2 mins to read

Could I afford to buy the house I grew up in?

A couple of houses for sale give me the opportunity to do the sums.

Wed, 15 Oct 2014

A new Massey study says home affordability is worsening as house prices rise faster than wages.

There's another measure of change in the real estate market over time: could you buy the house you were brought up in?

My parents built there first house in Te Awamutu in around 1972, for around $20,000 (including the land) or $256,000 in today's money, according to the Reserve Bank's inflation calculator. At the time, my father, a secondary school teacher, was earning around $4000 ($51,000 today). My mother started teaching on $2000, but was at home looking after us kids by the time of the build. A 3% State Advance loan from the government (then, as now, diddling with the first-home market), helped things along.

Could I buy that house in today's market? 


A very similar home — brick, three bedrooms, full section, same vintage — a few doors down just sold for $325,000, the agent tells me.

We later moved to a house in Murrays Bay on Auckland's North Shore, which my parents bought for around $140,000* in 1977 and sold for about $240,000 in 1984, or an inflation-adjusted $690,000.

It has just sold for $1.33 million or $435,000 in 1984 dollars (in terms of the property's development, it's been swings and slides. The house was modernised and a third story added, but the huge front section sub-divided off. The whole street looks more modern, but also more unsightly with front lawns replaced by McMansions too big for their sections).

Could I afford that house?


And me and my wife are at roughly the same age/career/kids/owned-a-couple-of-homes-already point as my parents when they sold it.

That's not all bad. Homes in Auckland now cost more in part because because of consent and planning log-jams, but mainly because more and more people want to live here. And generally that's been a good thing with the city becoming far more interesting and liveable. Yes, we have more traffic, but there's now more to the place than a single Tony's Steakhouse. Mind you, living in a house with sea views and a stroll to Murrays Bay beach wasn't bad ...

* I'm still checking on that $140K figure, the consensus is that it could be on the high side.

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Could I afford to buy the house I grew up in?