The dream of home ownership has never been less obtainable, so media reports would lead us to believe. But is that a fair claim? I got the Parliamentary Library to compile some figures for me so that I could work out how much someone from each of the last four ‘generations’ could expect to pay for their first home and how that compared to what they were likely to be earning.
In the 1930s before the outbreak of the Second World War the average weekly wage was about ?5 and 2 shillings. It doesn’t sound like a lot, but when translated into today’s dollars it works out to about $460. The average price of houses was about ?870, the equivalent of about three and a half years worth of wages.
Veterans returning home from the war faced a bigger sacrifice to get themselves into their own homes in the 1950s. They would’ve received an average weekly income of about ?9 and 2 shillings. That’s about $560 a week in today’s dollars. They could pick up a house for about ?2400, the equivalent of just over five years worth of wages (although to offset the extra cost there were a lot of grants/loans etc available for returned servicemen).
Fast forward to the 1980s when most of their children were in the workforce and buying their first homes and things had returned back to their pre-war levels. The ‘Baby Boomers’ were earning on average about $200 a week, or $600 in today’s dollars. They were paying about $36,000 for their first home, equivalent to about three and a half years worth of wages.
Hit the fast forward button again and we arrive at the present day, where average weekly earnings amount to $809 a week and the average house price is about $416,000. Applying the same calculations, someone on an average income and buying a home at the average house price can expect to pay the equivalent of about 10 years worth of wages. So it’s true, owning your own home has never been more of a hurdle.
Tracey: if the government had kept the tax structure relevant had put in a capital gains tax on 2nd homes when prices first started to sky rocket then we probably wouldn’t be faced with the same issues we are today.
And then there is state housing – massive shortage and houses that have been well under par in terms of condition.
I too think Kiwisaver was a fantastic initiative but it came in too late and does little for all the self-employed people out there.
In terms of rent – “Believe it or not there are families of four living in rented accommodation on the average wage who can make ends meet… I am not going to patronize them and say they are brimming in happiness but they are not brimming in “extras”.
WHERE? And how much is their rent? Do they get the WFF accommodation supplement? Middle – to higher income families don’t get this as they are deemed too rich for such assistance and consequently also pay a higher level tax.
This website gives a good break down of who charges what in terms of rents through out the country…
http://www.dbh.govt.nz/market-rent
It would be interesting to see what would happen if “the provision of affordable housing” was made a matter of national importance under section 6 of the RMA. That would mean that each District Plan would have to show how it gave effect to the provision of affordable housing.
A lot of discussion is taking place around whether things are better now than they were 20-30 years ago. If you look at our GDP per capita then of course we would expect more now than we did in the past – but for some reason housing has missed this boat. Just about everything these days is relatively easier to purchase than it was 20-30 years ago – except for housing.
What’s up with that? Why has housing bucked the trend and possible gone the other way?
So much for the right-wing revolution that promised to make us all better off. Upshot is, in housing anyway, that folks starting out are three times worse off. Nice one, Roger and Ruth. And their next generation are now at it again, promising properity through deregulation, privatisation and tax cuts, and getting away with it. Snake oil is still snake oil, however new the label.
It is an interesting point, about housing being one way in which growing wealth inequality is particularly manifesting itself. But I don’t know whether it’s specifically the result of neo-liberal policies – as it doesn’t seem as though it’s necessarily those who are on lower incomes who are getting shafted. Basically, what seems to matter is whether you bought a house prior to 2000 or not.
If you did, then you’re sweet and rising prices have created huge wealth for you to borrow against and finance cars, holidays, etc. etc. If you didn’t, then you’re pretty screwed – forever. And it doesn’t really matter what you earn, you don’t have much hope in hell of affording a first house.
The real question is how can we get back that median house price to median income ratio back to something manageable. Maybe a ratio of “three” isn’t particularly feasible, but surely something better than 10?
Tracey: the average wage is $45k which equates to $706 per week. The average rent in say Otara for a 2 bedroom place is $276 per week.
So this plus:
Power of say $150 per month
Groceries $200 per week
Phone $40 (homeline rental only) per month
Car reg/WOF/3rd party insurance approx $50 per month
Petrol of $150 per month
means they would have approx $144 spare per week. So yes, totally affordable provided everyone in this income bracket can find rent at this price and if you don’t have kids.
In Wellington you would have to live in Otaki or rent closer in a 1 bedroom place.
A few years ago we were renting a 2 bedroom place on the Kapiti Coast for 2 years at $250 per week on about $60k combined (no kids). The downside it was rotting under our feet (rotten piles) then the landlady was audacious enough to put it up another $50 per week so we moved. As it was the cheapest rent around, town was our only option (increasing cost of the commute as trains went up) which meant paying the going rate of $350 p/w.
“Power of say $150 per month” They must have tight belts.
– I wish mine was that cheap!
– They not Red Alert? 
“Phone $40 (homeline rental only) per month”
What about internet?
