Last year I woke up one day and decided to buy a house, and although I failed, I learnt a couple of things along the way.
The first one you hear all the time but you never truly believe, because your brother-in-law/diving buddy/neighbour is a real estate agent and they don't seem to be all that bad, do they? They drive that nice car and they send you a card at Christmas and you have those really neat conversations when you run into each other at the Pak 'n' Save. But it's true when they tell you to never trust a real estate agent.
The second is to avoid mortgage brokers. Do not touch them with a ten-foot barge pole with a sterilised gumboot on the end. Once you've signed on the dotted line, they'll suddenly turn into something about as useful as an ashtray on a motorbike. The banks will no longer deal with you directly, should you try to speed up the urgent finance process by circumventing the broker and going direct, and they'll send out your personal financial information to the wrong email address, so that email@example.com can enjoy reading through the ins and outs of your monetary life. Privacy, autonomy, be gone. (Naive, I know.)
And the third is two-pronged: the Auckland housing market has gone nutbuckets – and not in a good way, not in a 'let's drink pink champagne and jump into the pool fully clothed' sort of way but more like an 'I just drank four bottles of Robitussin and I'm going to ride my dragon to Twizel' sort of way – and no matter what property you want to buy, there'll be Chinese buyers with more money than you. A lot more money.
The real estate agents, of course, love it. More bang for their buck and a feeding frenzy on even the most decrepit properties in Auckland. I found one way out in West Auckland that had major structural issues and was leaking, but nothing that couldn't be fixed with time. I got my brother, a builder, in to look at it and he outlined the cost of fixing it and reckoned I'd need to budget at least another $50,000 for repairs, but that it was still a bit of a risk in terms of the property's value. It was right on the railway tracks too, which wasn't ideal.
I sat on it for a day or two and the property went to a multiple offer situation, going for way (wayyyyy) above CV.
Another, which had been listed in the morning, was off the market before the open home that evening, with multiple offers and a final price of way over the asking price. It was, said the agent, an "emotional buy". I put in a multitude of offers over four months and went through process after process. At countless other properties, the money offered by Chinese buyers was well beyond anything I could afford. It was terrifying. I went home and rocked myself gently in the corner.
But it's the inability of a regular New Zealand income to now afford these properties in Auckland that is of concern. BNZ chief economist Tony Alexander said in a recent missive that he constantly hears the same anecdotes, but only in Auckland. Alexander cautions that he doesn't believe the anecdotes fully reflect the true situation, but that he's a strong supporter of restrictions on foreign purchases of all nationalities of residential property in New Zealand.
Tony Alexander seems to me to be an exceptionally sensible man, not at all the type to ride his dragon anywhere.
"[I] warn that whatever the level of buying from China is now, it could easily be four times that within a decade, given developments in the world’s most populous country," he wrote. "It would seem better to address the issue now before the anecdotes coalesce into a nationalistic backlash and outright blaming of Chinese buyers for the housing crisis and inability of young people to purchases houses in Auckland."
I'd argue that nationalistic backlash and Chinese blame has already begun. Again, that's anecdotal.
"It would seem better to address this issue of rising concern about foreign buying now before China becomes New Zealand’s biggest export destination in two to three years’ time and policy changes will have to strongly take into account how our top customer feels about the things we do and say – such as talking about which side one would support in a reactivated Korean War."
A policy horse for Labour and the Greens to ride to fruition, perhaps? What are your thoughts?
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