Home ownership - then and now
Tue, 31 Jul 2012 7:00p.m.
For New Zealanders wanting to buy a house there's no doubt its getting harder. Home ownership rates are falling, while in the US, UK, and Australia they're on the rise.
How has this happened?
To understand that, we need to look back to the 1960s, and how the humble Kiwi family could afford to buy a house.
Watch Anna Burns-Francis’ report.
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2/08/2012 10:46:45 a.m.
People today overall are much lazier with a want want want attitude. Its not all their fault, society shapes our views, wants and desires, we live in a throw away society where reality and virtual reality are mixed together. Some people are in a trapped position but many could make an effort to have their own home, maybe lack of education or belief in them selves prevents this. If you are constantly told that houses are too expensive to buy you believe that and look no further. Still the queue at the KFC gets longer but at least it gets them away from the PC games or media sites for a minute. The bottom line is it depends how much you want some thing and if you are prepared to make an effort. "If you think you can or think you can't you are probably right"
2/08/2012 8:11:19 a.m.
We need to have more development for more houses which will lower rents and house prices.The RMA has strangled development and its this lack of housing that has driven up prices and rentals - thank Labour for that! Auckland has a major housing shortage and its reflected in house prices and rentals. If you fix your interest rate you can get arround 6% currently. If you dont you can get under 6%. Interest rates also reflect risk. Hence the interest rate in these tough world economic times have German bonds not earning interest, but the investor paying interest to invest in German bonds! NZ is in much better shape than the EU generally with its bailout and the US - hence our currency has climbed against those.Today one shouldn't be looking at $500-700k homes as a first home. Thats millionaire tastes and stuppidity. Take a place someone is renting, then look to buy the similar and the cost of mortage will be similar or less than the rent. This makes buying extremely affordable for anyone willing to get off their backside and add 2+2. If your a product of NZ's education system, maybe adding 2+2 is too hard therefore owning a home is beyond you.If dont believe me, just look at the rentals costs in Auckland, and have some estate agents show you around. Some of the mortage costs are towards 1/2 the rental cost, and your building an asset.If buy, pay off as fast as possible to get ahead, ie by not spending on luxeries. An average smoker if they had not taken up smoking would over their lifetime would save around $1,400,000 in todays value. Thats quite a house even today. If you claim you cant afford to buy, but smoke, your an idiot! Choices on luxery spending make the difference between being able to afford or not afford.
1/08/2012 8:58:23 p.m.
the interesting thing to note is that in the 1960's the average annual wage was the same as the total price of your house ie:6,000 pa income and a house at the same price.Today its 50-70K income to buy a 500-700k house,thats ten times the cost,we need to build more houses not celebrate our floating mortgages
1/08/2012 6:16:43 p.m.
it takes 6 x the average NZ salary to pay off the average house price in NZ. Compare that with other developed countries. Come on NZ get with it. The house's are over valued. What about the latest research finding much of NZ housing substandard and not meeting the criteria housing standards for countries which are members of the OED. Damp, cold, leaking, no insulation, no double glazing or real heating. Over priced poor quality. This needs intervention at a government level. We have the poorer members of society living in garages and caravans with children! Not through any fault of their own.
1/08/2012 2:39:54 p.m.
Compare, the house in this article was not in Auckland, in the backwoods of Wanganui and in todays value, $700,000.Look what you can get today in Wanganui new development for $700,000 and you can see that there is no comparison. In the 1960s you got a bare 3 bedroom building, no ensuite, today for much less you get much more.Interest rates, Back in the 1960's interest rates were lower than today, and the government of the day subsidised the money. We wont see any government repeat as the cost adds up quickly in it costs future NZ'rs forever to give those subsidies.How much is interest rates today? I have a floating mortage myself and am paying under 6% - vs 3% in 1960, thats not too bad.The big change is expectations, as nobody wants below the average house, and as in this article, those getting a home back then started with a bare home and not much more. Today everyone wants their house fully fitted with all the modern luxeries and a luxery lifestyle. Eg another reports says 50% of NZ have not changed their eating out due to the recession, and another 42% still eat out but less, or at cheaper places - ie 92% of NZ still eating out! Then again Camblel Lives illustration of living on various wages, you could have eaten out every meal for less than those examples, when eating at home it can be much cheaper.It is actually much cheaper to get into your own house today than in the 1960's, but expectations have changed so people expect more.Say you want to live in Auckland central, one of the most expensive places in NZ? The 1 room apartments with shared facilities work out around $40-50k, or if in interest terms on that borrowed, around $50 wk to live in central Auckland today! Anyone who choses can afford a home today. Set your sights at a home similar to what you rent, then work your way up as you can afford better. Often mortage cost is less than rent costs, and you get an asset in the end.
1/08/2012 10:34:10 a.m.
I enjoyed Anna's report. Back then people had more modest expectations and the govt seemed interested in helping people, whereas now it's all about having the latest gadget, and people being seen as a cost and a liability. That's the difference. Things won't get better until society and govts stop seeing money as the only thing that matters, and start valuing people again. Won't be happening under this dollar-driven govt, that's for sure.
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