A few more thoughts on house buying

I have a cousin who’s only a year older than me, but has always been light years ahead of me in every other aspect. Nationally ranked swimmer. Newly minted doctor. And now, a homeowner. If he wasn’t a really nice guy, I would really resent him for showing me up.

Seeing as I’m getting married in May, the adults of the family invariably turn to talk of property. Yes, I’m still renting, and plan to do so for quite a while yet.

my house my castle, some more thoughts on home buying

Unlike in many places in the US, it’s basically never cheaper to buy than rent here (maybe in the smaller towns?). To buy a comparable place to our current dwelling would be about double our rent – and our rent is NOT cheap, either. We wouldn’t, however, be buying a comparable place, but a much cheaper one – an entry-level house in the $300,000s, hopefully, which would only be another $100-200 a week.

As I was telling my other cousin, it’s not so much the mortgage payments that are hard to swing (according to my bank’s home loan calculators) but that massive hurdle of the down payment.¬† I always wanted to put down 20 percent. That’s the responsible thing to do. But to be honest, it’s quite likely that we’ll only end up putting 10 or 15 percent down (“That’s what everyone does!” Yeah, because prices start at about 4x household income and go up from there…).

Say we’re in a position to buy in 2016. We should both be able to get the full Kiwisaver first home buyer subsidy ($10,000 altogether, assuming the government doesn’t scrap that part of the scheme)

Who knows where prices will be by then, though? We had a slight dip in prices during the recession, but they quickly shot right back up to new heights. I don’t see the housing shortage ending anytime soon (not helped by lack of council/government planning and the traditional quarter-acre dream, which yes, I want a piece of too). And unlike in the US, our interest rates can only ever be fixed for a maximum of five years. Right now they’re in the 5-6 percent range (which is low for us, but not compared to the 3-4 percent outlined in this mortgage rates guide in the US) but lots of homeowners felt the pain a few years ago when rates climbed into the 8 percent.

 Well Heeled, though, is making it a mission to buy a house in 2016. I will live vicariously through her!

6 thoughts on “A few more thoughts on house buying

  • Reply Pauline February 15, 2013 at 06:43

    I was surprised how high interest rates were in NZ. A couple of friends went to the UK to work for a couple of years and came back with a big deposit, plus the pound was stronger so they got a really good deal. Being an island with limited space I guess it makes real estate more expensive.

  • Reply Michelle February 15, 2013 at 06:59

    We plan on buying our second house soon. I just hope the interest rates don’t go up anymore!

  • Reply krantcents February 15, 2013 at 11:33

    If it is cheaper to rent, why buy? There has to be a reason to buy.

  • Reply Mrs. Pop @ Planting Our Pennies February 15, 2013 at 12:54

    I love owning, but when it didn’t make sense money-wise, was happy in my little apartment, too!

  • Reply KK @ Student Debt Survivor February 16, 2013 at 14:14

    I have a cousin who’s a few months younger then me. There were a lot of comparisons growing up. If buying doesn’t make sense for you right now don’t feel pressured. I know a lot of people who rushed into purchasing because interest rates are low and that’s what someone in their 30s is “supposed” to do.

  • Reply Friday recap 21 January 20, 2014 at 11:26

    […] Thoughts on home buying on NZ muse […]

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