The Massey government got NZ homeownership rates up to the highest in the developed world and both National and Labour governments continued policies that encouraged homeownership rates until the 1990s. Such as 3% mortgages and capitalisation of the family benefit.
Property speculation really began to rear its head in the 70s and the Kirk-Rowling government introduced a land speculation tax in 1973 that was then repealed by Muldoon in 1979.
However, the one significant change was in 1991 when National changed the tax rules around property to remove ring-fencing of losses on it for tax purposes. I think that has contributed to the inflation of house prices significantly.
I don’t understand why Labour didn’t change those rules promptly in 1999 while they had the Alliance to support it. Now it looks as if National might change the rules, but I find it hard to believe they’ll implement policies that will help first home buyers.
The political problem is of course that the upper middle-class see it is their right to own multiple properties and get ahead on the backs of their tenants, even though the tax advantages are totally unfair. If there are going to be “market distorting” tax advantages they should be towards investment in capital assets and R&D, not property.
I think mortgages at the “Risk Free Rate of Return” (3-4%) for first home-buyers coupled with a CGT on investment properties unless they are being sold to a first home-buyer would make a huge difference.
I did say a family of four Rebecca.
They probably do qualify for WFF. My point is that “we” (whoever we happen to be) conveniently seem to forget that there are working stiffs out there, where mum and dad are both working or only one and the total income is the average wage. YES they make ends meet, hell many have veggie gardens (even before the recession)and they find a way by necessity. I am not saying this should be everyone’s target but I am saying that we each are responsible for the target we set ourselves, and IF our target is to accumulate material things then we will require two parents wokring and more and more.
I know from my own experience that the more I earn the more I spend. In 1993/94 my partner and I had a total annual income of $18,000 of which 10k was to meet our mortgage. We did not receive benefits or any outside assistance and we survived. As a result when redundancy reared its head 12 months ago and lasted 12 months we knew we could pair (sp) back alot, and we did. NOT to $18k pa mind you.
I sometimes think someone like A Mother must watch some of our discussions and think, “Hell” on $50k a year my family and I will be in clover.
I wonder what taxation rates prevailed during the time frames mentioned in the above article.
I wonder what the income tax rates were, what was paid in rates, enviromental levies, vehicle registration,fuel tax and the excise on fuel and the gst on top of all these taxes which is a tax on a tax.Its just a guess but I would be prepared to bet that the government takes way more out of the pocket than they used to,no wonder its difficult to get into your first home.
We are a family of 4! These are basic costs that we personally pay in our household. Obviously we pay more as have a mortgage, internet (obviously!) and have full cover vehicle insurance.
They are all average estimates and account for only the bare minimum – computers are luxury items Spud!
Power of $150 should be fairly realistic if you’re a family of 4 living in a tiny wee 2 bedroom flat. 3 bedroom or more would get very tricky.
We’re a family of 4 and have only we only pay $100 in summer and since buying our cheap little place here that has a woodburner & wetback, we only pay $150 max in winter & get wood for free by chopping up the wood from trees councils have chopping down, forestry thing (pay $25 for a key) and broken untreated pellets.
But the reality is it is very very difficult to keep costs like above at the level which means that renting let alone owning your own home is extremely unaffordable with the latter being well out of reach for most.
As stated above, it is so criminal that you have save upwards of $50k for a deposit if you want to borrow less than $300k and then earn more than $70k to meet basic living costs and weekly repayments of $500 per week plus rates, house insurance & any unforeseen repairs!
Sideoiler – yes let’s not forget the proportions in terms of increase cost of living!
By 1939, prior to the war, the top rate for income tax was 42.9% (and 57% for ‘unearned income’ such as rent, interest or dividends).
High taxes were particularly acute for small business in the 1940s. New Zealand’s unique progressive company tax scale meant that doubling a £4,000 profit before tax to £8,000 yielded only £434 more for the company, because a higher tax rate kicked in.
New Zealand’s involvement in the First World War was largely funded by borrowing, with a legacy of burdensome interest repayments through the 1920s. During the height of the Second World War low income earners paid 12.5% tax, but the highest income earners faced a top rate of 90%.
When the Labour government left office in 1949 the top income tax rate was 76.5%. The working class paid little tax. A top-ranked butcher on £460 ($29,000 in 2008 terms) a year, with two children, paid no income tax after exemptions and rebates. He paid a £34 social security charge, but received £52 a year family benefit for his children. The tax system was very friendly to families.
Sidney Holland’s National Party came to power in 1949 promising reward for effort. It gradually eliminated the remaining 15% war surtax (an add-on tax) that had helped fund the war. Yet aside from a few other tweaks, income tax rates remained virtually unaltered through the 1950s.
Pay As You Earn (PAYE) was introduced for income tax in 1958. Under PAYE tax began to be deducted fortnightly from the pay packets of wage and salary earners, and people never saw the money. Previously income tax had been calculated on gross earnings for the year and this was then due in a lump sum the following year.
