Better for first-home buyers now – Government
Nick Smith says figures for first home buyers nationally show housing is more affordable than when National became government.
Nick Smith has lost the plot (along with the portfolio).
The Government says first homes are more affordable, despite a new measure showing houses are out of reach for the majority of first-time buyers.
Four-fifths of potential first home buyers could not comfortably afford a house in New Zealand, according to an MBIE report.
The long-delayed housing Housing Affordability Measure (HAM) was finally released on Wednesday after almost two years of delay.
The new Housing Affordability Measure (HAM) is described here (Henry Cooke on Stuff):
New HAM measure is powerful but won’t stop the spin
Throughout the entire housing crisis, while median prices in Auckland have close to doubled in the last seven years, the Government has lacked an actual measure on what they consider “unaffordable”. This situation let John Key point to a grab bag of Trade Me listings when it was politically useful, and hamstrung journalists and others looking to get a rigorous picture of the problem.
Today that changed – kind of. The Ministry of Business Innovation and Employment (MBIE) have finally released the Housing Affordability Measure (HAM), which Cabinet commissioned way back in 2012. It has a funny name and is very complicated but it does do one very important thing: it puts a specific number on unaffordability.
If you’re a single renter who has less than $690 of pre-tax income left each week after paying rent or a hypothetical mortgage payment in your area, you’re below the threshold, and your housing options are unaffordable.
The story that number tells is a bit more complicated than “everything’s screwed” but isn’t that far off. With that number in mind, as of mid-2015, four fifths of renters could not afford to buy even a cheap house near where they currently lived, and close to two thirds couldn’t comfortably afford to continue to rent. (MBIE estimates those renters make up about a third of the country.) As ever, things are the worst in Auckland, where 95 per cent of the renters in Manakau could not comfortably afford mortgage payments on a starter home in their area.
MBIE got this number by taking a look at the exact median amount left over for the entire country in mid-2013, and then adjusting for inflation and for household size.
So no, the picture is likely not quite as bleak as “four fifths of Kiwi renters will never be able to afford a home,” but it does show that there is a definitely a serious problem, and in Auckland that problem is getting even worse. …
Read the full piece for plenty more and pretty graphs.
In other news (Liam Dann in The Herald):
Young house hunters should just give up
Last week’s property statistics were horrible for anyone hoping to get on the property ladder in Auckland.
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If you convert that 12.3 per cent rise into dollars (which, unfortunately, is what we have to pay for things with) the average value of a house in the Auckland region rose by $114,000 in the past 12 months.I’m not sure how many flat whites that is, but if I was young and contemplating the Auckland housing market I’d waste my money on something a bit stronger.
Normal people should probably just give up. If you are on any kind of regular wage then scrimping and saving to buy a house is futile.
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Based on the case studies we’ve seen in the media in the past few weeks some young people are so desperate to own a home they are gearing every aspect of their life towards it. They are effectively learning to become property investors in order to get into the market. This is a terrible way to resolve the housing crisis. The last thing New Zealand needs is more property investors.To quote Dr Oliver Hartwich from economic think tank The New Zealand Initiative: “Booming property markets create a mirage of wealth, not wealth itself.” That’s not a lefty liberal, millennial view. That’s the view of most economic and financial market experts in this country.
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The next Government, regardless of which party forms it, needs to confront housing inequality. Otherwise New Zealand will eventually have its own Brexit or Donald Trump-style backlash. …
Housing affordability plummets across New Zealand
Auckland housing affordability tumbles
Housing affordability ‘crisis point’
Auckland houses ‘severely unaffordable’
‘I see no way of ever being able to own my own home’
Loans for first homes jump 43% in 2 years
NZ ‘half a million houses’ short
Auckland needs to double number of new homes – data
And so on…
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