Buying a house in Wellington - Why it's not for me

Wellington_Hills

Buying a first home is an exciting but nerve-wracking step in life; a time full of big decisions, high stakes, and unknowns. So last year when Lucas and I decided it was time for us to take the plunge into buying a house Wellington we knew that it wasn’t going to be an easy journey, but boy did we underestimate the process. We researched, we prepared, we went for it a couple of times but the end result was not what we thought it would be. Despite the journey and the ups and the downs, I learnt a huge amount about the processing of buying a house and what I want out of life and ultimately what happened was the best for us. So, in the spirit of sharing, I wanted to talk a little bit about our experience.

Our position

We had been living in Wellington for just over two years when we decided it was time to look for somewhere to buy. We had enough money for a roughly 20% deposit so we thought we should invest in something. Our main objective, to begin with, was that we should buy a little flat that didn’t cost too much so that we could be paying our rent money towards ourselves instead of to our landlords. We knew that we might not always want to live in Wellington but we thought if we got a flat it would be a good investment that we could move on from easily. So our decision to go ahead and try and buy something was made but as I’ll outline below, it escalated quicker than expected.

Getting pre-approved

We got preapproval via our bank and via a mortgage broker. I would definitely say that doing it via our bank it was a lot quicker and easier and the mortgage broker could only get the best deal through our bank anyways. We bank with ANZ and they are often the best rate so it was pretty cruisy to get pre-approval directly through them. We did have a slight hiccup as they recently introduced the overseas investments act, but this didn’t end up affecting us and we managed to get pre-approval even before I was a resident because Lucas is an Australian Citizen and therefore we qualify for relationship property (This is kind of confusing to explain, but if you’d like me to, then comment below).

The hunt

When our preapproval was in place – the hunt began. This is definitely the most exciting part of the process and it was great looking at places we thought we might be interested in buying. It’s so much fun thinking about how you can make a place your own and imagining yourself living somewhere. However, it was during this part of the process that our scope began to grow.

The appeal of buying an apartment started to diminish for us. The flats available in Wellington are often unreliable as often they require earthquake strengthening and this is a risky thing to take on when buying in the short term so this was a big factor that put us off. Aside from this, as we began to imagine ourselves actually putting our roots down and buying somewhere, we began to really dislike the idea of a flat with limited outdoor space. So, we started looking at small houses in the southern suburbs as these were in the budget and would give us what we wanted. We kept being advised by others to look to North Wellington and the outer suburbs (Ngaio, Tawa, Petone) but the idea of so living far out when I already feel so far from home was too much for me. I want to be near the action and near the people who I know in the city. Sooo, we were now looking for houses in the Berhampore, Lyall Bay, Miramar sort of areas, it was in the budget of our pre-approval but more than we had originally wanted to spend.

Problem: the prices of houses in Wellington seemed to be going up by the second. By now it was the end of 2018 and the RVs (rateable values) had been re-done, so an accurate kind of costing was available for the houses and this was about a third extra from the previous RV which was from 2014. It was a high price and houses were going for about 15% more than the RV. Basically houses were going for A LOT and good houses were going for even more! When we first moved to Wellington in 2015 there were Newtown houses on the market for $550,000 and by the end of 2018, there is no way a Newtown house would be less than $750,000. It seemed crazy but if we were going to get one, we felt like we needed to act quickly.

Closed tender (aka: a giant scam)

Houses in Wellington are predominantly sold under a closed tender process, which is the worst process in the world for buyers in my opinion. There is a date by which the offers for sale have to be in and on that date the seller chooses the best one. This is the worst process in the world because it means you have to offer the price you think will beat all the other offers (and that you can hopefully afford) and just hope for the best. This could be thousands over what the next best offer was and you would never know. Basically, closed tender means that buyers can easily get ripped off and also means that you have no idea what kind of offer it is going to take to really “win” the house. It’s a giant gamble and a shitty process. But anyway, in Wellington, this is how it’s done, so we had to live with it.

Feeling Lucky!

The first house we decided to offer for was a lovely little renovated cottage in Miramar. We loved it and decided we could see ourselves there. The RV was reasonable and when we looked at what houses had gone for recently in the area we decided on an offer we could live with. It was a good offer and as far as we were concerned, anyone paying over that was getting ripped off. Needless to say, we didn’t get the house and the person that did had offered $40,000 more than what we offered, which ended up being about $120,000 above the RV of the house! Rejection is hard but inevitable so we picked ourselves up and moved on.

The Estate Agents from hell

After recovering from our first offer rejection we decided to make an offer on a house in Newtown that needed A LOT of work but was in a great location. We could deal with the work so decided the pay off would be worth it and we would go for it. But the experience of trying to buy this second house was one that revealed a lot about estate agents from Lowe and Co. as they really, to be frank, screwed us.

We were umming and ahhing about what to offer for the house and I was in regular contact with the agent. I spoke to her on the last day of tender and she let me know that we would be the only ones putting an offer in (I’m sure the seller would be furious about this but we thought it was great at the time). Because of this, we decided to offer low and just try our luck thinking the seller would come back with a counteroffer. The seller didn’t and he decided to put it back on the market. Fair enough (note: we wouldn’t have offered as low if we didn’t know we were the only ones – but anyway!) so the estate agent offered to let us know if they got another offer so that we could make our second offer. We agreed so were waiting to hear from the agent and finalizing what our next best offer would be. About a week past and we didn’t hear from her so gave her a call to see when we could put our offer in. She ghosted us for a while but when we finally got hold of her she let us know that the property had sold the day before. WHAT!

Needless to say, we were furious. She said that she had emailed us to let us know there was an offer but she definitely hadn’t and when we got her to look into this more, she said that the email had bounced (a lie). Anyway, she was terrible and duped us out of the house for some reason – likely to make their lives easier somehow. I’m sure the seller would be furious to know there was a potential second offer that the estate agent ignored. This was a terrible experience with Lowe and Co. and if you are a seller, for the two reasons above I would AVOID them.

We’re out.

Although I still remain a little annoyed with that particular estate agent, I also recognize that it was actually a blessing in disguise because we have now decided not to buy a house in Wellington at all. It is too hard, too expensive and at the end of the day, we are not going to get what we want for a good price.

The housing market in Wellington is completely out of control and I am no financial expert but I know that people are paying way more than these houses are worth and its something we don’t really want to be a part of. The closed tender process is not for buyers and estate agents are working in a market where the buyers don’t matter and they conduct themselves in some dubious ways.

I already have big issues with the poor quality of the housing in New Zealand so to be paying an absolute fortune for property feels wrong. What this decision means for our future is unclear but for now, but the current Wellington housing market is not for us. We will keep renting our “shitty-little” flat in a good location and saving our hard-earned money in order to buy or build our dream home in the future.

It was a stressful experience but has also been a real learning curve. It might seem like a failure but honestly, I believe that everything happens for a reason and I am so glad we didn’t buy either of those houses. We got caught up in the mad race to buy one of the few available houses in the city and were on a path that wasn’t right for us. So we are out and we are okay with it – we don’t own a house but we still have our freedom (and our shitty little flat).

Tips from a trier:

Don’t get caught up in the race – sit back and asses whether it really wants you to want.
Make sure you are constantly in touch with the estate agents – they may not play fair and you don’t want to miss a good deal because of them.
Now is a crazy time to buy, have a think about whether it might be worth it to wait. The market in Auckland is dropping. It might not be long for Wellington either.
Consider if buying is worth it. If rent is low and house prices are high – it may be just as economical to keep saving for a while because interest could be the only thing you pay off for a few years.