It is the New Zealand dream – home ownership. But for many this is getting more and more out of reach.
Rising housing prices, strict mortgage criteria and daunting deposits coupled with rising rent prices has meant that the average kiwi searching for that quarter-acre dream is now fresh outta-luck!
The slippage in home ownership rates and increases in the rental housing population has been going on for some time. In 1991, 26.2% of households rented. More recent data from the census show that from 2006 to 2013 the percentage of rentals in the total New Zealand housing stock increased from 33.1% to 35.2%. This trend is expected to continue.
You may be thinking this is all very interesting but why are we talking about first home buyers on a blog that is focused on older adults? Well, this is because houses owned by families are more than just stable and healthy places to bring up those families, they are also a crucial part of our retirement infrastructure.
Until now, the flow-on effect of our higher home-ownership rate in the 1970s and 1980s was that households formed 30-45 years ago have been relatively comfortable.
The assumption underpinning New Zealand Superannuation is that a retiree will be living in a mortgage-free home by the time he or she stops receiving income from work. So, what happens if this is not the case?
We have had one of the lowest rates of elderly poverty in the world. But that only works when the retiree owns a home.
In 2015 the Government was paying $1.2b in accommodation supplements. That is based on 2005 rent levels and the maximum levels for these supplements had not been changed since 2007. With the average house price in Auckland rising to over $1 million last year, it’s not hard to see why this will need to be reviewed by the Government in the near future.
There is a very real danger that in the near future there will be a generation who can’t afford to retire. Which will make the current argument over the retirement age obsolete.