“Many people claim that housing has never been less affordable and that it is an impossible dream for today's young people”, says Andrew King, Executive Officer of the NZ Property Investors’ Federation. “While these well-meaning people believe they are standing up for young first home buyers, they may in fact be doing them a disservice.”
A new study shows that while house prices have risen over the last 30 years, other aspects have made it easier for people to get into their first home. This doesn't mean that it is easy to buy a home today, rather than it has always been difficult but for different reasons.
The NZ Property Investors' Federation study looked at the situation faced by first home buyers in each decade from 1985 to 2015. The study looked into how long it took to save for a deposit and how much of your income it took to service the mortgage.
The study found that while house prices had increased considerably faster than incomes, this was offset by lower mortgage interest rates and other factors like Kiwisaver, rental prices and lower income tax rates.
Factors have changed over the decades meaning it was easier to save a deposit in 1985 but harder to service the mortgage when compared to modern times.
"Commentators who state that it has never been less affordable to get into your first home are wrong and may inadvertently be doing a great disservice to first home buyers" says King.
"Being told that they cannot achieve home ownership is likely to stop potential first home buyers from even trying. Rather than standing up for first home buyers, those who continue to state that housing has never been less affordable may in fact be condemning them to being tenants for life".
"This is a poor outcome for the individual, but also a serious risk for New Zealand, as tenants are likely to be less financially secure in retirement and may require a higher level of taxpayer support".
Go here to read the full report of the NZPIF studycomments powered by Disqus