%.
At which time we will see a lot of screwed young people and cheaper houses
Then watch younger low income people, who have scraped up enough to buy, having to sell.
They won't have a choice tbh.
And it won't even be their own fault.
Let's say a couple put a 200k deposit on a 1,000,000 house.
At the moment they are paying (If we go for a rough 3% interest)
They have to pay $1,745 a fortnight
When it it inevitably moves to 8 or 9%
$3,089 a fortnight or $6,714 a month.
Banks say sorry, but we are selling your house.
Why do you say that interest rates will move to 8-9% and in what time frame? Why 'inevitably'? What's the cause of this inevitability in your opinion?
Because they will. Depending on inflation etc. It is just a cycle.
Weirdly and I am no mortgage advisor, so might be wrong, but no one seems openly to tell young people about risk.
[Re-sized image to fit into window]
I think the young are told, but its one thing to be told and another to understand…and there is the factor of immediacy, the future will take care of itself (or optimism) and the (mistaken) belief that 'the gov' will always step in to assist.
And then there is the spruiking
Could someone with more knowledge of this subject please explain why that precipitous drop in 2008-2010 happened..?…with the obvious follow-up questions of could it go up again as fast…?…and what would the circumstances be that would cause that to happen..?
GFC… yes…inflation
It is a bit of an unknown tbh and not all in the NZ govts control.
Massive inflation can cause massive rises.
Something happens with global corporates and stocks, which is all an unknown.
It is one of those things you just have to watch and hope nothing ugly happens, you have no control over.
I remember when my solo mum was trying to pay for her house by herself and it was like 19-20% or some other stupid rate.
GFC caused banks to tighten the screws on mortgage lending significantly at a time when finance companies and other non-bank mortgage lenders were going under, so a lot of forced sales when there weren't as many qualified buyers.
Who here thinks they have $60,000 a year income to retire on?
why specifically 60K?
That's enough to get by according to the Retirement Commissioner.
Interesting…esp given the median wage is 54K. and the unemployment benefit (single over 25) is 14.6K
Should inflation mean that interest rates increase pay rates would follow to compensate. Though I must note pay rates follow inflation so the worker does lose out, those holding assets benefit AGAIN with assets appreciating faster than pay.
thenonly time I can recall this not happening was proceeding the GFC when mortgages were 10% and pay increases were marginal, but we had massive net migration into Auckland then
who controls interest rates (in most circumstances)?….central banks
Which won't happen with the govt raising the minimum wage to 20 bucks, the sick pay thing and companies trying to deal with covid.
I think you can write off pay rises to your average worker for a lot of years
It depends …if the RBNZ can keep the ponzi scheme afloat long enough then there is a possibility the asset inflation will force wage/consumer inflation, but as you note there are counter forces…but if they are unable to maintain the asset prices (or offshore events) then we could expect deflation….and ultimately there will be deflation at some point as the debt is unsustainable but the question is can it be propped up one more time?….personally I think not for very much longer when you look at the amount of debt being added and interest rates at zero in much of the world.
Many workers locally already getting pay rises. As employers cannot use the standard response, of bleating for more cheap labour from overseas, at the present time.
Have mortgage rates in NZ ever been as low as they are now? Going by that nice graph (@10:25 am), not during the last 56 years.
Given the low (~1%) and very flat term-deposit interest rates that major banks in NZ are currently offering (basically no difference between 1-year and 5-year terms), maybe interest rates won’t rise anytime soon.
Heck, maybe the mortgage interest rate cycle is now longer than the 25 years it might take to pay off a mortgage. For example, the 30-year fixed rate mortgage average in the US has been falling since it last peaked (at ~18%) in the early 1980s (and falling from 7% over the last two decades), Japan's mortgage rates haven't been much above 4% since the mid-90s, and except for a short-lived spike in 2008, even Australia's mortgage rates have been below 7% for ~25 years.
The graph goes to 2016 only. I’ve resized it to show the full scale.
https://www.cnbc.com/2019/08/12/danish-bank-is-offering-10-year-mortgages-with-negative-interest-rates.html#:~:text=Jyske%20Bank%20A%2FS%2C%20Denmark's,at%200.5%25%2C%20Bloomberg%20reports.
Thanks for that link Pat.
Whoops: ‘even Australia's mortgage rates have been below
7%~8% for ~25 years.’https://www.finder.com.au/historical-home-loan-interest-rates#svr
A rise in interest rates can now only occur if there is massive wage inflation at the same time. It takes no brains to work out that any significant interest rate increases when the world is flooded to the top of the mast with debt, that increasing interest rates to even 5-6% would result is widespread debt default.
Debt that cannot be paid, won't be paid.
which may be defaulted without an increase in interest rates…its taking some pretty serious measures currently to avoid it…..and many of them have just expired or are destined to shortly.
Modern day land grab aka how to put poor people back in their place.
