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.
Its such as you learn my thoughts! You appear
to know so much approximately this, like you wrote the e-book
in it or something. I think that you could do with some % to drive the message house
a bit, but other than that, this is great blog.
An excellent read. I will definitely be back.
Digital marketing success starts with the right agency! Discover more about effective strategies at content marketing agency .
Hi, I do believe this is a great site. I stumbledupon it ;
) I am going to revisit once again since i have book-marked it.
Money and freedom is the greatest way to change, may you be rich and continue to
help other people.
fantastic post, very informative. I ponder why the opposite experts of this sector don’t notice
this. You should proceed your writing. I’m sure, you have a great readers’
base already!
??? ???????? ??????????? ?? ????????? ???????? ??????????? ??????? ???????????? ??????? ?????????. ???????? ?????? ? ?????? ??????????? ? ???????? ?????: freediplom.com/kupit-attestat-11-klassov-bistro-i-bez-problem-3/
What’s up friends, its wonderful piece of writing about tutoringand entirely defined,
keep it up all the time.
My web page ????????? ?????????????? ???????
Please let me know if you’re looking for a article writer for your
blog. You have some really great articles and I think I would be
a good asset. If you ever want to take some of the load off, I’d really
like to write some articles for your blog in exchange for a
link back to mine. Please send me an email if interested.
Cheers!
????????? ?????? ? ?????? ????????? ?????? ? ?????? .
Hãy tr?i nghi?m game các c??c thú v? t?i http://11betn.com/
Fastidious response in return of this issue with real arguments and describing the
whole thing concerning that.
Feel free to surf to my web site … ??????? ????????? ???????
Hãy tr?i nghi?m game các c??c thú v? t?i 11bet
???????????????? ????????? ????? ?? ??????? ??????? ??????? ? ??????? ?? ???.
?? ??????????:?????? ??????? ??????? ? ???
???? ??????? ?????????? ???????? ????????????? ?????? ?????????? ? ??????? ??? ? ??????? ?? ???!
?i?m ??n Cá C??c Tr?c Tuy?n Uy Tín Hàng ??u t?i da88
That is really attention-grabbing, You’re an overly skilled blogger.
I have joined your rss feed and stay up for in search of
extra of your excellent post. Additionally, I’ve shared your site in my social networks
?i?m ??n Cá C??c Tr?c Tuy?n Uy Tín Hàng ??u t?i https://da88.blue/
Please let me know if you’re looking for a author for your site.
You have some really great posts and I think I would be a good asset.
If you ever want to take some of the load off, I’d love to write some articles
for your blog in exchange for a link back to mine.
Please blast me an email if interested. Kudos!
Hey there, You have done a great job. I will definitely digg it and
personally suggest to my friends. I’m sure they’ll be benefited from this website.
Each performance is free and is broadcast on the Internet,
so, you can organize a porn show necessary for your passionate needs.
free live cam sex is really personalized porn!
Wow, wonderful blog layout! How long have you been blogging
for? you make blogging look easy. The overall look of your web site is excellent, let alone the content!
ini adalah situs bokep paling bagus
Mighty Dog Roofing
8110 East 126t? St ?
Bixby, OK 74008, United Stat?s
19182125646
hail-resistant metal roofs
I just couldn’t leave your site prior to suggesting that I actually enjoyed the usual information an individual provide to
your visitors? Is gonna be back continuously in order
to inspect new posts
The mind brain injury lawyers vancouver
legal representatives at DE CARO & KAPLEN, LLP.
Its not my first time to go to see this site, i am browsing this web page dailly and take nice information from here all the time.
Also visit my page :: ????????????? ??????? ???????
Hello i am kavin, its my first time to commenting anyplace, when i read
this article i thought i could also create comment due to this good paragraph.
Whoa all kinds of helpful data!
Wonderful piece.
Highly descriptive blog, I liked that a lot. Will
there be a part 2?
My blog post :: ?????? ?????????????? ??????? ?????????
It’s not my first time to pay a visit this web page, i am browsing this site dailly
and obtain fastidious information from here everyday.
???????????????? ????????? ????? ?? ??????? ??????? ??????? ? ??????? ?? ???.
?? ??????????:?????? ???????????????? ??????? ? ??????
???? ??????? ?????????? ???????? ????????????? ?????? ?????????? ? ??????? ??? ? ??????? ?? ???!
Good info. Lucky me I recently found your blog by chance (stumbleupon).
I have book-marked it for later!
My webpage :: ????????? ????????? ??????
You said it adequately.!
In fact when someone doesn’t know after that its up to
other viewers that they will assist, so here it takes place.
Hi i am kavin, its my first time to commenting anywhere,
when i read this article i thought i could also create comment due to
this sensible article.
??? ??? ? ?????????? ? ??????????? ????? ??????
??????? ???????????? ?? ??????????? ????????
??? ????????? ??? ????????????? ??????.
my web page; https://fiestasparadise.nl/page/25/?mopob=22933381
Thanks. Fantastic stuff!
Regístrate ahora y disfruta de programa de lealtad con beneficios especiales.
With havin so much content do you ever run into any problems of plagorism or copyright infringement?
My site has a lot of unique content I’ve either
authored myself or outsourced but it appears a lot of it is popping
it up all over the web without my authorization. Do you know
any techniques to help protect against content from being ripped
off? I’d truly appreciate it.
Visit my website: ????????????? ?????????? ??? ????????
????? ????????? ???????? ??????? ?????????? ??? ???? ?? ????? ?????? ? ??????? ????????? ???????? ???????.
Hey there! I’m at work browsing your blog from my new
iphone 3gs! Just wanted to say I love reading your
blog and look forward to all your posts! Carry on the
superb work!
Really loads of fantastic tips.
I’m curious to find out what blog system you are utilizing?
I’m having some minor security problems with my latest site and I would like to find something
more safe. Do you have any suggestions?
My blog post :: ??????? ????????? ??????? ??????
Hello my loved one! I want to say that this post is awesome, nice
written and include almost all significant infos. I would like to peer more posts like this
.
My web page – ????????? ?????????????? ???????