Buyers need to knuckle down on savings: Bolton

by NZ Adviser22 Apr 2016
Home buyers feeling locked out of the high-priced Auckland market may find they are able to afford more than they think if they save harder, says Squirrel chief executive John Bolton.

Many house hunters on good incomes simply won’t give up spending on things like expensive cars or Sky TV to save for their first home, Bolton told the New Zealand Herald. 

"You've got to be disciplined. You don't need the $17,000 car ... There's nothing wrong with a $3000 car,” says Bolton.

"It's so frustrating when you see people with enough money in KiwiSaver but their ability to save is atrocious. They've got heaps ofconsumer finance debt. We have to tell them to pay down some of that debt before they buy a house.

"I do tell people to do without Sky when it's appropriate. When you go through people's expenditure it's amazing where the money goes.

"People have to learn that borrowing for these things doesn't give them assets. The TV is not an asset. The sound system is not an asset. The new sofa is not an asset. They're liabilities - because the people who bought them didn't have the money to begin with."

Conveyancing lawyer Bruce Dell also spoke out, saying the first home buyers’ dilemma was a myth. 

"Modern young people do not necessarily want the homes like we did 'in the old days'. They want to go to Bali twice a year; they want to drive a BMW on lease; they want a 42" plasma TV; they want to spend $200 at the bar on Friday night and they want to enjoy their two substantial incomes whilst they are childfree."

But a house hunter couple who spoke to the Herald said money has always been an issue for them even on their combined income of $110, 000. 

"We cannot think about affording the luxury car and Sky TV," said 27-year-old Lovely Garg, who is searching with her husband Bharat, 31, for a $630,000 property.

"We are driving a normal Bluebird Sylphy car (working in good condition) - keeping in mind if we are buying the $3000 car, the maintenance will be too high and we cannot afford it if the car breaks down.

"We need to think twice if we want to buy something.”

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