A helping hand for home ownership
TOnce you have equity, even 10 per cent, in a house you are in a totally different position to when you are renting. The Rev Charles Waldegrave
he woeful picture of the state of housing in New Zealand that the statisticians delivered this week reflects failure on three fronts: quantity, quality and — no less important — tenure.
Although it comes as no surprise that not nearly enough housing has been built to accommodate population growth and that much of the housing stock is damp, mouldy and overcrowded, it is startling to read how far the rate of home 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 how high house prices are today, it is probably even lower now.
The flipside is that 48 per cent of people over 15 live under a roof someone else owns.
All the bad statistics in the housing report are markedly worse for renters than owner-occupiers, including the share of income pre-empted by housing costs, the prevalence of substandard habitability and the frequency of movement
from one dwelling to another.
“People who don’t own have 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 a medium to address it”.
The proportion of households that rent, at 32 per cent, is up from 23 per cent in 1991. Four out of five rent from private landlords.
Reflecting the weakly regulated nature of the tenancy market, who you 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 people who rented from private landlords had lived at their current usual address for less than one year, compared with 16.6 per cent who rented from Housing New Zealand.”
But on the other hand, “households renting from Housing New Zealand were particularly likely to be in homes affected by dampness or mould”.
A leading researcher in this field is the Rev Charles Waldegrave, who heads 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 getting more housing built, but on measures to boost home ownership.
The fall in home ownership rates among Ma¯ori and Pasifika since 1986 had been much faster than for the population as a whole 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 build more state houses.”
National had delivered the Mother of All Budgets, slashing benefits while introducing market rents for state house tenants. It was 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, the Key Government sold more state house than it built and ended the longstanding principle that a state house was a home for life, so that elderly tenants can lose their homes to people whose housing need is deemed greater.
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 to show for it and the state has received [in rent] very often the equivalent of what middle class people have paid on a mortgage. That’s outrageous.” The WEAG’s conclusion was that the Government needs to
increase the range of home ownership options available to people of limited means, including equity sharing, rentto-buy state houses (so long as more are built to replace them) and papaka¯inga projects.
“Once you have equity, even 10 per cent, in a house you are in a totally different position to when you are renting,” Waldegrave said. “You can add a room, do all sorts of things. Some landlords won’t let you have pets or even put up pictures. And you can’t be moved out.”
He cited a stack of international research, which has found statistically significant effects of home ownership on health, employment, education, crime and wealth, even after controlling for socio-economic status and income levels.
He is keen to see an expanded role for the “third sector”, communitybased not-for-profit organisations that provide housing and can assist people into home ownership. The NZ Housing Foundation is an example.
Community housing trusts are more than property developers. There is a pastoral element to their mandate that might involve, for example, a mortgage holiday if people become unemployed. And their profits are ploughed back into housing.
To be fair, the Government has taken baby steps in this direction with its Progressive Home Ownership programme. It aims to provide — eventually — $400 million to approved community housing providers offering shared equity or rent-to-buy schemes.
It reckons this will help between 1500 and 4000 low- to medianincome 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.