Finding housing in the New Zealand property bubble?

[kiwias]

Hi,

Firstly a brief introduction of my situation;
I have skills that are hard for employers to find, I am currently earning a good income by New Zealand standards, and investing more than half of it.
I don't have any dumb debt, I do have a credit card, but it is paid in full each month.
My net worth is over 6 years of my current income, and I have decades of career to go until I reach official retirement age (currently 65) - that said, I might decide to retire before then...
I am single, no children, and living with my parents, which is very frugal, however, over a few short years, one of my parents has become a functioning alcoholic and is unpleasant (though not dangerous) to be around (the other parent loves my presence and does not want me to feel pushed to leave) - I'd like to move out soon, but I do not have to.
Historically, I have experience of living independently (in a rented house), and of being in business for a few years.


Maybe the following is just another WAAAH WAAAH WAAAH? I'd like to hear your thoughts, suggestions, and experiences?

I am in the situation were I can just go out and buy a house in provincial NZ, close to work, without a mortgage (but it will pretty much clean me out), however, I think that NZ (and Australia) is still in a property bubble that has been on the go since about 2002. Price/Earnings ratio (and price/median income ratio) for NZ houses is really expensive (house prices have increased twice as fast as rents over the last 30 years or so). Whilst USA, Ireland, Spain, etc saw large corrections to their property markets with the Global Financial Crisis, NZ only saw a very small correction, and our property bubble has since resumed growing. Even though I have the skills, do-ups are not cheap - the land under them is expensive. To me, it appears that the NZ economy is mostly driven by dairy farming (in the doldrums at present) and non-productively flipping houses to each other for ever increasing prices (especially in Auckland, NZ's biggest city). So, my assumption is that we are due for a correction at some stage in the future and that financially, purchasing a house in the current bubble is a very poor decision.

The problem with renting a house is that I have a large dog, whom I am very attached to (best mate & exercise partner), and generally speaking, landlords in NZ do not like dogs, as they know that they can't tell the difference between a responsible and an irresponsible dog owner. Whilst I can contract to pay for the lawn to be re-sown and the carpets to be professionally cleaned at the end of the tenancy, The Residential Tenancy Act stipulates that the maximum bond payable is four weeks rent - it is illegal for me to pay (and for the landlord to accept) an additional "pet bond". I reckon that I could scrape the bottom of the barrel to find a dog-friendly landlord, but considering how little notice you get to vacate when the house is sold (Kiwi's love flipping houses), what I'd like is to hook into a "dog friendly rental market" where I have some measure of certainty in my ability to find another home during the notice period. This is not helped by the fact that traditionally, NZ has had quite high home ownership levels (though this is changing), and that historically, most tenants have been lower-socio-economic status, and large numbers of them have been irresponsible with their dogs...

I have the requisite driver's licence to be able to drive a truck or bus, so I have also looked into living in a house truck or bus and renting a dog friendly yard to park it in (easier to find because it's my mobile dwelling that bears the brunt of the mess, wear and tear from a dog). However, the Arms Act says that I am not allowed to leave a firearm unattended in a motor vehicle, even if it is locked in a safe that is securely attached to a heavy vehicle. This is a problem because provincial NZ is full of wild game, I like going hunting in the wilderness, and if you don't get sucked into buying equipment toys that you do not need, or paying to go to "safari parks", it is enjoyable outdoor exercise and a frugal way to fill the freezer with good meat.


So, have you got any ideas or suggestions?
(I'm not looking for suggestions like "get rid of the dog" or "give up hunting").


Best Regards
Kiwi as.

[LanceThrustington]

just buy a house, you can afford it

if you live in it for a significant period of time there's no way it will go backwards.

people in OZ/NZ still earn high income, interest is still low, foreign demand is still high
at the end of the day the bubble is most likely not going to pop, it will just plateau  for a few years like it has in the past

[waltworks]

just buy a house, you can afford it

if you live in it for a significant period of time there's no way it will go backwards.

Congrats, that's the worst advice I've seen posted in a long time. Tie up ALL YOUR ASSETS in one illiquid thing that might be very overvalued? Great idea.

OP, keep looking for a rental. You'll find a place that will take you and your dog eventually.

-W

[Jeremy E.]

Could you find a rental near your parents house and keep the dog there? Visit it 3-4 times a week? Then you can also visit your parents as well.

[LanceThrustington]

just buy a house, you can afford it

if you live in it for a significant period of time there's no way it will go backwards.

Congrats, that's the worst advice I've seen posted in a long time. Tie up ALL YOUR ASSETS in one illiquid thing that might be very overvalued? Great idea.

-W

Thats entirely dependant on several factors that we dont know (unless i missed it in the long post) the OPs age and intent to keep earning. I assumed he was reasonably young (due to living with parents and being decades from retirement)

my impression was that he was intended on working for a significant period of time 10+ years.

