7 Sep 2016

Akl houses worth millions, but owners don't feel rich

1:36 pm on 7 September 2016

Auckland home owners don't feel like millionaires despite the average home value topping seven figures for the first time.

In Lynfield, 15km from the Skytower, prices have recently topped the magic million.

According to property valuation provider QV, over the last three months, the difference between the sale price and the capital value in Lynfield is 43 percent.

Recently retired, Derrick Lewis, has lived in his Lynfield home on a quiet cul-de-sac for 30 years.

Homes like his now sell for over $1 million - one down the street has an asking price of $1.1m.

But he said he and his neighbours don't feel like millionaires.

"Most of the people that are in this area realise the worth of their house but they're not acting like millionaires - put it that way.

"Basically average people that are just getting on with their lives, most of them have lived here for a long time so we're not extravagant put it that way," Mr Lewis said.

Further down the street is Ray Parmar. He has been there for 14 years.

However, unless he moves out of the Auckland market he said he and his neighbours would not benefit from the high property prices.

"Internally they might feel that they are millionaires and feel good but are they really? It's a million and then it could be 1.5 million and then two million.

"If I were to move out from here around and about within the Auckland area, not very far then I'd be end up paying around about the same price."

He said with house prices so high some would be looking to make some money and move to another cheaper market.

"Go out of town, go out of Lynfield, far away where they can get houses cheaper and also they'll be able to make some money."

Mr Parmar said it raised the question of what would happen to future generations.

"I'm just looking at whether my grandchildren will be able to afford to buy houses. The way things are it doesn't look like they'll be able to. But there has to be a crash sometime."

Auckland home owners don't feel like millionaires despite the average home value topping seven figures for the first time.

Photo: Screenshot / RNZ

Jim Green and his wife have already experienced both of their inherited family home values skyrocket.

But he said his Lynfield home rising to above $1m wasn't necessarily a good thing.

"I'm not happy because I'm not ready to sell and I have a couple more houses in Ponsonby and Westmere that are way over the million dollar mark.

"I'm paying it in rates and again I'm not interested in selling. My kids who live in those houses can't afford them, they can't buy them."

'I've seen house prices fall'

Brian Stacey said it could come back to haunt those who've overpaid on their homes if or when things die down.

"I've been a builder for 50 years and I've seen prices rise and fall and there's a lot of tears out there when that happens. People who pay $600,000 for a house that's worth [$390,000].

And he said the million dollar price tag could make property owners try to live the life to match.

"They're buying boats and new cars with the money they're borrowing off the house, they might have a $900,000 house or a $1m house but if there's a collapse it might be only worth $600,000. Then they've got a car bought on time payment based on the house."

Of Auckland's 210 suburbs, 90 now have average values in the seven-figures, QV said.

'It's just life'

A three-bedroom home a few houses down from John Bentley has recently sold for just over $1m.

For the 41-year-old, and his wife and four children, it means accepting he will never be able to afford a deposit for a home of his own.

"It pretty much cuts me out of the market so there's no other option for me but to rent up here in Auckland because of the price that keeps going up and up.

"I've got no choice but to live in Auckland because work is up here and my wife works up here as well. With both of us working there's no way we can afford to buy a house up here in Auckland so ... it's a problem at the moment because everyone's been cut out.

"My wife's got KiwiSaver but even with her KiwiSaver combined with my KiwiSaver that's not enough for a deposit in Auckland so maybe have to move further down south.

"But our kids go to school up here around this area so I'd rather stay central.

"It's just life."

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