• TobyPascoe

Hiding from the property bullet.

The topic is getting warm again, actually it is getting hot and it is slowly, but surely rearing its head in an election cycle again – but it is simply too late. House prices. Despite all the doomsday predictions by most economists and commentators, house prices have soared over the last four months, with a 14.7% increase in the median house price from this time in 2019.

The reason I say that it is too late is because with four days to go in the season of political promises, the parties are now just cottoning on to the fact that we are about to go through another boom period and whoever makes it into government will have not a battle but a war on their hands when it comes to housing New Zealander’s, so they are doing everything they can to avoid making promises of how they will fix it. Apart from the fact that they actually can’t fix it and stop the market climbing in the short term with current policy; KiwiBuild has proven that, any promises now will ultimately be broken by the 2023 election and could result in their ousting from the halls of power. The median New Zealand house price increased by $10,000 to $685,000 from August to September, effectively meaning that a first home buyer (or investor for the matter) would need to save an extra $2,000 in that month to afford the normal 20% deposit on a home. If things keep up the way they’re going, that would blow out to an extra $24,000 needing to be saved over a year just to keep up with the deposit requirement. Is that truly sustainable?  Home deposit savers are quickly falling more and more behind the eight ball. The income to house price ratio gap is growing again.  There is a lot of talk about the ease of serviceability on a mortgage now with extremely low interest rates, but that is all worthless if someone can’t actually step onto the ladder due to the deposit requirement.

Owning a home, in terms of actually servicing the mortgage, is now cheaper to afford in most cases than paying rent to a landlord. howevwr getting the deposit together is in some cases mind boggling. We risk having a country of renters in future generations. With the latest round of rental regulation brought in on the eve of Parliament closing, we are also running the risk of investors pulling away from the market.  So then what? The result is first home buyers who cannot afford to get into the market, along with the possibility of mum and dad investors giving up on owning a rental property due to the increased burden placed on them and therefore less rental properties available; all leading to a dire situation that will lead us to seeing an increase in the waiting list for state housing. Or is that already the case? Well yes – the waiting list has ballooned from 5,800 to 20,000 households in three years. Owning a home is advantages to many facets of life and wellbeing – wealth creation, security, safety, health, mental wellbeing and preparing for retirement. We, more so the people we elect, are creating a perfect storm of increased regulation and costs to private property investors who provide rental accommodation to those who need it, and then on the other hand little to no policy to support first home buyers into deposits and onto the ladder. Mark my words; the next election will be about one thing – housing. When that time arrives in three years, for whatever party is successful come Saturday, watch them run and duck for cover for what they are choosing to dodge and ignore today.

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