Housing has been a rather consistant "investment" in AU/NZ for a couple of decades, as for over valued thats really a supply demand issue. they are overvalued compared to US properties however there is a significant demand for properties down here. I dont believe there will be a large correction like the US but there is potential for a plateu as I said previously.

That asside he has the opportunity to buy a property, near his work... cash. Thats a great position to be in if he intends to stay in the area for the next 10 years or
so with the bonus of getting the freedom from his parents and for his pet and not have to pay rent/ move when landlord sells.

Imho given his good wage and having no housing costs and being near work he should be able to accumulate enough liquid assets in the next 10 years or so to retire if thats his choice.

I'm all for frugality but living in a bus to save money when you could buy a house cash seems like madness.

[patrickza]

I've always wanted to live on a boat. Sadly I'm landlocked, but I do know a bunch of mustachian like people who do it all around the world. The pay-off is usually greater in areas with high cost of accommodation. If you're not near a port, how about doing what Jacob from ERE does and get a motorhome in a motorhome park.

[Tieke]

Could you find a rental near your parents house and keep the dog there? Visit it 3-4 times a week? Then you can also visit your parents as well.

Or, could you alternatively go for the bus option (if you can find a dog-friendly spot for it), keep the dog, and store the guns at your parents house?  Seems to me the dog's probably better company at night...  if the idea of living in a bus doesn't bother you and it speeds up your progress towards financial independence, I can easily see that it might be a worthwhile trade-off.

Although if you would far prefer a house, I'm not that sure about the 'bubble' issue - every time a real estate bubble bursts in NZ, a new one seems to form not long afterwards so I wonder whether it's really something to worry about if you're not having to take a mortgage into account. 

[JLR]

Love your user name.

I agree with others who have said "Don't buy". I think that your situation gives to some time to find a suitable landlord. Could word of mouth help you at all? Getting into our last two rentals have been greatly helped by knowing people, or even knowing people who know people.

I know that having to move out of your rental is a pain. Would it be possible for you to move back in with your parents for a time until another suitable place could be found, if it came to that?

I agree. The Aus/NZ housing market is so overinflated. We would only buy something if we planned to stay in the one spot for a very long time. As that is not the case for us currently, we are renting.

[Jacana]

Is it legal to offer to pay more rent for your dog? Some apts here charge extra rent for pets instead of a deposit. Eg normal rent is 2000/mo, rent with a cat is 2050/mo, rent with a dog is 2075/mo.
 

[Kouhri]

Is it legal to offer to pay more rent for your dog? Some apts here charge extra rent for pets instead of a deposit. Eg normal rent is 2000/mo, rent with a cat is 2050/mo, rent with a dog is 2075/mo.

Long time lurker first time poster here. :)
Hi yes it is perfectly legal (in NZ) if you want to go down this route. In fact in many rental listings in NZ that are "pets negotiable" it usually means that they are willing to rent to people with pets but for more than the list price.
Your best bet in finding apartments of this type is to try and go with private landlord. Easiest way would be to search for rentals that fit your needs on trade me, identify all the listings that aren't attatched to a real estate agency, hit them up and say that your willing to pay $30 (or whatever you feel is reasonable) a week extra for having your dog.

[NZSurfer]

Hey Kiwias,

the good thing here is that you have a lot of options and no real rush.

As a landlord with a large dog, I'm always open to tenants with dogs. I prefer them over cats actually, generally less destructive. But definitely it can be very hard to find someone that will allow it, most places I've seen recently seem to be managed by a rental company and it's probably more them that don't want to deal with dog issues than the owner.

One thing though, don't let the 'noise' within the market put you off making a decision. I remember buying propertties back in the early 2000's when the market was going well also and being told by an economist friend it's too risky and not to do it. He has subsequently bought a house about 10 years later had to pay around $300k more than I was paying. Timing the market is a difficult thing in any market. If you wait too long prices could come back and you have extra cash left over or they could keep going up and out of you cash range.

If you do buy, you could then rent out any spare bedrooms to tenants to increase your income further. When interviewing tenants dogs are a great judge of character also and mine was always good at weeding out potentially dodgy tenants. One in particular he basically just sat in front of barking at. Being a golden labrador usually he's all over people with excitement so he seemed to pickup on some bad vibes from that person!

Best of luck with your decision and for those other kiwis if you aren't aware there is a facebook group; Kiwi Mustachians that is going strong that you can join.

[zephyr911]

If you have to buy, go as tiny and cheap as possible. You don't want to expose yourself to any more of that potential decline than necessary. Go with a real starter home and improve it as much as you can using your skills, and keep saving money. Then, when the bubble pops, rent that fucker out and go buy a nice house.