I don't get how people can take large sums of low interest money without long term fixed rates, especially when prices are so exorbitant. A scenario exactly as you wrote is staring them in the face.
"200k deposit on a 1,000,000 house" = 800k mortgage.
Serviced at 3% interest = 800k x 0.03 = $24k mortgage payments per year, or
~$923 per fortnight, not "$1,745 a fortnight"?
I'd bother to point out the obvious, but feel you need to work it out yourself.
https://www.westpac.co.nz/home-loans/calculators/mortgage-repayments/
Hint.
You actually have to pay it back.
Neat, thanks – Westpac’s calculator says a minimum payment of $1,552 per fornight for a 30-year, 3% mortgage, not "$1,745 a fortnight". I must be using it wrong; the total number of payments isn’t changing when the loan term is changed?
If you use the mortgage calculator of a NZ-owned bank, e.g. TSB, at their current best rate if you paid "$1,745 a fortnight" you'd pay off the mortgage in 23 – 24 years. Similar result at Kiwibank.
https://www.tsb.co.nz/loans/home-loans-mortgages/calculator-repayments
https://www.kiwibank.co.nz/personal-banking/home-loans/guides-and-calculators/repayment-calculator/
I went for 25 years as people are getting older when they buy their first house.
Unless you want to still be paying with your minuscule superannuation obviously
I think with all due respect you might be missing the point a tad.
I went for Westpac as I had to pick one popular.
It doesn't matter whether it is Kiwibank, TSB or what ever.
If the reserve bank says the rate is 6-7 % they will all have to go to 8-9%
You are correct if you have an interest only mortgage which means you are never actually going to pay for the place and will never own it.
Banks don't really like providing that sort of mortgage for people who claim to be buying a permanent home.
The numbers given are correct for a 25 year mortgage at 3% and actually plan to buy the place.
Edit. I see that Chris beat me to it.
The extent of the problem presented here
https://www.rbnz.govt.nz/statistics/s32-banks-assets-loans-by-product
Sorry.
Re-reading that post I probably came across as a bit blunt and a prick tbf.
Basically by your calculations yes you are correct and are paying the interest.
But you are not paying off the 800k the bank owns on your house.
So the bank is basically the majority owner of your own house.
So unless you are paying off the 800k you are kind of just paying rent to the bank to live there.
And if interest rates suddenly rise, which is inevitable, going by historical trends, the bank still owns 800,000k of your house and if you cant afford the interest rises, they will say. "Tough luck mate. We still love you as a customer, but as we own 80% of your house we have decided to auction it. Please move out by next month"
If it helps we can give you a credit card at 19% interest.
Would this be an opportune moment to note/remind that the word mortgage comes from the french language..it's literal translation is 'death-grip'…
Good laugh for the day !
Looked it up and got slightly different translation
"You’ve undoubtedly heard the word “mortgage” thrown around a million times. But you may not know that in the literal sense, it is defined as a “death pledge” in the French language.
Ironically, the French don’t actually use the word themselves (they use hypothèque, while Spanish speakers use the similar word hipoteca).
Broken down, the mort part (pronounced more) means death and the gage part (pronounced gahj) means pledge."
House buyers and banks always bet on the House and the House usually ‘wins’.
Let’s take your example and assume they fix for 3 years for a Loan Term of 25 years. After these 3 years, they can no longer service the mortgage for whatever reason and are forced to sell. Over that period, they’ll have paid $69,093 in Interest to the bank, which is their ‘loss’. They’ll also have paid $67,480 in Principal, which they’ll ‘get back’ upon sale. So, their house would need to have increased in value by $69,093 to ‘break even’, which is an annual increase (appreciation) of 2.25% over the 3 years. This does not take into account one-off costs incurred such as moving costs, real estate agent fees, lawyers, loan fees, etc. Also, in real dollar terms they’ll go backwards although inflation is quite low. If they sell the house for more than $1,069,093, they’ll come out in ‘positive territory’, more or less. Seems doable.
During that time, they won’t have to pay rent, only insurance and general upkeep of the house, which they can call ‘theirs’ for the time their name is on the Title.
The interest cost averaged over 3 years equates to $441 per week or $883 per fortnight (with some rounding).
And which means they will end up with luck, their 200,000k and by then not enough for current deposit for another house.
They’ll end up with $267,480 if they sell at what they paid for it. But that’s just from the sale, as I explained.
https://www.stuff.co.nz/business/opinion-analysis/123456016/ardern-should-cash-in-some-political-capital-to-intervene-in-housing-market
It seems my estimated increase in the value of their house at $69,093 over 3 years seems a tad on the ‘conservative’ side, shall we say 😉
Which means they have to pay that much more if they want another one in deposit.
Yes, tragic, isn’t it? They would be better off renting, don’t you think?
And I wonder how much rents would have increased over the years until they sell?