Durig the 60’s The majority of the government favoured retention of high progressive income taxes, but wanted special tax treatment for selected industries. This led to an era of tax incentives for farming, tourism and export marketing. For example the 1962 budget allowed export manufacturers to deduct 150% of expenditure on export promotion from their income. This became seen as a junketeers’ charter. Once one sector of the economy got preferential tax treatment, others also sought tax relief.
National had portrayed itself as the party of low taxes throughout the early 1960s. From 1966 imports became more expensive and the country earned less for its exports. The government found it increasingly difficult to balance its books but was reluctant to court unpopularity by introducing new taxes.
Robert Muldoon was finance minister from 1967 to 1972 and prime minister and finance minister from 1975 to 1984. He did not favour indirect taxes as he felt these penalised those on lower incomes, and led to expectations of wage increases which would make it difficult to rein in inflation. Muldoon introduced ad hoc taxes to try to raise more revenue. He introduced a payroll tax in 1970: companies were taxed on the number of employees they had. This tax was unpopular with business and contributed to National losing the 1972 election. In May 1979 he imposed sales taxes of 10% to 20% on a wide range of goods, including petrol, lawnmowers, caravans and boats.
etc etc
http://www.teara.govt.nz/en/taxes/6
P.s Tracey I totally understand where you are coming from and yes I am very conscious of families like A Mother’s reading these things and thinking just that. However, the point of the discussion is about the affordability of first homes – my personal experience and that of our friends tells me/us that unless you are on a high wage, it’s completely out of reach but yet it is something everyone agrees is a must do in terms of long term wealth and financial security for retirement etc.
Rebecca, I thought your breakdown above was in relation to my comment about a family of four living on the average wage… as your post progressed you ended the financial breakdown with “if you don’t have kids.” THAT is what I was referring to when I repeated family of four.
Well, I just dont know, to be honest. I know some high income people and I know some low income people…
I know a couple on combined $70 who just paid 425k BUT I am pretty sure they have had family help out with deposit, so again they fit your argument.
I guess it’s coming down to some people having to get jobs they can do online and moving to places where homes are cheaper…
Sorry yes the way I wrote that was confusing – it was my way of saying that being on the average wage and sticking like glue to those kind of costs makes rent for most people (unless you manage to find a dunger of a shoebox for under $300) in the main cities, completely unaffordable. When you put kids into the mix then WFF obviously steps in and helps take the pressure off, but still I would suspect it falls well short.
Point is rent is almost as unaffordable these days as a mortgage! Something has got to give, question is what? Who is going to be brave and give everything a good overhaul?
“computers are luxury items Spud!” – Not for me, I have to have one. And for so many people it’s important – kiddie’s homework, keeping in touch with people far away.
“woodburner & wetback” – Wetbacks are great!
Most people have to pay for thewood, matches and maybe those little devils. Not everybody can afford to run a fire. 
I’m very surprised by your power bills, I know families who pay heaps in winter
Poor A Mother reading this.
Tracey, that tax history is fascinating. Thanks.
jennifer welcome.
Rebecca, no one, because frankly other than Mark Hubbard (with his untested theory of libertarianism – laissez faire carte blanche) no one really knows how to fix the mess.
@ Tracey excellent research, while the tax rates seem high, I think with all the compulsory charges,taxes, levies etc that the citizen pays today,as a percentage of his or her income the a probably not as well off.
I think peoples expectations are too high, I talk to younger people in my industry (30-35 yo) I ask do you have your own home? Many do not, when I ask why often I am told “I could only afford a dump.”Most of them own nice vehicles, big screen televisions and X boxes. (whatever they are) When we bought our first house I walked to work because I couldn’t afford fuel and the mortgage payments.
I tell them that it might be a dump but it is your dump and it is a stepping stone on the property ladder.
Sideoiler I agree re taxes. Re “peoples expectations are too high”. To a degree perhaps, but then there is also plenty of people like us: we owned a dunger of a car and still have the same TV we have had for 10 years. Our friends who have also struggled to get into their first homes also live very modestly. Conversely we have had friends whose combined income has been about $180k for the past 5 years, have only been paying $400 rent in their fancy apartment (mates rates) and could not scrape together a 5% deposit for a $370k house they were keen to buy last year. They go out heaps, have gym memberships, personal trainers you name it. And now they have even less shot as need a 20% deposit! Beats me!!!
Spud: computers – schools/unis have computers as do the cafes & libraries if you only use them occasionally. Unless you work from home I do think they are a luxury.
