Why I’m WAY more worried about buying a house than saving for retirement

Why I'm more worried about buying a house than saving for retirement

New Zealanders have not traditionally been great at saving for retirement. (I doubt we are the only country in this boat.) KiwiSaver was only introduced in the last 10 years and still has a lot of skeptics.

Honestly, if I’d never come across personal finance forums and blogs, I wouldn’t be particularly worried about retirement savings. I might have left my contributions at 4 percent and never increased them.

But here’s the thing. Governments have proven they are unwilling to tinker with NZ Super. And the only parties willing to do anything about the state of rental housing have wound up on the wrong side of power.

To me, then, the logical and pragmatic thing to do is to continue to pursue home ownership. I’m not counting on the government to do anything about quality, affordable housing, either rented or owned. Current policy encourages buying – the latest change would double grants for first-time buyers who are building a new house, not unlike the Homestart first home buyers grant in Perth – and nearly 10 years of renting has well and truly turned me off renting in New Zealand. I see buying as the more likely route to securing a healthy and stable future for me and my own. Our chief human rights commissioner summed up things pretty succinctly in a recent speech: “…If you can do so you will do what it takes to ensure your family live in an adequate home … many people are not fortunate enough to find a landlord that they would trust to do that.”

Since the government seems far more likely to cater for me in my twilight years than ensuring healthy housing in my best ones, I’m going to prioritise getting into a house over saving retirement for now. I used to be pretty set on not touching my Kiwisaver account for a down payment. (I don’t personally think it’s a great idea to enable people to withdraw even more money from their Kiwisaver accounts to buy a house, as new rules will soon allow.) But I’ve changed my mind. I’m not going to rule out drawing on it – that’s drawing from, NOT draining it, to be clear – if that’s going to mean the difference between owning and renting.

I’m tired of the terrible quality of rentals. Mushrooms and mould do not belong indoors, ever. As property owners get richer selling houses to one another, people priced out of buying have to make do with substandard rentals and no legislation to protect them from shoddy, unhealthy properties. For a country that’s been at the forefront of things like gender and marriage equality, it’s well past time we got onto the basics of housing equality.

I’m tired of being on the wrong side of rising prices. Just a few years ago when I graduated, $360 a week could get you 3 bedrooms in my area. Now it only gets you 2 on average, and I guarantee in another year or two, it will only get you 1 bedroom (and a lot of the smaller 1-bedders forbid couples. AWESOME). This is an untrendy fringe area; prices are much higher in more central suburbs. Our city is growing and there’s not enough housing. Auckland is the Sydney, London, or New York of New Zealand. I do not see this trend reversing. I think high (and rising) prices are the new normal – here to stay.

I’m tired of the uneven playing field. I have the privilege of having the kind of job where I can duck out of work during the day to go to a viewing, but even I can’t do this all the time, and you need to do this at the drop of a hat when you’re actively hunting.

I’m tired of the instability. At any time a landlord can decide to cash in and sell out, displacing you, (and of course increase rent).

Like marriage or having kids, home ownership will be bloody hard … but I believe with all my heart it beats the alternative here.

Not every rental is crap and not every owned house is warm and dry – there are always exceptions. But in broad terms, there is a divide. When you’re an owner, you have the option of taking action to address the root causes of issues with your house. I can’t wait to have (or install) decent insulation and maybe even a heat pump. When you’re renting, you simply have to put up. I personally tried to do my bit for the cause by going beyond the numbers and highlighting the quality issues in a recent magazine article on renting vs buying, but what we need is sustained mainstream coverage.

There’s a reason multiple political parties put their support behind standards for rental housing this year. There’s a reason people are talking about this issue (though as has been proven, Twitter/the internet are far from representative).

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15 thoughts on “Why I’m WAY more worried about buying a house than saving for retirement

  • Reply Liquid October 6, 2014 at 07:50

    The world is governed by the haves, people who own financial assets and power. Becoming a home owner is a great way to build up wealth and join the ranks of the elite 😉 But keeping a balanced asset allocation is important as well. Taking money out of a KiwiSaver account to fund a first home isn’t a bad idea but I would make sure I still have enough investments in my KiwiSaver to withstand any market corrections. If the NZ real estate market underperforms or declines in the near future relative to the stock market then paying a large down payment for a home today at the expense of having a smaller mutual fund or stock portfolio would not be ideal. But that’s just my thinking 🙂

  • Reply Myles Money October 6, 2014 at 07:56

    Attitudes differ to home ownership vs renting around the world and I wonder if that’s because of the reliabilty (or otherwise) of landlords: in the UK, everyone wants to own their own home and the unaffordability of housing is a major political issue, whereas in Europe the vast majority rent and it would never occur to them to consider buying their own place.

  • Reply Pauline October 6, 2014 at 13:50

    I felt the same way in the UK after a few rental horror stories. It made more sense to buy and feel truly at home. But it is getting harder to afford a decent place. I hope you find yours soon!

    • Reply Firstgenamerican October 19, 2014 at 23:27

      When I lived in the UK, my office mate admitted to unscrewing the heating duct and putting a smoked kipper in the wall because he knew the person moving in after him and hated him. UK rentals are a horror story from both sides.

