Homeowners’ price qualms
New Zealand homes and the land they are on are now worth a staggering one trillion dollars.
Those who have a share in it are generally assumed to be pretty happy.
I can tell you now. Not all of them are.
Many homeowners don’t approve of house prices having soared so high, even though it has enriched them personally.
Their distaste that the median house in Auckland costs roughly ten times the median household income is because inflated property prices are interfering with the ordinary lives of the people they love, making them far harder than they need to be.
I can illustrate using examples from my personal sphere of acquaintance.
APRON-STRINGS
Once you raised children, and by the time they were in their twenties, they were independent. These days, people in their 30s are still financially tied to their parents. That’s because the parents have had to lend them money, or give a bank a guarantee, just so they can buy a home.
BROKEN FAMILIES
Grandchildren are one of the con-
GOLDEN RULES
Don’t assume all homeowners like high prices
Many think in terms of ‘‘family’’ finance
Children are remaining financially dependent for longer solations for getting old. Living near them means being able to see them, and chipping in with school pick-ups and care so they don’t have to spend hours and hours in after-school care every day. But high house prices can mean generations of the same family struggle to live near each other. Some people even see their children flee their home cities in search of better, and cheaper, living elsewhere.
DIVORCE
Divorce in an era of high house prices is hard. One home, worth a whopping $1million with a mortgage of $400,000 has to be sold, and the separating couple have to start up new homes alone. They have a little shy of $300,000 each to go shopping with. They’ll be lucky not to end up doubling the debt they individually carry, if they can ever buy a home again. What a way to start single life again.
CASH DRAIN
There’s been a drive to get us to think about ourselves as selfish individuals seeking only to maximise personal wealth. Families don’t think like that. Homeowners watch with horror when their young ones take on mortgages of $600,000-$800,000, knowing what the result will be. Paid back over 30 years, there’s $650,000-$850,000 in interest to pay, assuming an optimistic 6.5 per cent interest rate. What parent wants their children to be lifelong slaves to banks?
MOVING PAINS
People need to move house sometimes, but downsizing, or upsizing can become a nightmare in a hot property market where unconditional auctions are the norm. If you accidentally end up shut out of the market, things can very quickly turn against you.
LOSING FRIENDS
Particularly painful is losing friends because they flee the city to establish a traditional family household somewhere cheaper. As you wave them off, you know you’d probably do the same if you were in their shoes. This country was at its best when it was a broad-based home-owning democracy.
‘‘This country was at its best when it was a broad-based home-owning democracy.’’