The New Zealand Herald and NZME recently published the findings of an extensive survey on the attitudes of kiwis toward a range of issues to find out what had unified and what had divided the country. Titled ‘The New New Zealand: Rebuilding Better’, the survey concluded that New Zealand has become more divided in recent years – a view that was held most strongly by women (68%) and people over 65 (76%).
The Survey went on to propose four specific issues which might have been the cause of this division and, while I felt that the range of options was unnecessarily limited (and didn’t, therefore, tap into some of the real reasons why division has become so heightened) my attention was drawn to a finding that a major driver of division was ‘access to housing’, or lack thereof. According to the survey, 70% of us believe that this has deteriorated in recent years, and only 9% believe that it has improved.
As an expression of the mood of the public and frustration at what appears to be a growing problem, the survey results are no doubt an accurate barometer of the collective sentiment of the nation. Most kiwis have an innate sense of the ‘fair go’ and believe that everyone should have an opportunity to be what they want to be and the chance to live in a way that provides security and a degree of comfort. For most of us, that also includes an expectation of a secure roof over our head, preferably in a home that we own.
But is the survey finding an accurate reflection of the reality of the housing market?
The answer to that question depends on whether respondents thought they were expressing a view on the ease with which young people can buy a first home, or on access to housing in general. If the latter, then it’s easy to understand why people might be unhappy since all of the indicators, for renters, have become worse since Labour came to power in 2017. The significantly escalating cost of renting, new tenancy laws which have made landlords hesitant to take a punt on dodgy tenants, and the consequent explosion in the number of people on the Social Housing Register – have all contributed to the perception that access to housing is much much worse than it used to be.
If, however, the survey result is the measure of a view that it has become more difficult to buy a first home – the sentiment is entirely understandable, but wrong.
In fact, our access to home ownership has remained remarkably consistent for nearly 100 years, despite the colours of the Government in power and regardless of whatever else might have been going on in the economy at the time.
Consider this. In 1916, 52% of kiwi homes were owned by the occupier. Ten years later, in 1926, that figure had increased to 61% – and there it stayed for 25 years, until 1951. From there, it progressively increased between 1951 and 1991 until it reached 73.8% – the highest level we’ve achieved in our history – before slowly dropping back to 66.2% by 2013. It currently sits at around 63.5%, just marginally ahead of where it was in 1951.
So the perception that the rate of home ownership has deteriorated in recent few years simply isn’t true. That’s not to diminish the significant hurdles in front of first home buyers, of course. Interest rates have risen steeply in the past few months and the banks are making it much more difficult to access finance than was the case even a year ago – but despite this, first home buyers continue to be the most active buyers in the market (as they have been since at least 2013) and have continued to maintain that percentage of owner’s vs renters even though house prices have increased exponentially.
None of this should be taken to mean that I think we should stop looking for new ways to get young people into their own home. Owning one’s own home is the basis upon which our democracy is built and should always be a major focus of Government policy.
But claiming that home ownership has gone backward simply isn’t true. Despite terrible Government housing policies and a difficult purchasing environment – young kiwis have continued to get their foot on the property ladder in more-or-less the same proportions as their forebears almost 100 years ago.
DISCLAIMER: The opinions expressed in this article are the author’s and shouldn’t be taken as financial advice, or a recommendation of any financial product.