Mad prices, risky loans
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Each one lived the best way it knew how.
They bought houses, mostly to live in, which is an action as Kiwi as eating fish and chips, watching the All Blacks, or having complicated feelings on Waitangi Day.
Owning a house is the absolute heart of our culture.
So when house prices went up, and up, and up, people who could borrowed extraordinary amounts of money to get one.
Just as it sees high debts as risky for a country, so too would the IMF look with a frown on the risk a couple who borrowed 6.5 times their before-tax income to buy a house have been forced to take on leaving them extremely vulnerable to shocks like job losses or a spike in interest rates.
Let’s be clear. I, and many of my age never had to do anything so risky.
But what could people do? When you are born into extraordinary times, you have to do extraordinary things.
An extraordinary debt (which to me is anything over four times household income) requires an extraordinary debt clearance strategy to get it down to a level where a couple can cope with it on one income.
That means going for options like taking second jobs before children come along, adopting extreme frugality, letting out rooms, living with secondhand furniture, running one car (at most), and pursuing pay rises, and promotions, with singular focus.
It also means crisis-planning with family.
Would family help with repayments in a crisis, or let the kids move back in, so the debtencumbered house could be rented out?
I hear people tell young folk who can’t afford to buy in the city of their birth to get the hell out of Dodge and live somewhere else.
It’s a level of casual economic cruelty and neglect that marks the last decade.
Telling young New Zealanders they shouldn’t expect to live an ordinary life in their home cities is extraordinary.
That’s why Labour polling shows affordable housing is the number one issue for parents and grandparents in the coming election, and probably why National has now decided to emulate Labour with promises to build affordable homes in Auckland.
A child’s conception of a home. On current prices, many won’t grow up to own one.