  • Reply Linda October 6, 2014 at 14:27

    I know you really want to stay in Auckland, but is the rental housing situation better anywhere else? My friend that lives in Silicon Valley is contemplating a move to Portland now because she could save quite a bit of money on rent. Luckily her job would allow this move so she wouldn’t have to job hunt. But it sounds like what may be going on here is that the jobs are in Auckland and so the high demand has really pushed up housing prices. In other words, is it a supply/demand thing?

    • Reply eemusings October 6, 2014 at 17:19

      Is the quality any better elsewhere in NZ? No. A lot of those tweets are from around the country, people in Wellington and Dunedin, which of course are much colder than Auckland. That discussion made me realise we haven’t even had it that bad, relatively speaking – what’s a single mushroom and run of the mill mould compared to some of the other horror stories out there?

      Auckland = jobs, culture, warm weather, food, everything, if you were asking me, plus of course friends and family. Depends what you want, but nowhere else compares for me, and obviously 1.5 million other people agree. Non negotiable. My happiness hinges on a lot more than cheap housing.

      Consider me the equivalent of an annoying lifelong New Yorker or something, who will never leave, if you must. Except with a godawful rental market. They call us JAFAs (just another fucking Aucklander).

  • Reply Sense October 6, 2014 at 20:38

    I completely agree. If I had the means, I would have bought as soon as I signed on to do 6 more years here with the PhD. Then I looked at TradeMe houses and got so depressed…

    My friend here is a professor and makes big $$. He is looking for a simple, small 1 bedroom for him and his girlfriend in the CBD, and his budget is $600,000-700,000. He keeps losing them to other bidders.

    My other friend just put in an offer on the highest end, fully upgraded house in the best neighborhood in a city near where I grew up. It’s 3 bedrooms plus office, 3 bath, with a huge fenced-in lot for his dog, only a five min drive from where he works. His offer is $360,000.

    I know it’s useless to compare, but I just can’t handle it. I’m never going to reach my housing goals here. Never. For someone that usually gets what she wants with a ton of determination and hard work, it is a really hard blow to face that reality.

    Renting it is. I’m lucky I found two good, decent apartments with no mold thus far. First rent was $210 pw for 5 years. I should have stuck with the a-hole landlord to keep the cheap, non moldy place, shouldn’t I have?? Now I’m paying way too much–so much I can’t afford to have a car and have to cut way back on every other budget area–for a decent place.

  • Reply Toby @ One Six Zeros October 7, 2014 at 01:12

    I’m renting, it sucks the big one. Can’t wait to get a house that I own again!! can. not. wait.

  • Reply Michelle October 7, 2014 at 16:36

    I can’t even wrap my head around this issue. It is unbelievable to me that people don’t decide to treat their renters with dignity and respect. I am hoping to rent out my property in the next year I would not consider doing that until everything is fixed, in great order, and in the shape that I would want for myself. One-it’s the right thing to do. And, two, I can make money and keep my tenant happy.

  • Reply Jayson @ Monster Piggy Bank October 7, 2014 at 22:50

    That’s why I advise for those who are still young is to save for getting the house you dream of. I got my house when I was 32, before that I made sacrifices and dealt with many obstacles like temptation, losing the big picture, and a lot more. Never get a bigger apartment. 😀

  • Reply moom October 8, 2014 at 00:11

    Rental quality seems to be generally good in Australia. Mostly newish apartment buildings.

  • Reply save. spend. splurge. October 8, 2014 at 21:51

    I am with you. If the housing situation in Canada was as bad as in NZ, I would buy a house first too, over retirement savings. It’s appalling!!!

  • Reply SP October 12, 2014 at 03:45

    I cannot believe you had a mushroom growing inside your home. EEEEK.

    This is unacceptable. The US is still a home ownership focused country, though less so in big expensive cities… but rentals are up to normal standards, at least in general! Maybe less so in NYC?

    Those tweets of people describing their rental issues made my skin crawl a bit!

  • Reply Revanche October 12, 2014 at 21:18

    My skin is crawling reading these tweets etc too.
    As you know I’m newly LLing now and I simply wouldn’t stand for the rental to even begin to approach those states; I was a renter nearly all my life, how could I possibly turn around and let out a place that was uninhabitable?
    It’s just unfathomable to me that someone could care so little about the state of a home that they own and rent out to other people. I know we have slumlords here who would be happy to rake it in as the structures nearly fall down around your ears but… It really is the equivalent of our health care system in the US isn’t it? No one cares enough about getting a good job done to fix the darn problem.
    Given that, I would likely do the same in your situation. A habitable living space is so crucial.

  • Reply KFN July 31, 2015 at 09:18

    When I moved to Wellington, it was summer. One of the rental places I looked at had not only a very conspicuous damp smell, but mushrooms growing on the window sill. In LATE DECEMBER! My shock must have shown … the landlady/property manager looked super pissed off and kind of dusted them away. I feel sorry for whoever took that place, they would have needed a cast-iron immune system not to get sick constantly – complete health hazard.

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