COMMENT: “When bad news is riding high and despair (is) in fashion, when loud mouths and corruption seem to own centre stage, when some keep crying that the country is going to the dogs, remember it’s always been going to the dogs in the eyes of some, and that 90%, or more, of the people are good people, generous-hearted, law-abiding, good citizens who get to work on time, do a good job, love their country, pay their taxes, care about their neighbours, care about their children’s education, and believe, rightly, as you do, in the ideals upon which our way of life is founded.”
So said American historian, David McCullough, in his 2017 book The American Spirit: Who We Are and What We Stand For. And although McCullough was describing the United States, his book could equally have been written to a Kiwi audience. Most of us go about our daily lives doing our best to get ahead and make the world a better place for our kids, and while we can’t ignore the constant diet of bad news served up to us through social media, we do our best to consign it to a place where it doesn’t affect us too much.
But if you have kids who are trying to buy a home, that’s becoming more and more difficult. At a time when the cost of renting is rising more quickly than at any other time in our history, when the percentage of an average household income required to service a mortgage is almost as high as it was in the 1980s, and when house prices are accelerating away at a rate so fast that many young couples are struggling to put together a deposit, it would be easy to believe the constant barrage of bad news stories telling us that home-ownership is now out of the reach of most young Kiwis.
But is it true? Statistically, no. With the exception of a period in the 1990s, when rates spiked upward, home-ownership in New Zealand has remained remarkably consistent for more than century and about 65% of Kiwis own their own home, despite big increases in house prices over the past four decades. We also know that first home buyers have been the single largest group of borrowers for most of the past eight years, according to data from the banks – so, so far at least, the rhetoric doesn’t match the reality.
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But, regardless of these figures, should we be doing more to help first home buyers?
The answer to that question is a resounding yes. Last year I wrote an open letter to the Prime Minister, Jacinda Ardern, on the topic. The crux of my advice to her was that home-ownership should be the primary focus of the Government because most social issues are resolved when people own their own home. I said that she was wasting her time trying to control house prices and wouldn’t be able to do so (house prices have increased by around 20% since I wrote this), and that, in any case, capital growth is a good thing and has made the significant majority of Kiwis wealthy. I believe we should be lifting the remainder up not pulling the majority down, and the Prime Minister can make her mark by promoting positive initiatives to help young Kiwis buy a house rather than punishing those of us who have already done so.
Ashley Church: “The PM can make her mark by promoting positive initiatives to help young Kiwis buy a house.” Photo / Ted Baghurst
To her credit, the Prime Minister has subsequently made a couple of statements in which she has alluded to the importance of first home ownership and expressed a view that the needs of first home buyers should be a priority, but, sadly, the Government has continued to persevere in their King Canute-type attempts to control house price inflation, punish landlords, address a non-existent housing shortage and introduce or threaten various other measures which confuse ideology with practical solutions.
So perhaps we should be looking across the aisle to see what a National Government might do to help first home buyers where Labour has been unable to do so? Sadly, no. So far, National’s ideas to help first home buyers look like a dusted off version of Labours 2017 Election Manifesto – big on virtue signalling and slogans but light on any ideas that would actually make a difference and move the dial on home ownership for young people.
Until one of the two major parties finds the courage to confront the major obstacle facing first home buyers – the deposit – young Kiwis will find it increasingly difficult to get on to a ladder that previous generations have been able to climb as a rite of passage.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