Yes we are lucky re power but it comes at a cost – $950 per fortnight (minimum) in a mortgage! However, in many ways it has meant that rather than paying over $200 or so (or whatever the going rate is) per month in power to the power companies, we are paying the difference towards our own future. But we are also very very very power conscious – do the age old stuff like go out and collect/chop up our own wood, put on another layer before lighting the fire, turn everything off at the wall unless it is being used (never have standby – use our watches to keep an eye on the time!) etc
Tracey we are overlapping! Yes I meant to say thank you for the tax info – you’re a great sleuth. And yes I like your solution: let’s all sell up/give notice and move to Bluff- you can get gorgeous wee houses down there for $210k!
Well I thought slightly north, Invercargill, maybe pick up a dairy farm and start our own co-op…no droughts there
Library computers, at least mine, are VERY hard to get onto. I have NEVER been to the library when one is available.
I recall back int he day, not having children, we would turn the hot water on when we went to bed (about 11pm in those days) and off when we rose at 6am… then we got off peak rates , morning shower, we were playing sport, so showered after practice at the club… I accept with kids this was not an option.
There are cheap homes for sale in Nightcaps and Ohai but not a lot of work to pay a mortgage though.
Some of these comments may have been made – but affordability from wage income is not the same as affordability from net income. And tax changes are relevent here, and so are tertiary debt repayments.
ADVICE (The best way to save has always be to live rent free with parents and save to buy a house – that maximises the ability to save for a deposit, then buy and rent it out until one gets enough of a wage to pay the mortgage alone).
Otherwise there was a mortgage payment tax rebate (until the tax reforms in the 1980’s) and the ability to capitalise FB for a deposit, that made things even easier then.
Since the 1980’s floating of the dollar access to mortgage finance has been easier – lower deposit requirements, but only if the person could service the mortgage. Often that required two incomes. That is the only way we have managed to cope as well as we have – and home ownership rates have fallen and are falling. Thus whenever jobs are lost, families losing one of the jobs will struggle – here WFF tax credits help, but the lack of access to the UB for the partner is a relic of a former era.
How many people here think they should own their own home before they have a children, I don’t mean mortgage free.
Jarbury, the continued level of hosue price to wage is not a given. Between 1976 (after a spike) and 1981 – home prices plateued and in an era of high inflation and wage compensation homes become affordable again. The same thing won’t happen again so quickly, not with our RB policy, but over time the house/wages ratio will fall back from 10* to a lower level.
As to appropriate policy to make homes affordable. First change the depreciation rules and ring fencing property losses. Once the impact is assessed a second move and I advocate something along this line – higher deposit requirements for those operating rental property and a surcharge on rental property mortgages. And third a capital gains tax once things settle down to fairer value.
On Power bills.
We have a fire for heating, dont use the drier or other heating, try not to use the oven as this seems to spike teh power usage and we pay $200.00 per month with the discount.
There is no competition here.
I know people with heat pumps who pay 400 – 500 per month in the winter. What is everyone else paying around the country?
Sideoiler, it’s easier if one does, then the mortgage can be paid down with DINK. That’s ideal family planning as it allows the family to later cope on one income + WFF later, if necessary. The only way that’s more likely today is if one or both partners plan while single.
@sideoiler, Yes i think it is better to have your own home before having children(from an adults point of view). It is not possible for most, that is why many people are not having kids until they are into there 30’s.
I would never say it is better for the children though, all kids realy need are a parent/s who love them and put them first.
SPC: I agree with those approaches to making home ownership more affordable. They would be a start at least!
Sideoiler: yes I think it is better to own your own home before children on the proviso you do thinking ahead – regardless of when or if both parents work, your family income inevitably drops for at least a short while….PTC is a help for the first 14 weeks but after that you’re on your own. However, like Waterboy has said it is not a real possibility until you’re well into your 30s in terms of earning capacity to repay a mortgage (or at least one outside Bluff & Invercargill!!!) so many are faced with say buying a house first, going hard to try and make a dent in the mortgage then having kids later with huge potential for fertility issues or having kids first and trying to somehow get one foot in the door. We were the latter.
Waterboy in terms of power: we pay max $100 p/m in summer & $150 p/m in winter. We have a logburner/wetback and chop down our own wood, collect old untreated pellets and buy about 1 cord (3 cubic metres – $280) per year. We don’t have a heat pump and use a panel heater in winter for the kids rooms overnight. Being in an area with loads of native trees a heat pump is not worth it as the power goes off to various trees falling over powerlines. Like you we don’t have a drier or even a dishwasher so keep things pretty basic…..and no we’re not rural/country bumpkins, just live in the Hutt Valley!!!
Owning your own home just makes things a little less stressful in terms of security for the kid’s schooling etc (money can be a different story), but yes like you say, it has no impact on their actual development. Love is something many kids lack more than anything in this country!
Yes Chris and now MP’s are lining up to bail out homeowners for 10’s of billions of dollars from non-homeowners to pay for leaky buildings.
Making housing for those who currently do not have a house, even less affordable.
What is the Labour Party policy on such and if it is in favour of a bailout would it be in favour of bailing out Hanover and Strategic Finance “investors” as well?
