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We read it in the news, see it on TV and hear it on the radio: Auckland has an affordability problem. With properties in inner city suburbs selling for literally hundreds of thousands of dollars above value and median house prices increasing so fast its easy to see why people are getting pushed out of the home owners market and first home owners believe home ownership will never ever be possible and they will be stuck in the rental market forever.

I however am of a different opinion. Sure house prices have gone crazy, but the problem is not affordability, it is greed and peoples expectations. People who expect to step onto the property ladder in Remuera or Ellerslie have to be joking. Imagine your first car being a Ferrari. Unfortunately it seems too many people are accustomed to a certain level of comfort or status and are purchasing properties beyond their reach and pushing prices up, that they can’t actually afford in the first place.

Auckland has plenty of well priced affordable houses if people just stopped setting their sites on the prime inner city suburbs. Areas in the West and South still have median house prices ranging from the $300k -$450k mark in safe areas with realativly good access to the city. Even areas such as Avondale or Mt Wellington are within the average persons affordability.
The second problem is people believing that the only way to purchase a property is via the traditional 20% deposit and bank loan method. If home buyers were to investigate different ways of purchasing houses or get more creative it would see more people get on the property ladder earlier and easier and see them start getting some capital gains.

Take for example if you were to use vendor finance to purchase a house in a high growth area. With the market increasing your house value and your rental payments decreasing your principal you could quite easily have the 20% deposit saved within 2 years allowing your self to refinance through a bank. For those that cant wait to long, its not to hard to do a quick cosmetic reno to boost the house price and get access to that 20% equity faster.

So through a little investing knowledge and being smart about the aréa you can afford and chose to buy you can see that purchasing a house is well within most peoples budget if they wanted, they just need to stop chasing the Ferarris and focus on the more affordable Toyota.