My House Earns More Than Me

Is it harder than ever to buy your first home? To do that we're joined by Habitat for Humanity CEO Alan Thorp & Economist Bernard Hickey. Plus we hear from Wellingtonian Vladimir Zdravkovich on his never ending quest for home ownership. And Whangārei home owner James.

Stats NZ’s Housing in Aotearoa:2020 report shows home ownership rates have been falling since 1991 and recently hit a 70-year low. The average home in New Zealand now costs $906,532 –a 22% price increase from this time last year, according to CoreLogic’s June 2021 data. This home also requires a deposit of $181,306, $33,662 more than last year.

If you earn the average salary of $56,160 – and had that deposit a year ago – would now have to save 60% of your pre-tax salary to cover the increase. These numbers echo research that Consumer NZ has been undertaking. Our Sentiment Tracker found three out of five homeowners couldn’t afford to buy their house at its current valuation. James, a registered electrician from Whangārei purchased his home in 2018 for $450k. Since then, the property’s capital gains have exceeded his and his partner’s – a registered nurse – combined income.

But does it really matter if we own our own home? According to Habitat for Humanity chief executive Alan Thorpe the answer is yes. Tammy Ngawhika Hutchins is a prime example. In 2012, along with Habit for Humanity’s help, she got into her own home. She was determined to provide stability for her four children. Her kids had had hundreds of doctors' appointments for asthma, but after moving out of rentals – and into their own warm, dry home – their health improved dramatically. Habitat and other community housing providers are trying their best to provide affordable homes, but can only meet a small fraction of the demand. In the past 30 years, Habitat has housed 530 families. As house prices increase, Alan tells us that mission is just getting harder. But, what about the people who haven’t been quite so lucky?

Vladimir Zdravkovich moved to New Zealand 30 years ago with his parents, escaping from war-torn Yugoslavia. He’s been saving to buy a home for more than 10 years, but always feels like he has the deposit he needed a year or two ago. This feeling of futility isn’t unique to Vladimir. According to Consumer NZ’s Sentiment Tracker, 42% of non-homeowners feel completely locked out of the market. A further 20% said that they’re saving for a deposit but can’t catch up.

So, what is driving this house price unaffordability? According to economist Bernard Hickey, New Zealand has the perfect storm of low interest rates, tax-free capital gains, and high quantitative easing all combining to push up asset prices. Bernard doesn’t see much political will to solve this problem, but he does offer up a model solution: Christchurch. At $631,000 it has the cheapest average home price of the four major cities. He claims this is driven by the response to the 2011 earthquake, where the government suspended the Resource Management Act, built high- and medium-density housing, and invested heavily in infrastructure.

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