Homes are more affordable
There continues to be a large number of media articles talking about the "housing crisis" and people being tenants for life. I'm sure that the people saying that home ownership is unachievable for young people are doing this with the best intentions, but they are giving these people the wrong message. Ironically, by trying to stand up for first home buyers they are likely putting them off even trying to achieve their first home.
An NZPIF study shows that while it is hard for first home buyers to get into their first home, it has always been this way. Now another study, this time on home affordability from Massey University, shows that it isn't impossible for first home buyers to enter the market.
Massey's latest study was recently released and showed that housing affordability in New Zealand had actually improved. Not only over the last quarter, but over the past seven quarters since the middle of 2015.
I thought this was really interesting and told a friend about it. They were a little sceptical as this went against everything they had heard in the media. "Affordability might have improved nationally" they said, "but what about the hot areas, like Auckland?"
According to Massey University, Auckland's housing affordability has actually improved slightly more than the national average over the last seven quarters. Nationally, housing affordability has improved by 15.8% while Auckland's affordability has improved by 16.1%.
The improvement has been caused by flattish house prices, slightly lower mortgage interest rates and higher incomes. The graph below shows that housing affordability is actually better now than at the peaks of 1997 and 2007.
New Zealanders need to know this information as many are likely to have the wrong idea about the housing market. This is dangerous not just for first home buyers thinking that home ownership isn't achievable, but also for the affect it could have on policy makers.
In the lead up to the election, some political parties will be campaigning on a theme of housing in a crisis, with policies aimed at our industry to curb demand from rental property providers. Despite being unnecessary, it will actually do more harm for first home buyers by reducing rental property supply and increasing rents. Good policy needs to be based on good information, so if you are in contact with election candidates, make sure they know this information.