Today’s kids tobe locked out of owning homes?
For all the cries of anguish about rampant house prices it’s only been in the past few months that I’ve started to seriously doubt my children’s ability to buy a home in the future.
It’s increasingly looking like a privilege afforded to the wealthy as home ownership rates fall. I worry they and others growing up today will be locked out of their own country.
I always thought my children would be all right. It may sound naive but hear me out.
We’re a ‘‘normal’’ (hugely complex at times) middle-class family and home ownership has always just happened. My sisters, my cousins, mymumand dad and my grandparents, on both sides, all own homes or did.
So I thought I’d get planning a few years ago when I decided to grow up a bit myself. I opened KiwiSaver accounts for my children in 2011 thinking that would go some way towards a deposit for their first house. I put in $20 a week. Every week. Without fail. They now have close to $5000 saved. The sum inches ever so slowly up each month, then backwards thanks to the negative returns every now and then.
But the truth is I’m bloody depressed about it. Their accounts are dwarfed by the rising cost of housing. That money would barely pay for their legal fees. In a decade it still won’t be enough.
I can’t keep up. The more I save, the more I fall behind and the more out of reach it becomes for them.
When I opened KiwiSaver accounts for the kids, the average cost of a house in Auckland was $550,000 and they would have needed just a 5 per cent deposit – about $27,000 – to buy that home.
Now the average price of an Auckland house is an astronomical $970,000 – and they would need close on $200,000 to get a foot on the property ladder. Of course they wouldn’t be able to service the mammoth mortgage, so I can’t see how on earth they’d buy the house.
It’s not just Auckland: nationwide, the picture is only slightly more affordable.
The average price in Wellington is now $625,000, up 15 per cent on last year. In the capital’s western suburbs the average price is $725k.
Hamilton’s prices surged 29 per cent last year and Tauranga wasn’t far behind. Christchurch continues to climb.
In Whangarei you’ll need $450,000 to enter the market and thanks to the Reserve Bank’s actions this week all homeowners, no matter where you live across the country, will have to find a 20 per cent deposit.
The only cheap houses left in the country are where there are few jobs. In Levin you can still get a house for $200,000 but you’ll face hours on the road commuting to and from Wellington to work. At least you’d own a house though. Maybe I’ll tell the kids to move to the provinces.
In rural Southland you’ll get a house for less than $100,000 but I’m not sure what you do after that if you can’t get a job.
Yes, the Government tweaked KiwiSaver rules from July 1 to help first-home owners into homes. More than 11,000 people have been helped into their first homes with these deposits and incentives. But that’s only added to the demand.
So the Reserve Bank had no other option this week than to do something to cool the market – although the experts aren’t even sure it will work; it’s more targeted at banks and who they lend to. The truth is investors have been creaming it.
More than 40 per cent of all sales nationally now go to investors – and 80 per cent of all sales in South Auckland
We just aren’t paid enough to keep up with the rising cost of housing. We live in a country that doesn’t build enough houses, where immigration is rampant and where land hasn’t been released and developers have land banked.
Thank goodness my children will always have their KiwiSaver retirement accounts to fall back on, right?
It’s just a shame they’ll still be working in their mid-80s to service their mortgage.
"I can't keep up. The more I save, the more I fall behind."