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Leader's LetterMarch 2007
A Dying Kiwi Dream The relentless decline in housing affordability in New Zealand is cause for great alarm. Escalating house prices throughout New Zealand are locking first homeowners out of the housing market, which will have huge long-term ramifications in terms of the traditional kiwi lifestyle. The dream of an affordable family home is increasingly out of reach of many now. We must accept that while the rapid rise in the median house price over the past five years has benefited some, it has harmed others. The Kiwi goal of home ownership is simply unattainable to many young people who are already leaving university with major debt, and to those on low incomes, many of whom are Maori. The probability that households in New Zealand will own their own home has been falling since 1991, and the fall of ownership has disproportionately affected younger, lowerincome households. The reasons why we are turning into a nation of renters rather than home owners are varied, and include foreign and local investment in property pushing up prices, low wages, immigration, lack of land being made available, interest rates etc, but I think we need to seriously and urgently ask if we want this shift to be taking place. New Zealand First is adamant that we don’t. Despite declining home ownership rates, New Zealanders’ aspirations to own their own homes remain high. But whether these aspirations can be met for those experiencing financial difficulties and delays moving into home ownership remains to be seen. Many are projecting home ownership rates will continue to fall in the next ten years, while the number of households renting increases. The last thing we want to see is hardworking New Zealanders being denied their dream of home ownership through no fault of their own. The Government has an important role to play to ensure that this doesn’t happen, and the Minister of Housing needs to make this the highest priority. In recent years the Government has provided little support for home ownership - although the absence of a capital gains tax on the sale of a home cannot be disregarded and raising the maximum for a Government backed home loan without deposit, from $150 000 to $200 000 has also been a welcome move. But the Government certainly cannot afford to rest on its laurels. Earlier governments facilitated home ownership for many through such policies as the capitalisation of the family benefit and the provision of incomerelated mortgage lending. No one scheme is capable of being a silver bullet to raise home ownership levels to that seen by older generations. We must look at schemes that cater to different situations and abilities of potential home owners. Today those who are trying to get a foot on the bottom rung of the ladder have to borrow highly, which leaves them exposed to the vagaries of the market such as fluctuations in interest rates, house prices and incomes. This combined with a deteriorating savings base is having a detrimental impact. We in New Zealand First believe homes are the basis of family life and incentives should be in place to facilitate families into their own homes. These incentives must be a mix of enticements to save and greater provision of affordable housing. Home ownership gives people a stake in their communities, and creates social stability. Do we really need to jeopardise this by letting house prices skyrocket out of control, making landlords wealthy but renters unable to get ahead? Pita Paraone MP
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