Rent or Buy? any advice?

[Wooly_Cow]

If you need a high ltv % mortgage for 2 years in current uncertain market I'd say that the dead money argument is not necessarily true.
In two years to come out on top you are relying on capital appreciation.

Eg for a 400k home with a 100k deposit - a 300k mortgage over two years will require 36k of interest payments and you should knock off about 10k of your mortgage. So hopefully in a better position than renting. But add in buying/selling costs and the 5k (?) you may have made in interest on your deposit then it becomes a tough decision imho.

So I have small model to compare the cost of renting and buying over any given period. I ran it with your assumptions compared to a rental of $300 per week. For this case to break even ther house prices over two years would have to rise by 9% This assumes a lot of the costs scale with the price of the house. In reality this will not be the case as there is a certain fixed cost in any transaction.

Will house price rise by 9% in two years, or more specifically could you buy a house that you could sell for 9% more in two years????? I don't know BUT it's not an unrealistic goal.

Incidently if house prices stay the same it would cost you an extra $36,000 over the two year period to buy a house rather than rent!

[ralf-nz]

I think finances are "only" one aspect when contemplating on this. Further aspects are e.g.flexibility, certainty; all what one can also associate with renting or owning.

[Wooly_Cow]

Here's a recent report on historical and forecast house prices, by region.

http://www.qbelmi.com/Uploads/Docume...440b9056c0.pdf

Looking at my own area, I could conclude that a house investment is only worth while here for longer than a 2 1/2 - 3 year window, and that depends on Government finances and spending.

[LAsmith]

i dont think you could turn it around for much in the way of profit over two years, the economy isnt really awesome anywhere and the market looks a bit stagnant. thats not to say it can't boom but honestly that isnt where id put my bet. for us the choice is easy. no matter where we land we land for a minimum of the next 7 years. if its not working by then it never will! we will rent only until the second i spot a place i like. I do have other factors though. I have animals to think of and a deep desire to stop moving from place to place as leases end.

[chocolate cake]

Yes, house prices have come down, but IMHO I think you'd be mad to consider buying for just a two or three period in the current market.

The NZ $ is at pretty much a historic high against most currencies, house prices are tipped to stay steady, NZ interest rates are high internationally and then you've got the transactional costs of selling. Whilst there isn't any stamp suty on buying, agent fees on selling are typically expensive and certainly well above what you would see in the UK, and do they earn it? I think the answer is no.

[lin]

Hi a02arifa, we came out last year & rented for the first 6mths and are now in our own home for the last 6mths. 6mths seems fairly common for a rental lease here so it may be worth your while either (i) renting first so you are familiar with the area or (ii) negotiating on the rent if you are looking for a long-term lease.

If you buy here, there is no stamp duty (unlike Ireland) but you do pay council rates. You can check the rates applicable on the council websites, well you can here in Marlborough.

I posted on a previous thread some of the resources we found useful: http://www.enz.org/forum/showthread....eferrerid=4019

"Maintenance – this will depend on the house but jobs here appear to cost a lot more than in Europe. "

I have to remind myself not to say "is that all?" when I've had a few quotes - so far costs seem to be cheaper or on a par with Ireland.

[Guavagirl]

In 2008 we applied for a home loan because we thought the same as you do, renting is throwing away money. We went to our bank and was told since we've been in NZ for less than two years, a minimum of 30% deposit was required. Our bank's rejection turned out to be a blessing because we ended up moving down to Christchurch.

Just last month the OH and I thought now we've been in NZ for over two years and have a bigger saving, it's time to buy a house. (Also our lease is expiring and it's a real pain to find a decent house willing to take dogs) We went through a Mortgage Broker this time and the experience was great. Our broker secured a loan for us (with same bank that rejected us the first time) by the next day. We're putting in 20% but our broker said we can put in even less if we wanted to. Our broker never heard of the "<2year=30%" formula but it didn't apply to us anymore anyhow. He also said right now is a great time get a home loan because the banks really want our business.

I don't know if things have changed or whatever, but it doesn't hurt to talk to a mortgage broker. Also, I recommend renting for at least a short while, until you know Auckland a little better. check out: http://www.wheretoliveinauckland.co.nz/

[a02arifa]

Wow thanks everyone for your input. This is great stuff. We have a relocation agent in Auckland that will be helping us settle in (setting up bank accounts, getting drivers license etc) and will also provide local knowledge about rent, mortgages, what areas to avoid etc... I guess we just need to let the information sink in for a few days and then make a decision.
We also have 30 days of accommodation so I guess that's enough time for us to decide if we wanna go ahead with buying or not.

At leaset we know now that the money is going to be wasted anyway (rent or interest) as the rate is so high in NZ.

Thanks again everyone.

[moz]

When we moved to NZ we bought a house before we arrived as our intention was to live there for good. To cut a long story short we decided to return to the UK within a year of moving. Our return was delayed as we had to sell the house and the market was poor. We both said that we would have been better to rent to begin with. That way if we wanted to move to a different part of NZ we could just up sticks and go or if we wanted to return to UK we could quite quickly.

Although renting can be seen as throing away good money when you are making a huge life chaning move such as emigration it would be wise to take tihngs slow and not rush headlong into buying a property. I know others who have bought almost straight away and never looked back.

I agree with Nicky here.. I have always owned houses, not rented for long at all..we bought in Christchurch with intentions of staying, but were forced back to Australia after 9 months..all the money we could have spent on rent worked out the same as we lost on the house. We were lucky as we only had the house on the market for nearly 4 months before we sold it, but we lost $30,000 nzd on the sale, and we lost more on the exchange back to Oz..

I would rent also to see if you would like an area..when we moved we couldn't find a rental and had to buy, our kids already missed a term of school, and we couldn't get them into schools for the new year without an address..

Good luck whatever you decide to do!