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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The knit is named after the small, eponymous Shetland Island in Scotland and uses a traditional
knitting technique to create those distinctive patterns with multiple colours.
It was brought into vogue by an earlier Prince
of Wales (later Edward VIII) in the 1920s, and has remained a casual
wardrobe staple for members of the Royal Family, including
Kate Middleton, whose jumper collection includes at least three
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Kensington Palace
Another fan of the nostalgic knit is Alexa Chung, who recently layered a
Fair Isle vest by Molly Goddard over a light blue button-down in a snap for Instagram.
The It-girl previously also wore a V-neck vest from Cotswolds-based
knitwear brand Cooking Apple, and sported a chunky Fair Isle
crewneck with white, straight-leg jeans, black loafers
and an oversized, black leather blazer to ring in the
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A host of designers have dropped Fair Isle-inspired knits for AW24, proving the multicoloured jumpers have become a timeless investment.
If, as in our case, that £1,885 cashmere turtleneck from Loro Piana is
a little out of your budget, there are countless options on the
high street. The cropped cardi from Hush certainly
caught our attention, as did the Fair Isle knit that was
featured in the John Lewis Christmas advert.
John Lewis
Scroll down for our pick of the cosiest patterned knits to shop right now.
The best Fair Isle knits for AW24
£49, John Lewis
£46, Next
£115, Nobody’s Child
£140, Hush
£50, Gap
£179, Holland Cooper
£35, M&S
£94.99, Superdry
£79, Albaray
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Smile 2 and Terrifier 3 are set for a horror box office showdown this weekend.
Terrifier 3 – made for just $2million – has become a surprise hit,
raking in $28.6million so far and knocking Joaquin Phoenix and Lady Gaga film Joker: Folie à Deux off the top of the US box
office.
But the clown horror faces fierce competition from the sequel to
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Smile 2 – starring Naomi Scott, Lukas Gage and Ray Nicholson –
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weekend.
The synopsis reads: ‘About to embark on a world tour,
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increasingly terrifying and inexplicable events.
Smile 2 (pictured Naomi Scott in a scene from the film) and
Terrifier 3 are set for a horror box office showdown this
weekend
Terrifier 3 – made for just $2million – has become a surprise hit, raking in $28.6million so far and knocking Joaquin Phoenix and
Lady Gaga film Joker: Folie à Deux off the top of the US box office
‘Overwhelmed by the escalating horrors and the pressures of fame, Skye is forced to face her past.’
Read More
Terrifier 3 dethrones Joker: Folie À Deux as box office
champ
The original horror film starred Kevin Bacon and Kyra Sedgewick’s daughter, Sosie Bacon,
30, as Rose Carter, a doctor who witnesses her patient experience a traumatic death.
The physician then begins to have her own haunting experiences,
including incidents in which she faces people with forced smiles.
Rose quickly learns she must face her own troubling past before time runs out
and the evil force claims her life.
Terrifier 3 stars David Howard Thornton as homicidal clown Art who brutally
murders an array of victims in stomach churning scenes.
The film 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.
Smile 2 – starring Scott, Lukas Gage (pictured) and Ray Nicholson – will
drop October 18 with The Wrap predicting the film could make $22million over its opening weekend
Terrifier 3 stars David Howard Thornton as homicidal clown Art who brutally murders an array
of victims in stomach churning scenes
2022’s Smile became a smash hit – making $217million against
a $17million budget.
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 being in more than four thousand theaters across the US.
Lukas GageLady GagaNaomi Scott
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