Million ‘ locked out’ of home ownership
Labour says data is evidence that Government policies aren’t working
More than a million renters are locked out of the home ownership dream because they cannot afford a deposit, says Labour.
Figures from Statistics New Zealand reveal 78 per cent of those currently renting — or 458,000 households — have a net worth of $ 120,000 or less, which means they cannot afford the 20 per cent deposit on the average New Zealand home.
Net worth includes significant assets such as savings, KiwiSaver, investments and cars against all debts. A typical Auckland renter had a net worth of just $ 41,000.
Aucklanders are worse off than most other would- be buyers as an average home in the city now costs $ 1 million. Even a relatively cheap home at the lower quartile mark — threequarters of the way down the price scale — cost $ 674,600 in July, well out of most renters’ range.
The data also shows 62 per cent of renters have a net worth of $ 60,000 or less — meaning they cannot even afford the 10 per cent deposit available through a special loan through the KiwiSaver HomeStart scheme.
Opposition housing spokesman Phil Twyford said it was “unacceptable that more than one million Kiwis are . . . locked out of the dream of affordable home ownership”.
He acknowledged some people chose to rent but said the “vast majority” would buy if they could afford it.
“Almost all the people I speak with want to own their own home but it has become completely unrealistic under the current policies for them to do so. That’s a million people or 458,000 households who can’t afford the deposit, that is a lot of people who can’t afford their own home.”
Twyford said the data was further evidence the Government’s attempts to help first home buyers weren’t working.
But Housing Minister Nick Smith said the policies had helped 16,000 buy homes in the past 18 months.
He said supply would improve with intensification under the Unitary Plan.
“We would urge people to be patient rather than paying too much right now.”
In June Smith said Massey University data showed housing affordability was no worse in Auckland and better nationally than in 2008.
But Twyford said the International Monetary Fund’s latest Global Housing Watch showed New Zealand now had one of the highest house price- toincome ratios in the world.
“It i s now so much worse for current home buyers and all it takes is a small rise in interest rates over their 25 year mortgage and they are under water.”
Twyford said rising rents over the past five years and static wages had added to the woes of the first home buyer.
“One of the reasons people cannot afford to save for a deposit is because rents have gone up significantly in the last few years and wages have flatlined, so paying rent and saving for a deposit is impossible.” Real estate figures from Trade Me show rents are stable at the moment but in the past five years have increased 19 per cent. Data from Barfoot and Thompson show average weekly rents in Auckland range from $ 464 for a three bedroom home in Avondale, $ 479 for a three bedroom home in Blockhouse Bay and $ 675 for a home in Epsom.
Phil Twyford