Town planning – local councils are all for increasing densities the moment that say an area has a density of 15-20 dwellings/ha the price of raw land is basid on the lowest level i.e. 20 dwellings/ha. You increase density there is more “wasted” area. The area taken up for roading increases, increased driveway nos = less on road parking, reduced permability so more area for stormwater management. House sizes increasing to section size. 5 years ago sections were larger and the size of a dwelling was 35% of section size now it is around 45%.
Fees from council have increased from a section selling for $170k in 2003 had about $15k, a section down the road developed in 2007 and sold for $498k had council costs of $80k.
Land within Auck is how more difficult to develope owing to geotechnical nature and slop.
House size has increased from 1998 about 190m2 to last year of 235m2 and has gone from single level to 2 level. This has been as a consequence to smaller sections and min floor area covenants being specified by developers to keep their developments desirable.
The time to build a house has increased from my experience that from S224 (Council approval) to code of compliance from 4 months in 2004 (1 house 200m2 was completed within 90 days in this year)to 10+months last year.
Also from my experience houses that are selling well in the $600-650k (East Manukau) are well below replacement. New houses are being sold at below cost for the same type of house $600-650k (230m2 on 700 site) are costing to buy and build $700k and on a 500m2 site.
Finally I will comment on time to get land having a zoning change takes about 9 years. That costs if you can find finance. Today developers are required to acquire the land with their funds then develope with debt. Not many can afford to hold land and progress thru the system for that lenght of time. Opening up land will not solve much as most land owners will not be able to fund a rural setting with infrastructure that ARC and local councils require, and there is no help from central govt.
Who opened NZ land up for overseas buyers.
Land agents encourage overseas buyers – look at their websites.
The price of land and houses in NZ had been edged up steadily over the last 20+ years through a number of mechanisms. Overseas sales and Land Agents are just two of the salient influences helping to make houses unafordable for single income families.
Banks eager to capitalise on opportunity, have loaned freely and upset the balance in the buying market, accelerating price increases. They call this growth in the market whereas growth in irresponsible greed is more like it.
Just blaming lack of capital gains tax is not really an issue as there are taxes already on the gains made through trading property. The tax dodgers or more to the point.
Earlier Govts loaned money at a benign rate to young couples with families which was a very sound policy.
Now days such schemes have suffered political discredit and it is interesting how this has been done. It is the same old story through our history of right wing govts in NZ. Let the market rule.
While the trade in housing is big business it produces nothing – except profit for the traders, effectively takes away opportunity for home buyers and has been a key indicator in our economy.
The story is not new and controls on house sales were implemented at one time just to prevent such a senario
This has been a really interesting discussion, and perhaps not quite the one I thought we’d get! I agree with those who have argued I’m not strictly comparing apples with apples, things like the size/quality of the hosue come into play, as do tax rates, other expenses etc.
I started down this road because I’m interested in issues around inter-generational equity. As many of the comments above have picked up, our lives are much more complex than 50 years ago and our expectations different. My parents owned one car when we were kids and we had one TV. Microwaves, dishwashers, clothes dryers, videos, etc. all came later on.
I do also think it is fair to say that a lot of people my age (early 30s) expect to start on the housing ladder at a similar point to where there parents are after 40 odd years in the workforce. We shouldn’t forget that our parents often started in humble houses, renovated, moved, etc. to get what they have today.
I’ve got some further work in the pipeline on issues around inter-generational equity that I’ll blog on soon. In the meantime, thanks for your comments. Very thought-provoking!
Capital Gains tax has never stopped bubbles or price rises in any of the countries its been tried. Just to let everyone know, it puts the legitimate buyers on a par with the traders who declare it as income, ie no real effect on them either. My big objection is that most of the proposals mooted inflict distortions on the business of owning property while remaining ‘legitimate’ for every other business. Somehow the spin dr has convinced Joe public that there are “special tax breaks for owning property”, Newsflash – only if you are an out of town MP!. There are however many mum & Dad renovators who did not understand the law and did not pay what was owed (tax cheats).
Gotta agree with the Greek fella up there – Look at the price of an older (Renovated) house in any ads and a similar new house, you can pay $30K+ for no discernible difference apart from the lack of character.
Just to throw an idea I had been thinking of. How bout we have a public access database of sales and rents, (eg like QV/RPNZ) where no one can hide their sales. I wonder if this could cut through some of the sales promotions hype. Maybe if enough people used it. Would you feel ripped off if you knew that the people next door (similar house) paid 30K less than you, while the agent tells you you made a good buy?
Far too many people need education on buying houses, BEFORE talking to agent. Hows this for an idea. Buy the house for less than the asking price? Here is where it gets tricky, most expect negotiation and are happy knocking off 2-3000. Good job. Try 10%, 20%. If you can calculate “Fundamental” value ie what the financial benefit (rent received or not paid) then this is fair value, but not necessarily market value (today). Next the most often repeated and often broken advice – do not fall in love with the property (not your first anyway). Also look for cash to come out of the property, eg flatmates, subdivide & sell 1/2 or build second, run an office, who knows many options & individual circumstances?
