A millennial’s perspective on the Auckland real estate market

auckland real estate rant

Everyone and their hamster has an opinion about first home buyers in the Auckland property market.

Even those who have no freaking idea what they’re talking about. I don’t know why this surprises me. It really shouldn’t.

I may own a house myself but I get SO riled up when this topic comes up. We had a spirited conversation about it at work the other day, and I couldn’t stop thinking about it afterward. Here are my definitive personal thoughts on the matter based on the most frequently asked questions.

Why don’t you just buy an apartment/townhouse?

Banks are tougher on lending when it comes to apartments (especially smaller ones) and then you have to account for body corporate fees.

Apartments and townhouses may have a good reputation for being modern and sought after overseas. Here, they are more synonymous with cheap and nasty. How many apartments/townhouses built in the 2000s here were part of the leaky house epidemic? Not only have those owners had to deal with the costs of fixing their properties, they haven’t seen much (if any) capital gain.

I lived in a neighbourhood where quite a few apartment/townhouse developments sprung up around the same time. I have lived in 3 separate properties in those developments (1 apartment, 2 townhouses). They were cramped, poorly built, with paper thin walls, and ALL OF THEM WERE LEAKY. I didn’t really care as a renter, but I would never buy one to own. In terms of the residents, let’s just say they almost exclusively fell into 2 main buckets and I didn’t love either of those crowds. They have almost become a kind of ghetto in a way, and I believe the same is true in other similar developments around Auckland.

Some of those actual apartments/townhouses can be bought for fairly cheap right now. And I wouldn’t touch them with a barge pole.

What about buying a new apartment or townhouse? Well, I can’t afford them, quite simply. If I did have $700k to spend, I personally would rather buy an older house on more land. As you might have guessed, I’m pretty wary of recent construction in Auckland from my personal experiences. And so many current development projects have been cancelled in the past few months – so if you’re buying off the plans your apartment/townhouse may not actually get built after all.

But a house in my suburb just sold for [dollar figure significantly under the average price] …

Bully for you. Do you understand what average means? Some sell for higher, and some sell for lower. But the average is the average for a reason. (As per previous point – just because something is cheap doesn’t mean you should buy it.)

Everyone expects too much – new houses today are huge!

Yes, new builds today are monstrous McMansions. … but us first home buyers are not really buying them (because we can’t bloody afford them). We are buying 70, 80, 90 square metre houses from the 1960s/70s/80s because those humble do ups are what’s (juuuust) in our price range.

Count yourself lucky – I was paying 20% interest on my mortgage!

And were house prices 8-10 times your household income back then? House prices have ballooned, but incomes have not grown at the same pace. Payments on a $100k mortgage at 20% are still a lot less than a $500k mortgage at 5%.

Why don’t you just resign yourself to renting?

(Oh, I love this one! Let me count the ways…)

Have you ever felt the sheer terror of having to move house because you’ve been given notice to leave? Used up all your goodwill with the boss because you have to keep ducking out of work to go to viewings (because rentals are only ever shown during working hours, unlike open homes)? Applied to countless places only to never hear back because there’s so much fierce competition? Wondered WTF you’re going to do as your last day approaches and you have nowhere to live lined up?

Have you ever opened your wardrobe to find mould growing on your clothes like a rash? Or found a mushroom growing through your carpet?

(Then, my friend, you haven’t truly lived. Let’s swap lives, k?)

Do you dream of owning a pet?

Do you want to have kids, settle down, make a home?

Do you want to decorate, hang things on the walls, paint? Do anything at all to put your stamp on your place?

Do you want to breathe at night?

There is your answer.

(PS – Fortuitously, The Spinoff is running Rent Week right now … a series highlighting just how much renting in NZ sucks. Check it out.)

8 thoughts on “A millennial’s perspective on the Auckland real estate market

  • Reply Felicity (@FelicityFFF) March 22, 2017 at 09:13

    As someone who has no experience whatsoever in real estate, let alone the Auckland market, let me tell you all the things you got wrong…

    joking, joking of course 😉

    There are some crazy housing markets around the world right now, to be sure. O.o Looking around me in the Boston area, houses are also 8-10 times the median income (depending on where I look for data…weird that there are a lot of discrepancies).

    We’re lucky and have a pretty sweet rental situation, so that’s our plan for the near future, especially since we don’t 100% have a mid-term future planned out yet. It’s definitely not something everyone has access to, though. Especially in NZ, apparently, geez! I’m going to take some time later today to read through Rent Week articles.

  • Reply Michael Lawrence March 22, 2017 at 18:13

    The situation is similar in big cities in Canada. Real estate in Toronto and Vancouver is crazy right now.
    I pay about $900/month + $50 parking for a bachelor in the suburbs of Toronto that includes heat and water. Plus a seasonal outdoor pool.
    There are some basement apartments that are cheaper but sometimes you don’t know how legal they are and if the landlords will follow all the rules.
    I don’t actually mind renting thought. Don’t have to worry about lawn care, snow shovelling, fixing the roof, ect.

  • Reply Femme Frugality March 24, 2017 at 06:09

    Super interesting about older construction being a higher quality! Our older houses I guess are good quality, but a lot of them have to be tested for asbestoes and lead paint, and we haven’t had the same epidemic problem of shoddy construction. They may not last as long as something built 100 years ago, but they’re not going to be hell to live in in ten years, either.

    It always blows my mind when people spend that much money on an apartment, though in my area they call them “condos” when they’re purchasing them. They’re really just apartments. And I’m like you–if I’m going to drop that much money, I don’t want neighbors through my wall and I better have a dang yard.

    So glad you got out of that renting market. That sounded like a NIGHTMARE.

  • Reply Revanche @ A Gai Shan Life March 25, 2017 at 20:05

    I was just reading Rent Week and it’s every bit as horrifying as I thought it’d be.
    Real question: Why were / are new builds so horribly put together?

  • Reply Julie @ Millennial Boss March 28, 2017 at 04:30

    Wow when I hear “house from the early 2000s” I think young and perfect. Very true about new construction being crappy though. I have to admit after renting for this past year, we really missed owning. The mold problem is gross and I feel like living in this crappy apartment is a safety hazard. We’re just not comfortable. We’re not in a situation to change it yet either though. If I lived near our forever destination, that would be different. Thanks for the insight on the Auckland apartment situation. Now we know for future Airbnb inquiries when traveling!

  • Reply Funny about Money April 2, 2017 at 06:02

    Great post! And it all (well, most of it) applies across the ocean, too.

    I’ve never been able to understand the rationale of BUYING an apartment. US apartment buildings share all those shaky characteristics you describe…better to rent one of the things (if you have to) and be able to move out of it at your convenience, rather than having to unload it on some other hapless sucker.

    Renting can be the pits, too.

    Newer free-standing houses tend to share the same shoddy construction, and they’re built on postage-stamp lots that put you elbow-to-elbow with the (often obnoxious) neighbors and their (always obnoxious) barking dogs and peeing cats. Better to buy an older house that was solidly built back in the day when no homeowner in their right mind would care to live in the neighbor’s lap.

  • Reply Harmony@CreatingMyKaleidoscope April 3, 2017 at 02:03

    Really goes to show just how very different the housing markets are in different geographical locations. I’ve lived in a few apartments, but they were all clean and well-constructed. However, I completely understand where you’re coming from with the benefits of owning a home. We have a nice sized yard with woods and a small creek in the back. There is always wildlife around and we have small bonfires pretty much every weekend over the summer.

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