Helping hand with home ownership
Once you have equity in a house you are in a totally different position to when you are renting.
The woeful picture of the state of housing in Newzealand that the statisticians delivered thisweek reflects failure on three fronts: quantity, quality and— no less important— tenure.
Although it comes asno surprise that not nearly enough housing has been built to accommodate population growth and thatmuchof the housing stock is damp, mouldy and overcrowded, it is startling to readhowfar the rate ofhome ownership has fallen. It peaked at 73.8 per cent of households in 1991 but had dropped to 64.5 per cent by the 2018 census, the lowest rate since 1951. Given howhigh house prices are today, it is probably even lower now.
The flipside is that 48 per cent of people over 15 live under a roofsomeone else owns.
All the bad statistics in the housing report are markedly worse for renters than owneroccupiers, including the share of income pre-empted by housing costs, the prevalence of substandard habitability and the frequency ofmovementfrom one dwelling to another.
“Peoplewhodon’townhave less tenure security, poorer affordability and worse housing conditions,” concludes the report from Stats NZ, Housing in Aotearoa: 2020.
But housing is not just a visible manifestation of inequality, it says, “[it] can also act as amedium to address it”.
The proportion of households that rent, at 32 per cent, is upfrom 23 per cent in 1991. Four out of five rent from private landlords.
Reflecting the weakly regulated nature of the tenancy market, whoyou rent from makes a big difference to one of the most socially damaging features of renting, particularly for families with children— the frequency of movement.
“Almost 40 per cent of peoplewhorented from private landlords had lived at their current usual address for less than one year, compared with 16.6 per centwhorented from Housingnewzealand.”
But on the other hand, “households renting from Housingnew
Zealand were particularly likely to be in homesaffected by dampness or mould”.
Aleading researcher in this field is the Rev Charles Waldegrave, whoheads the Family Centre Social Policy Research Group and led the housing work stream of the Welfare Expert Advisory Group (WEAG).
In a recent talk to the Fabian Society, he argued forcefully for public policy to focus not just on gettingmorehousing built, but on measures to boost homeownership.
The fall inhomeownership ratesamongma¯ori and Pasifika since 1986 had beenmuch faster than for the population as awhole and amounted, Waldegrave contends, to asset stripping— not intentional but in effect. It entrenched inequality of wealth.
Both major parties are captive, he says, to unhelpful ideology: “For National, the market would solve it; for Labour, just buildmorestate houses.”
National had delivered the Mother of All Budgets, slashing benefits while introducing market rents for state house tenants. Itwas a brutal change from the post-war generation’s experience of subsidised loans from State Advances, a capitalised family benefit as the deposit, and lots of state houses constructed.
Later, thekeygovernment soldmorestate house than it built and ended the longstanding
principle that a state housewas a homefor life, so that elderly tenants can lose theirhomes to people whosehousing need isdeemedgreater.
The problem with Labour’s approach, as Waldegrave sees it, is that someone in a state house does not acquire an asset. “They reach retirement age with no asset toshowfor it and the state has received [in rent] very often the equivalent of what middle class people have paid on amortgage. That’s outrageous.” The WEAG’S conclusionwas that the Government needs to increase the range ofhomeownership options available to people of limited means, including equity sharing, rent-to-buy state houses (so long asmoreare built to replace them) and papaka¯inga projects.
“Once you have equity, even 10 per cent, in ahouse you are in a totally different position to whenyou are renting,” Waldegrave said. “You can add a room, do all sorts of things. Somelandlords won’t let you have pets or even putup pictures. Andyou can’t be movedout.”
Hecited a stack of international research, which has found statistically significant effects ofhome ownership on health, employment, education, crime and wealth, even after controlling for socio-economic status and income levels.
Heis keen to see an expanded role for the “third sector”, community-based notfor-profit organisations that provide housing and can assist people intohomeownership. Thenzhousing Foundation is an example.
Communityhousing trusts aremorethan property developers. There is a pastoral element to their mandate that might involve, for example, a mortgage holiday if people becomeunemployed. Andtheir profits are ploughed back into housing.
Tobe fair, the Government has taken baby steps in this direction with its Progressive Homeownership programme. It aims to provide— eventually— $400 million to approved community housing providers offering shared equity or rent-tobuy schemes.
It reckons this will help between 1500 and4000low- to median-income families to buy homes.
But given the magnitude of the problems laid out in Statistics NZ’S housing report, it would be generous to describe that level of ambition as paltry. It is like trying to fight a forest fire with
a garden hose.
The Rev Charles Waldegrave