Went to an agents presentation last week (Angus) – Kept saying he wont sell you anything tonight, called himself an “investment adviser”. Found out he had flown from Auckland to pump the I-loft apartments. Would not answer any questions, after my first (did not like the line) and was deliberately looking for people who were not investors, to become investors, losing only $150 pw, but after “tax breaks” only loosing $50pw on an unrealistically figured example. I can only imagine he may get 1-2 people with more money than sense buying his advice and calling themselves investor. They are not, they are “turkeys”. Totally unethical behavior, but also what they are paid for (achieving excessive prices). Just to point out an investor will never compete on price with a first home buyer, they want low prices and high rents, so will wait till they find one with no competition. (exception terms can compensate a higher price).
Unfortunately too many people with investment properties are also not investors (as defined above).
P.S. Bring back housing corp loans!!
SPUD –
You seem to be starting out- What I wish someone said when I was in Varsity (yes some students are real investors to), go to the book shop, business/self help section, look for real estate investors (secrets) books, and buy property investor magazine. Whatever you do don’t just blindly follow whats written (often use extreme examples). It wont give all the answers, but will start you on a journey where you can find something that works for you. At least you wont be taking advice from a salesman.
Does the average wage incorporate those who live in higher income places like Auckland?
I have never even gotten close to earning $45k a year, even with overtime!
Every cent myself and my wife earn goes on bloody bills and stealth taxes.
The only chance we have to get a house is through inheritance!
“Spud: computers – schools/unis have computers as do the cafes & libraries if you only use them occasionally. Unless you work from home I do think they are a luxury.”
- It depends on which university you go to, some you have to pay for how much internet data you download
Plus you might not be able to get a computer without queuing for ages. Plus there are data caps on how many files you can store on your student drive. Cafes you pay. 
Some work places you can use the internet, other places you are shot for personal surfing. 
If you have kids you need to be able to let them have access to sites for their homework. I work many places, including home, my computer is not a luxury. And when sick don’t feel so cut off from the world. 
“let’s all sell up/give notice and move to Bluff- you can get gorgeous wee houses down there for $210k!” – I don’t know where you live but your power bill is bound to go up down there.
@Chris “We shouldn’t forget that our parents often started in humble houses, renovated, moved, etc. to get what they have today.” YES. thankyou!
@Jeremy – Thanks
C Kate wrote
“lining up to bail out homeowners for 10’s of billions of dollars from non-homeowners to pay for leaky buildings.”
What a ridiculously oversimplified response. Non child owners pay for children’s health and education. Non public transport users pay for public transport. Non criminals pay for crime fighting, and so on.
If you genuinely want to know about leaky buildings then let me know and I can forward you some information about exactly what the causes are. It might interest you all to know that new houses currently being completed and complete din 2009 already leak and are rotting… The Govt that allowed untreated timber, Branz, BIA, and the way Branz and suppliers are skipping liability is the problem NOT owners of leaky buildings. I can show you submissions t select committee in 2002 which outlined what is happening now, which was ignored. I can show you reports and analysis from the 90’s outlining the problem, which Council’s Branz, manufacturers, suppliers and govt ignored all making the problem worse.
Consumers are not expected to know the law, they are entitled to rely on experts (Lawyers), same with accountants, architects, brick layers and builders. Consumers do not have to be experts in how to buid houses, that is what they pay the experts for.
I may have misunderstood your point. I apologise if I did.
Spud – not necessarily it is colder in Bluff, power is more expensive in the south island.
Rebecca, kudos to you and your family for good control of the prices.
We are a household of 3 adults, our average power bill across the years is $150 per month.
The laboratory based decision to approve untreated pine for house framing ( a BRANZ announcement ) had experienced buiulders shaking their heads is amazement.
Common sense gained from years of experience in the building industry was not included in the decision making.
Short term profit motives within the timber supply and larger home building enterprises took the windfall gladly and lowered the specification of their products immediately.
If a road sign was mistakenly made to read 150 kph in a built up area, would that make sense to travel at that speed?
Architects also have responsibility in the leaky homes debacle as they specify what is to be used. Many of them have never lifted a hammer and have no experience in repair work which is the testing ground of building practices.
High flyers, quick bucks, shonky industry practices, all approved and what a disaster. Lawyers also do Ok out of it.
Local councils controlled building before the BRANZ regime came into being being it would seem a better job was done in a simpler environment.
We have power bills of $85.00 per month, use LPG for on demand hotwater and cooking, costs around $95.00 every 2 months for a 45kg cylinder.
Our biggest costs aside from these are Fire and General Insurance and Life Assurance of over $300.00 per month.
