Thursday, 16 July 2015

House ownership just a dream without a rich Daddy.

For most New Zealanders home ownership is a dream…because it is becoming less and less attainable in this day and age…even ACT's sole MP David Seymour said “home ownership had become the privilege of the wealthy”.

Seymour said house prices in Auckland, and to a lesser extent other parts of the country, had risen so high, so fast that owning one was increasingly a function of the wealth of a young person's parents. The Act Party is rarely, if ever right about anything these days…but they are correct to say that unless your parents or a rich uncle hand you the cash for a deposit, your chances of home ownership is zilch. 

Home ownership numbers in New Zealand have fallen as low as levels seen in the early 1950s and post-First World War periods. 
Figures released by Statistics New Zealand in its Century of Censuses report showed the percentage of households that owned their own home had dropped to 64.8 per cent by 2013, the lowest rate since 1951 when it was 61.5 per cent.

·        In the United States home ownership was at 63.7 per cent,
·        In Australia, 67 per cent of people owned their own home.
·        In Singapore the home ownership rate was at 90.3.
·        In Sweden in 2013 it was at 69.6 per cent,
·        And in the United Kingdom it was 64.6 per cent.

With our rate of 64.8% so much for our Rock Star economy! As they say Yeah Right.

Data showed this number rose during the 1920s but fell during the Great Depression, hitting an all-time low in 1936 at around 50 per cent, before rising steadily during the 1950s.
It peaked in 1986 and 1991 at 73.5 per cent.

Figures from the 2013 census showed a downward trend in home ownership, with a decline seen across the board from people in their 20s and 70s.
After a strong lift in house prices in the 2000s, prices fell nationally after the global financial crisis hit in 2007.

Rebounding house prices since then, particularly in Auckland, have been making it harder for people to get their own homes. The average asking price on Auckland properties has increased by more than $130,000 in the last year, the June Trade Me Property index showed on Wednesday.

·        Average asking price for property outside of Auckland, increased by just $13,950 to $404,550.
·        The average Auckland house was $834,300.

The proportion of renters has also increased, to 31 per cent of households in 2013 from just over a quarter in 1991.

However, Christchurch property expert Hugh Pavletich said at the time that it used to be quite easy to buy a home and it could be again.
"In 1978 I bought my first house for $24,000 with a mortgage of $20,000 on a single earner income of $8000 a year. The house was three times my income and the mortgage was two and a half ," he said.

Despite a dramatic drop in home ownership from the 1950s, the number of people living in each home has steadily fallen. In 1911, there was an average of 4.7 residents in each home, while in 2013 there was an average of 2.7. 
This figure makes a lot of sense - while our population has quadrupled, the number of dwellings has increased by seven times, from about 238,000 to more than 1.5 million. Almost half of all private dwellings were rented in 1916 (the first time the data was collected), while 31.2 per cent of dwellings were rented in 2013.

Property prices in Auckland have risen at 10 times the rate of anywhere else in the country.
The June Trade Me Property index showed the average asking price on Auckland properties has increased by more than $130,000 in the last year.
The average asking price for property, outside of Auckland, rose by just $13,950 to $404,550.
On top of that, the average Auckland house has an asking price double its equivalent elsewhere in the country and was now $834,300.
Outside of Auckland the price was $412,050.
For the first time in New Zealand's history, home ownership has become the privilege of the wealthy, says ACT leader David Seymour.
Seymour said house prices in Auckland, and to a lesser extent other parts of the country, had risen so high, so fast that owning one was increasingly a function of the wealth of a young person's parents.
"For the first time we have a situation in New Zealand where property ownership is heritable," Seymour said.
He pointed to the way his circle of friends had made it into their own homes.
"I look at most of my friends, lawyers, doctors or engineers. All of them went to Auckland Grammar, or St Cuthberts. All of them have done it with parental help."
With house prices rising up to a reported $1000 a day  "houses in Auckland are earning more than people", he said.

Christchurch and Auckland are attempting to build affordable houses, but it would seem that this task is impossible for private builders.  Although Gerry Brownlee has his own ideas about what an affordable house looks like…but joking aside, the cost of housing both second hand or new is massive…yet the government plans to sell off State House stock, how stupid is that?

With the re-build of Christchurch slowing down because of insurance company failure and the Dairy industry being hit by the continuation of milk returns falling at what is now a rapid rate. This means that two of the fantasy, spin reasons put forward by the government for believing that the Rock-Star economy actually exists. But NZ somehow believes that spending 26 million on a flag change that no one want’s, But the spin has grown obvious and even the fans of Key are starting to doubt that Key actual has any financial skills other than selling off state assets.  

1 comment:

Gerald Tait said...

I have just sent an email about zero hour contracts to Mr. Woodhouse in the National cabinet, and paste it here as it is relevant to house ownership.
Dear Minister Woodhouse,

I have a problem with zero hour contracts.
Of course in the big picture we don't have the manufacturing base we once had before the so called reforms of the eighties. But just imagine if the government had taken the advice of the Tax Working Group and introduced a half per cent land tax which would have lowered land values by 9%. It would have put pressure on land owners who had unused or under used land to sell up to someone who could use the land more efficiently. It is called capitalism.
There would be more work for artisans.
Instead you put the GST up by another 2.5% which is another impost on the people on zero hour contracts.
Taking this to its natural conclusion you could have raised the land tax by another half per cent the next year and reciprocally reduced the GST back to 10%. Think how that might have been a factor in calming the over heated Auckland property market in which houses are left empty in the expectation of a capital gain. It is a topsy turvy world Mr. Woodhouse where the FIRE sector (Finance, Insurance, Real Estate)seems to be in complete control.
I hope you will bring this to the attention of your cabinet colleagues.
Gerald Tait