I’ve been on a bit of financial planning binge over the last several months. This was prompted by a bunch of books I’ve been reading including the books from the ‘Rich Dad, Poor Dad‘ series and a bunch of investment books (including shares, bonds and property).
Meanwhile there has been a house price spike in Auckland, New Zealand as can be seen from the tail end of the graph below (data from Barfoot & Thompson).
Interestingly, during this period, total returns are 21% or 4.2% per annum. Adjust that for inflation and you got a 1.8% return on your investment, hardly amazing. But that’s a subject for another post.
Back in 2005 when we bought our current house (a 3 bedroom house on a small section on Auckland’s North Shore) we were able to get it with a mortgage of about 3.5 times our combined income. We then went overseas for a couple of years and came back ready to have our first child. Fortunately, my income had increased, so we could still afford our mortgage (3.7 times income).
These days, with two growing pre-schoolers, a wife who’s just finished studying and is returning to work our mortgage is a very healthy 2.3 times income.
Here’s the issue, like many of our peers (and generations before us) we’re now growing out of our 3 bedroom house on a cross leased section.
In previous generations they may have just added an extension (not possible with so little land) or simply moved to another house with only a marginal increase in their mortgage.
Even though our house price has to some extent kept up with house price increases, acquiring a four bedroom house on a full section in our neighbourhood would require us to increase our mortgage by 82%.
This would mean our mortgage was now 4.3 times earnings, without the likelihood of the dramatic salary increases possible in the earlier years of your career. [Note, this site suggests 2 – 2.5 times gross earnings].
So what am I saying?
There’s a lot written about housing affordability and the fact that people can’t afford a first home. I’m looking on one step further, even if you can afford a small first home, based on two incomes, what future can you look forward to when kids come along and you eventually need a bigger place?
The answer is pretty clear to me, either:
- A lot more middle class New Zealand families will be renting their homes in the future (maybe from overseas residents (again a topic for another post))
- A lot more middle class families will be forced to live outside Auckland
- There will be a major correction in house prices as people refuse to pay the unaffordable prices
- Many families will undertake a massive (possibly unsustainable) debt burden that will negatively influence their entire life.
The last point is the one I worry about. What does a society look like where families are toiling under the pressure of their massive mortgages? Unable to take holidays, struggling to put food on the table, unable to even think about supporting their community (either financially or in time)?
That’s why, I would encourage my peers and those just starting out their adult life to seriously think whether the traditional aspiration of house ownership is still relevant.
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Terrifier 3 star David Howard Thornton has broken his silence on the low-budget horror film demolishing
$200m flop Joker: Folie à Deux at the box office.
The grisly film – made for about $2 million – stars Thornton as
homicidal clown Art who brutally murders an array
of victims in stomach churning scenes – with the film knocking the starry Joaquin Phoenix and Lady Gaga film off the top of the US box
office last week.
Thornton said the runaway success of his film had left him stunned as he
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Terrifier 3 star David Howard Thornton has broken his silence
on the low-budget horror film demolishing $200m flop Joker: Folie
à Deux at the box office (pictured as Art the clown)
The grisly film – made for about $2 million – stars Thornton as
homicidal clown Art who brutally murders an array of victims
in stomach churning scenes – with the film knocking the starry Joaquin Phoenix and Lady Gaga (pictured) film off the top of the US box office last week
‘We turned down studios as they wanted to compromise the integrity of the film and we wanted
to stick to what the fans wanted and we wanted.
Read More
Terrifier 3 dethrones Joker: Folie À Deux as box office champ
‘This shows Hollywood that we need to start making movies
that take risks again.
The star said he had yet to see the panned Joker sequel, saying: ‘I was shocked too
as the first Joker film I loved, I’m curious to see why people aren’t as crazy about the second one.’
Terrifier 3, written and directed by Damien Leone,
is an un-rated blood fest, which has received a 78-percent rating from the critics
on Rotten Tomatoes. Audiences have ‘certified’ it ‘hot’ and
given it a healthy 90-percent on the popcornmeter.
The film earned $18.3 million at the box office according to The
Numbers.
Landing in third place was Joker: Folie à Deux.
After winning the box office competition during its debut weekend could
not overcome the bad reviews, enduring an 82-percent decline in ticket sales.
The movie collected only $7.055 million, in spite of
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Thornton said the runaway success of his film
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‘David vs Goliath’ – pictured last week
He said: ‘Terrifier 3 was a small lower budget independent film…
I never expected this to happen in my life, I’m floored and grateful for it all’
The musical is ‘poised to lose at least $150 million to $200 million in its theatrical run’ according to the publication.
The movie studio spent about $200 million to produce the film
and about $100 million on marketing and distribution, according to the
report.
It would need to gross about $450 million at the box office to
break even — when factoring in the cut taken by theaters — though Warner Bros.
sources claim the number is $375 million.
A Warner Bros. spokesperson responded to the report, saying ‘Any
estimates suggested by anonymous “insiders” or
“rival executives” are grossly wrong and continues a trend where
rumor is reported as fact.’
‘The film continues to play in theatrical release, included with this week’s opening in China, and
will continue to earn revenue throughout its home viewing and ancillary run.’
So far, the musical about Batman’s nemesis has grossed $51.5 million domestically and $165
million globally after two weeks of release.
The film is ‘poised to lose at least $150 million to $200 million in its theatrical run’
according to the publication
In comparison, the first Joker grossed $96.2 million domestically and $248.4
million globally after three days of release.
The hotly-anticipated sequel to the 2019 billion dollar Oscar-winning
film was considered a surefire hit for Warner Bros Pictures, yet ended up being slammed by critics and failed to ignite at the box office.
Joker: Folie À Deux has garnered the lowest CinemaScore in comic book
movie history as the film bombed at the box office on opening
night.
Joaquin PhoenixLady Gaga
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