Peter – crikey that life insurance is hefty! Ours is $85 for appropriate cover for both my husband & myself so we are mortgage free if one of us goes and stay at home with children for the first year after death. Also includes an accelerated portion should he (being the breadwinner) get very sick or worse, terminally ill. Have to hope family & friends will be able to step in if it’s me that ends up in a bad way. Other insurance (house & contents) works out to be $60 per month…
Jeremy: yes wish someone had given me that advice when I was a lot younger too. My husband & I first looked at buying a place around 2002…wish we had just bitten the bullet! But I believe life works out as its meant too.
Spud – no judgment was being passed, more an observation. There’s always exceptions and yes, when studying these days life without computer would be very tough. In my day essays (even 6000 word ones!) were all handwritten!!!!
In terms of Bluff – we would all have to make sure we got places that had logburners & wetbacks!!!!
Herodotus: interesting re house sizes increasing. Of course one only has to look to a house built in the 1920s-1950s and you can see the difference I suppose. Our house is 100 square metres so not large but it’s functional, all day sun and insulated – essential with kids.
Mark: your circumstances are exactly what I was referring too. Rent is skyhigh for so mnay people so buying a house is beyond being a pipe dream as is absolutely impossible.
Tracey: Thank you and so interesting re leaky homes. I have never really read that much about it. Horrifying to think that houses being built in 2009 leak!!!! Our place was completely rebuilt in 1995 but the builders were the owners hence no leak I suspect. We struck lucky.
For most – much better off buying the 1950s-1970s houses and then doing it up yourself as these leaky new ones don’t give me much hope!
” not necessarily it is colder in Bluff, power is more expensive in the south island.” – You’re right, it depends on how much the temperature varies there.
“In my day essays (even 6000 word ones!) were all handwritten!!!!”
John W, it has always puzzled me too that the architects seem to have completely escaped any responsibility for the leaky homes disaster. They specified the shonky materials and building systems, and the manufacturers slid off any responsibility arguing their systems were incorrectly used and okayed by the poor old builders and local councils. It was the architects who designed these mediterranean villas and the suppliers who dreamed up the building systems to make them possible, and the then National government who removed all the rules. It was like watching a baby playing with a razor blade, certain to end in tears. Now its the little guys at the end of the chain who are in the gun when things inevitably went wrong. Just like the finance houses where the little guys lose their money and the overpaid directors just shrug their shoulders and order another bottle of bolly.
Chris – there have been an increase in other costs that were not applicable even 5 years ago that add to housing costs.
e.g. manukau Water use to changre for a development $15/ha or about $1.5k/house for water supply. Now they charge the builder a water connection of $6/house, and there are 15 -20 houses a h.a. now (increase density) of $75 – $100k h.a.
A breakdown of costs for a $180k section 550m2 (density 15 h.a.)2004
Reserve Cont $11.7k, Stormwater $3.5k ($45k ha) others $2k = total council costs $$17.2k or 9.5%
2008 section SP $248 490m2 density 17.5/ha
Res Cont $16.2 SW ($110k ha) $6.3 Water $6k dev Cont $6k others $1 = 35.5k or 14.3%.
Stormwater costs were reduced as there was the ability to pipe the discharge under sections, now there is a tendency to have green fingers. So councils increase the densities to fulfil their pop. requirements say from ARC growth strat.
To achieve an affordable house then you build appartments as these costs are then shared by the no of levels that are produced i.e 4 levels these “ground” costs are then 1/4.
As sections become smaller then there is the increase in foundation costs as underground pipework then has to be bridged. On larger lots 700+m2 this pipework could be placed on the boundary well outside building lines. That is not the case now. For a uneffected house the foundation costs would be $30-$40k with bridging this increase to $70k. For the same 2 houses next to one another the costt to the builder could be $30-$40k different and they both would command the same selling price. You see Chris what I am attempting to convey is that costs have increased to that of yesterday, and by some margin.
Architects havent completely escaped liability BUT many did what builders and developers did when this broke, they voluntarily liquidated their companies and started new ones keeping themselve sout of reach.
Rebecca – the problems around leaking buildings is much buigger than some realise. ALL homes are moist. What changes is the ability of the home to dry out before it gets wet again. Hence climates like Auckland were taylor made for leaky building syndrome, being wetter climes.
BUT 1950’s and 1960’s homes which are renovated are also rotting. When they were built, especially those built pre-insulation, the home was designed with air flow in mind (space under houses etc) Along came building paper and insulation… now people have insulated floors, walls and ceilings, essentially trapping moisture within the walls. Luckily they have treated timber BUT if treated timber cannot dry out it too rots.
the difference is mainly that houses built post 1990 are known to have probs so people get them tested… pre that time people dont.
Basically builders/suppliers etc all pray to get past the ten years from building completion, they hope you cant see what’s happening behind those walls, because after the ten years they are safe from claims… Now homeowners get to see behind their walls how? Infrared and inside flat wall based moisture readers wont detect until stuff is really bad.
