Again, I did a lot of research for this week’s Nelson Mail column on housing policy, and didn’t have room for all of it in the column. So here’s the info and links.
Here’s the column as it appeared today in the Mail. Below is pretty much the same, with all the links added.
Is this the end of the Kiwi dream?
I have lived in 28 houses in my 27 years. I always thought one day I’d settle into one of my own and stay there.
It’s not just my transient childhood that created this expectation. I grew up with the notion that home ownership was not just an important goal, but a necessary measure of success.
Is this realistic for my generation? The current economic barriers are making it look more and more like a dream. Even if I hadn’t had the setback of illness, I’d be a long way off from getting my KiwiSaver to any useful figure. The few friends I have who are buying are mostly doing through some form of family assistance.
Home ownership here is the lowest it’s been in 50 years. In 1991, 75% of New Zealanders owned their own home. This has dropped to 65% and is still falling.
The cause of the drop goes beyond the failing house marketing. Tax treatment of property and greater inequality are doing their bit to make it harder and harder to get into your first home.
Home ownership has benefits beyond achievement of a cultural milestone. As our Prime Minister says “[home ownership] provides stability for families, strength for communities, and security in retirement.” It also improves health and education outcomes.
This is true. But how much of this could we achieve through developing and supporting renting culture? At the moment, rental stock is largely substandard and the Residential Tenancies Act doesn’t reflect the new reality of a fragile global economy and a less accessible property market.
“44% of rental properties are in poor condition,” says Green Party Co-Leader Metiria Turei. “Over half of all renters report at least one or more major problems with their house.”
The National Party don’t see improving this as a priority, despite the more than a million adults and 400,000 children living in rental property. Their election housing policy focuses on first home buyers, taps into KiwiSaver, and ignores the 70% of children in poverty growing up in insufficient rented homes.
Here’s some media coverage of that policy.
Here a very interesting article with a comparison of this plan with one in England (which failed).
An article on Guide 2 suggests that National ignored advice from Treasury that their plan won’t work.
“Documents released under the OIA show Treasury advised the Government that ‘Experience with homeownership grants in Australia suggests that such programmes tend to push prices up in a supply constrained environment by supporting greater demand, rather than improving affordability. There is a risk that by significantly expanding eligibility for the KiwiSaver Deposit Subsidy and Welcome Home Loan schemes, the Government will end up undermining affordability for first-home buyers’.
As I said, I’m a long way off being able to buy my own home. I’ll honest, I felt a certain level of bitterness when I realised that my illness would prevent this from happening as I expected. It took a long time to accept that it is something I may never achieve, which speaks volumes to how deeply it is embedded in the Kiwi psyche.
Other countries take a different approach. Germany has one of the west’s lowest rates of home ownership – 43% in 2013. And according to the OECD, more than 93% of them say they’re happy with their housing.
The first housing law to be passed in Germany after World War II was designed to boost home construction – but the similarity between that and current policy here ends there. The houses needed to meet criteria: “in terms of their fittings, size, and rent are intended and suitable for the broad population.”
Building suitable, affordable homes exclusively for renters, as opposed to or in addition to first home buyers, could work really well here at home. Guaranteed long-term rents with an option to buy is also worth exploring.
Labour’s Factsheet on Declining Homeownership states; “The lack of affordable housing has other flow-on effects as it puts extra pressure on the rental market, including the quality and availability of rental housing. This means rental affordability is strongly affected by issues with homeownership.”
Their housing policy includes a ‘healthy home guarantee’ to make ‘every rental home healthy, warm, and dry.’
They also say they will ‘work with the private sector to build ‘100,000 modern affordable homes for first home buyers.’
I’d be interested to see what figure these ‘modern affordable homes’ would go for. If it’s anything upward of $550,000, National’s plan won’t work either – their grants only go up that far.
The Greens announced their policy last week, which focuses entirely on improving rental quality and the rights of tenants. I think you can imagine how I received this.
The key points are a Warrant of Fitness for all rentals, providing greater security of tenure for families, insulation for another 200,000 homes, and $3m towards helping families take action against substandard housing.
“As home ownership rates decline we need new policies to support renters,” says Metiria Turei. “Renting is a new reality for many New Zealanders and it’s time for laws around the safety, quality, and security of our rental homes to be updated.”
I support helping people buy their first homes – or any subsequent home. It used to be, and still should be, a reasonable expectation to own a house in New Zealand. But I think we need to accept that, for many, it won’t be a reality. Therefore, the alternative – renting for life – needs to viable and safe. Everyone should have somewhere warm to call home.
National’s policy for First Home Buyers.
RadioNZ article on National’s policy.
‘A tale of two cities’ comparison between housing plan here and in England.
The Guide2 article about National’s plan.
Article about German home ownership.
Labour’s housing policy.
Labour’s Factsheet on Declining Ownership.