Still better to buy IMO.
Why do you think it is better to buy than to rent?
"Why do you think it is better to buy than to rent?"
I've always thought it better to be paying towards eventually owning than paying rent and effectively paying some one else's mortgage. In example above: $1m house; Couple have $200k deposit and $800k mortgage. Should be able to get 2.65% with bank (or less at moment and rates likely to fall again next year as Reserve bank talking possible negative rates). Paying P'pal and interest weekly is approx $840 a week, whereas you could easily be paying $700 -$800 in rent per week. I would rather pay the bit extra and get on the ownership ladder (assuming couple can afford the higher mortgage v rent payments).
Ta
Is “the ownership ladder” a euphemism for tax-free CG, by any chance?
I think many people would rather live in something they can call ‘their own’ even though the bank tends to co-own it. In Europe, tenancies can be very long-term and tenants treat ‘their’ rental as their own; very different attitudes over there compared to over here.
You also have to add-in the amount they still have to be paying in interest, they can't before the house is sold.
Unless you lumped rates under general upkeep there is thag vist too.
I live in rural SI. No sewage or rubish collection. Rv $750k rates $3000
What are rates for a $1m house in Auckland?
Looking at the formulae on my rates bill, on a $1million house the annual rates would be around $2500. Of that, $141 pays for recycling and other general waste services.
Household rubbish is charged separately at $4something per 120litre wheelie bin. Water and wastewater are charged separately at $231/year for the connection plus $3.75 per cubic metre for the water (nominally it's $1.59/cubic metre for the water and $2.16 to take it away after it's been filled with piss and shit).
Don't know about Auckland, but in Palmerston North my annual rates bill (based on a Land Value of $355,000, and not including the $416.18 Regional Council annual rates bill) is $3,308.19. PNCC does take sewage and rubbish away though.
GV of $695k in a provincial NI city paying $4500 in reg/dist rates.
No water/sewage/footpaths and user pays rubbish collection.
Ah, yes, rates. How could I forget the rates, the final nail in the coffin of each existing and aspiring home owner?? What was I thinking?
Do you really believe the interest rates will get to 8% within the next 10 years?
ACDC's never going to sound the same again.
https://www.instagram.com/p/CHteLWYBzrg/
https://twitter.com/edbott/status/1330295486918615040
So much for freeper's partisan judges whine.
https://twitter.com/BarbaraComstock/status/1330325094607052801
Barking.
https://twitter.com/ScottMStedman/status/1330340488101076993
https://twitter.com/AndrewFeinberg/status/1330343716469547011
Trump is trying, very trying, but will never be top Windsor Davies stage presence and gyrations, here he is with Don Estelle who lived in NZ for a while later.
I dont give a tinkers toss about cars, houses, accumulating consumer goods or fulfilling my destiny by going somewhere exotic and coming back. What I care about is the freedom to smoke a joint without the door being bashed in or the neighbours narking. I beseech everybody to use the break to write to their mp's and asking them to do something about the inequitable laws at presented enacted to criminalise and imprison otherwise innocent people. I know there are some sanctimonious, self righteous reactionary members of the NZLP caucus but they must be neutralised and not allowed to impose their views on the rest.
'allowed to impose their views on the rest."
R.P. Mc, the majority spoke on the marijuana referendum. It voted against. BTW, I voted for it- the arguments persuaded me, though I am not a user.
The majority imposed its view. That is what happens with referenda.
Would it have been better tactically to have sought decriminalisation?
Did all that supported legalisation and were entitled to vote in the referendum do so, especially amongst younger voters? There's a lesson in citizenship there.
referenda like this would work better if a range of options were presented and could be rated, like STV.
I suspect many who voted against, were against total legalisation. Not necessarily decriminalisation of usage.
1,000,000 people saying 1+1= 3 does not make it so. there should never have been a referendumb in the first place.
Jane Barnes is a preschool teacher who was bullied out of her job.
She had been a teacher for 23 years, until a new manager came along and basically ruined her life.
https://www.stuff.co.nz/national/education/123466658/victory-for-bullied-kindergarten-teacher-after-more-than-five-years
She won $100,000 plus some costs. That's just for the entitled sick leave.
There's no way it will rebuild her life as it ought to have been.
The Canterbury Westland Kindergarten Kindergarten Association, the Manager who bullied her, and the HR Manager Karyn Willets (quoted in article) should simply be required to pick up rubbish for the rest of their professional lives.
"Premier Gladys Berejiklian wants to use a third of the state's hotel quarantine slots to bring in international students and skilled migrants, starting in as soon as six weeks, in a move that would cut the number of overseas Australians able to come home through NSW."
https://www.smh.com.au/national/nsw/berejiklian-and-morrison-split-over-return-of-international-students-skilled-migrants-20201120-p56gj2.html
Pressure mounting