161–170 of 172 posts
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what is the interest rate in NZ?
Around 4-5% right now I believe.
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you don't save money by merely keeping it in your savings account (at least, not for the past decade and a half). You "save" by investing that savings in stocks (and may be some mix of bonds too if person is more fiscally conservative).
Ah yes, I'm sure that's what my parents had to do in the late 70s to get their deposit together. I'm not saying your wrong or that it's not a bad idea, but should you have to take risks by investing your deposit just so you can have the chance to take a bigger risk in the housing market? It's mental that that's the case these days
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What does an average home in Prague look like? Is it an apartment or a detached house, how many bedrooms? In Eastern European countries, the quality of housing varies greatly, from cramped apartments in gray concrete buildings to elegant mansions. I wonder, which of this is worth 16 times annual income.
65 m2 apartment is Czech average, obviously it will be apartment as well in Prague, since houses are reserved only for extremely wealthy or people with family here who inherited it, though I'd not guess what's average m2 in Prague, I'd assume less than Czech 65m2 average, which is btw. quite small 2BR+1LR apartment and it will be mix of old brick buildings, commie concrete block buildings and new brick/concrete build…
Earlier quoted context omitted.
you don't save money by merely keeping it in your savings account (at least, not for the past decade and a half). You "save" by investing that savings in stocks (and may be some mix of bonds too if person is more fiscally conservative).
Ah yes, I'm sure that's what my parents had to do in the late 70s to get their deposit together. I'm not saying your wrong or that it's not a bad idea, but should you have to take risks by investing your deposit just so you can have the chance to take a bigger risk in the housing market? It's mental that that's the case these days
yes. There cannot be ways to obtain risk free returns that out-performs inflation. Where would that return come from if it was risk free? It must come, at some aggregate level, via other people's productivity growth. But this means it's a free lunch, and more and more people would try to take advantage of it, thus lowering the expected return of such a deposit scheme (however it is funded).
> the chance to take a bigger risk in the housing market?
A house is not a bigger risk than the stock market tbh. It's why the lender for the mortgage is willing to give some 5x leverage (20% deposit) vs a margin loan in the stock market (which at most they're gonna lend you 50% LVR), and at a higher interest rate even!
It's the fact that real estate is such low risk that so many people, esp. the poorer/middle income people who cannot take the risk of stock market, want to buy real estate.
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Around 4-5% right now I believe.
4-5%!? Aren’t central bank rates in the 0-1% range pretty much globally still? My mortgage is usually around one percent over the central bank rate so it’s been hovering around 1-1.5% for years now.
See these banks for examples:
- https://www.kiwibank.co.nz/personal-banking/home-loans/
- https://www.asb.co.nz/home-loans-mortgages
- https://www.westpac.co.nz/home-loans-mortgages/
Also, it appears that our central bank has an interest rate of 1.5%: https://www.cnbc.com/2022/04/13/new-zealand-central-bank-hik....
More importantly, mortgage payments have gone from 1/3 of income to 1/2. That's reaching unsustainable levels.
That's not normal? I paid half my income to rent when living in London 10 years ago, and prices have only gone up since then.
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I don't disagree that the housing market in german cities is overheated, but isn't it pretty standard to take 30+ year mortgages? Keep in mind that 20+ years into paying this back your monthly payment will not increase to 2042 levels but remain in current 2022 levels.
When I talked to my parents they told me most of their peers would pay off their mortgage within 20 years but maybe times changed, I don't know the data on that. I am 30 now and I have trouble imagining being in debt for a time equivalent to my entire lifetime so far - just to live in a house. 15 years sounds so much more bearable emotionally but it's probably never gonna happen. You are obviously right about 2042 pa…
I can empathise. 10 years ago, I had friends in their early 20s "buying a house" (signing up to a debt of $1.2m+ dollars over 30-35 years for a $700k house), and could not see the value propositon for the emotional turmoil.
Looking back years later, they don't seem so stressed by it, but it's definitely affected their ability to make decisions around their job, relationships, social life, etc. But they've all made pretty strong profits (on paper, assuming they ever sell).
I bought a house for cash instead. The trade off of living further away is much better to me than feeling enslaved and not in control for decades.
Buy some land if you want - a small package in a small town 30 minutes past all the developments. You'll probably find once you've paid off the mortage in 5-10ish years, the area has built up and you're in a non rural position with a good block.
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When I talked to my parents they told me most of their peers would pay off their mortgage within 20 years but maybe times changed, I don't know the data on that. I am 30 now and I have trouble imagining being in debt for a time equivalent to my entire lifetime so far - just to live in a house. 15 years sounds so much more bearable emotionally but it's probably never gonna happen. You are obviously right about 2042 pa…
> I am 30 now and I have trouble imagining being in debt for a time equivalent to my entire lifetime so far - just to live in a house. I can empathise. 10 years ago, I had friends in their early 20s "buying a house" (signing up to a debt of $1.2m+ dollars over 30-35 years for a $700k house), and could not see the value propositon for the emotional turmoil. Looking back years later, they don't seem so stressed by it,…
Earlier quoted context omitted.
Ah yes, I'm sure that's what my parents had to do in the late 70s to get their deposit together. I'm not saying your wrong or that it's not a bad idea, but should you have to take risks by investing your deposit just so you can have the chance to take a bigger risk in the housing market? It's mental that that's the case these days
> should you have to take risks by investing your deposit yes. There cannot be ways to obtain risk free returns that out-performs inflation. Where would that return come from if it was risk free? It must come, at some aggregate level, via other people's productivity growth. But this means it's a free lunch, and more and more people would try to take advantage of it, thus lowering the expected return of such a deposit…