Frustration escaping rent by buying

It seems that anyone who can raise a pencil has an opinion on how to fix the housing affordability issues in Auckland. Housing is such an emotive issue and I am writing this based almost solely on memory so if there are inaccuracies you should probably put it down to drained brain cells as much as anything.

Lets face it my focus is on finding a house for myself, not solving the grand picture, so if this post seems a bit slanted you can understand.

As much as I would like to live in a really nice neighborhood I know I can’t afford this but equally I don’t want to live somewhere that is filled with kids who play in the street or young children sit bored in the gutters with revving of engines and screaming coming from the houses not to mention a pitball at each door. Don’t even get me started on pitballs. So if you read this and feel I am having a go at your area I’m not I am simply saying it’s not where I want to live

Clearly the current situation won’t see a silver bullet solution. It is important to realize that other than building a zillion new homes what we need is buyers to drop their prices, it does no good to invoke a policy that simply makes the buyers go to ground for another 5 years. As much as it pains me the answer must be measured and gradual.

Auctions

Any buyer knows a huge percentage of properties are sold via auction, this is more of a testament to the effectiveness of Agents than the effectiveness of getting the best price. Due diligence when buying at auction dictates you get a LIM, a building inspection and a chat with your lawyer before raising you hand to bid. So often I read of people who put time, money and emotion into preparing for an auction only to fall in a heap on the day.

I don’t think auctions work for the vendor with many buyers like myself not even considering houses at auction – dismissed out of hand. If I had my way TradeMe would give me a filter I could set so that auctions didn’t even show up.

Overseas buyers

Politics aside restricting non-resident buyers to building new homes is consistent with overseas practices and makes perfect sense. I am a firm believer in facing financial facts and I have a strong dislike of the protectionism that I lived through in the 70’s and 80’s. However I don’t believe restricting no-residents is protectionism and certainly not racist.

As far as Asian buyers go lets knock this one on the head right now. I have no time or place for racism, just because the person who out bids you doesn’t look European or Maori doesn’t mean they aren’t a Kiwi – even if there English isn’t perfect. Yes I think it’s perfectly valid to restrict foreign ownership but that doesn’t discriminate based on race.IHateRentingV4

Land banking

I have a passionate dislike for land banking, its nothing but a money making exercise and does nothing for the housing market. If I had my way there would be a mechanism that crippled any land banking incentives.

New developments target high priced homes

It would seem that all the developments or at least the non-apartment/town house developments are catering for the higher end of the market. Twenty years ago there were good-sized developments targeting the lower end of the market. Now don’t get me wrong a whole suburb of budget homes doesn’t work either. What’s needed is balance, I know we aren’t going to get the rich living with WINZ customers but there is something in between. It’s a real tricky one but it’s got to start with cheaper land and that isn’t going to happen while land banking is allowed to continue.

Monolithic cladding

Every time I look at a modern attractive monolithic home I have mixed feels. On one hand I feel it’s a missed opportunity because it’s another house that is scratched immediately off my list. On the other hand I can’t help but feel sorry for the owner, I mean you put your hard earned money down on a beautiful house, you get the rubber stamp from the council and then just when you are nice and settled you find it drops drastically in value because no-one want to take a risk that it won’t turn into a leaking building.

On the surface it seems like the smart thing would be to buy a monolithic and re-clad. Unfortunately this works out in the neighborhood of $800 – $1200 for every square meter of your house. So if you buy a 100m2 house then its in the ballpark of $100k to re-clad.

Apparently when you do re-clad the council are all over you like a rash making sure the house has no signs of rot – 4 or 5 inspections if I remember right. I guess you can’t blame them but it’s certainly not a case of rip of the old cladding and nail on some weatherboard.

The almighty ring fence

IHateRentingV5I am not sure where this is with the great “unitary plan” of our wonderful “Super City” but I for one have even less time for this idea than I do for pitballs. Why is that people who have no financial worries decide that the rest of us would like live boxed in apartments? Yes I have heard the arguments, they will be nice and pleasant to live – yea right! Listen to the people for once, we don’t all want to live in boxes, lots of us want space from our neighbors with  grass under our feet.

Ain’t renting great ?

You might have picked up on the fact that I don’t really relish the renting experience. What people need to realize is that for many people buying their own home is not so much about getting a home and more about not renting. Lets face it most the people who rent don’t actually want to, sure it works well for some but there is a truck load of us who simply have no choice.

Life is constraining enough but when you go home to a rented home it just feels like more of the same. You are there at the grace of someone who is just as likely to sell up and leave you in the lurch.

If you are someone who takes price in where they live and puts effort into getting things the way you want it’s pretty hard because you really can’t make it your own and there is zero motivation to improving the place.

Investment

As I have said there are lots of people like us whose motivation to buy is not based on investing money but quality of life. Obviously you still have to consider the value of your property, but that’s not the driving force. Every year that you continue to rent is a year you are not paying off your mortgage, another year when the affordability is getting further out of reach.

Cost of housing

It’s been done to death but the ratio of incomes to house prices is just insane. Yes a lot of couples, hell of a lot actually, have both parents working but that’s not true for everyone. If you are a family on one income buying a modest house is just out of the question. It is impossible to just pay the bills let alone save up any form of deposit.

Rents must go up

Landlords are going to increase rents to match the much higher cost of homes and this is going to force people out of suburbs. It just doesn’t make sense, the only thing that makes any sense is that landlords are only interested in the profit in the increase in value of the house rather than the rent so they can afford to have a disparity between rents and house prices – but it still doesn’t make sense, there has to be a correction coming up.

 

Things have to change !