Gee, I wonder why these homes were built with a method to detect moisture behind them???
Branz gave appraisal certificates and NOT ONE has ever been revoked, even amidst the leaky home crisis. Branz gets about 6m per year from levvies… and yet not one appraisal has been revoked, makes you wonder if their “fit for purpose” claims is anything more than, well BS.
Yes, I have a leaky home. I am a lawyer by training. I have had to learn alot to run my claim. The more I’ve uncovered the more appalled I am. I am not a conspirasy theorist but boy some underhand stuff has been going on, and the consumer was always the one going to be in the dark and screwed.
should read
“Gee, I wonder why these homes were NOT built with a method to detect moisture behind them???”
Rotting framework is one issue. Rightly moisture within confined spaces is the perfect situation for mould and fungi.
The current greeenwash of Govt home insulation is curious. Many of the older naturally ventilated construction styles have no provision for wall ventilation once batts are placed in walls. Moisture and wet accumulate in the batts creating excellent spawning environment for fungi. The framing is then attacked. So by insulating parts of your home can become very unhealthy. This is ignored by installers may of which are sub contractors to large franchises. No guarantees cover this.
As a home owner you just try to get a deal on cheaper batts for your home though the Govt scheme. You can’t. The Kiwi do it your selfer cannot access the scheme. It is propping up commercial installers who charge like wounded bulls and employ the cheapest unqualified labour they can. The real windfall is made by the commercial sector not the home owner.
Even a builder cannot get assistance through the scheme to insulate his own home. It is all well tied up with access only by paying through the nose to commercial interests.
Untreated pine is also found in floor joists as allowed after the BRANZ fiasco. Joist can be exposed to the air and borer. Untreated pine is not quite fruit salad for borer but pretty close. Borer will infest the untreated pine and joists are not easily replaced, particularly where canterlever design has been used.
The life of the house will be reduced with untreated framing and joists as the scope of repairs through borer and fungus attack becomes uneconomic.
In the past rimu and other natives were used for framing and treatment was not used generally. The sapwood did suffer from borer over time but as the timber was stronger and often contained some heartwood. Then 150 years plus was a fair expectation for cheaper spec houses while good building practices with heartwood used, the life could be hundreds of years. Not so with untreated pine where borer infestation can produce chronic weakening of structures.
Record show that construction by settler using native white pine (now there is a tasty variety for borer) resulted in houses being demolished as they were unsafe in a short span of time often as little as 30 years.
Asbestos was another issue where the NZ govt moved to protect Fletchers and James Hardies from law suits by NZders dying with asbestor related disease. One NZder successfully had is day in court near the end of his life . The National Govt then changed the law so that could not happen again.
Both of these companies continued to market dangerous materials for many years but the financial clout of their overseas owners were able to sway politicians away from protecting the public. Asbestos related health problems have been identified since early 1800s. The peak of asbestos related illness in NZ has yet to come . The gestation period from exposure is typically 20 to 50 years. The perpetrators have got off scott free in NZ. Big overseas bucks seem to control what our Govts can do. One can only speculate how this works although some material has been published on who has been paid what.
In Australia James Hardie may be brought to task as a loop hole in the law there has seen successful challenges in court against them.
Shonky practices by big players seem to be relatively immune to redress by Kiwis. Leaky homes similarly catch the unsuspecting owner, not the developer, archtect, builder, or material supplier.
Privatisation of Council services is another area of no reponsibility.
Using wetbacks for hot water has some pitfalls.
If your hot water cylinder is heated by wetback and also has the electric element then be aware.
With the electricity turned on the element will run until a temperature is reached where the thermostat turns the element off.
If you have a faulty thermostat then the element can stay on. With water boiling while the fire is burning you may not suspect the element is chewing up power at a great rate.
Most people turn the element power off when a fire is running.
Check you thermostat.
If your fire is not burning then electricity will heat the water BUT the wetback loop into the fireplace is totally uninsulated and designed to conduct heat.
You are then running electricity to heat your fireplace and that will skyrocket you power bill. Most of this heat will go up the chimney. A conservative estimate of heat loss through a wetback loop is about a kilowatt per hour, depending on water temperature, air temperature and design of the wetback.
If you don’t intend to run your wetback almost continuously then a separate electric hot water system is advised as it will be much cheaper. The price of fuel to run a wetback also is a part of the mix.
Kiwis used to bath once a week as a normal practice not so long ago. Nowdays showers have been linked with greater consumerism and daily purging of your skin of its natural oils accelerated the production of skin defenses to replace the oils. Fashion, advertising and fear of social pressure seem to be the drivers of this silly trend.
Something to think about in your consumption of power for hot water.
A small undersink heater may be all you need for daily hot water with a wetback system for Sunday evening skin scrubbing. That would probably reduce your hot water bill by 75%.
Cold water is not poisonous – yet.
Why give your money away to power companies especially if you are paying mortgage interest on every dollar.