Over 70% say owning a home is unaffordable
A whopping 90% of first home buyers feel locked out of the property market despite recent predictions of a price correction from economists, according to a new housing report.
The finding was revealed by insurance company OneChoice in its 2022 Housing Trends Report.
The report also revealed 77% of Kiwis said homeownership in New Zealand was unaffordable, while 90% of people actively searching for a home have admitted prices have delayed their prospects of buying.
Other data in the study showed 50% of current homeowners surveyed admitted they felt overwhelmed by debt, 53% of current homeowners admitted their mortgage felt like a burden on their lifestyle and 68% of first home buyers said they could not keep up with property prices.
New Zealand Housing Foundation chair of the board of trustees Sandy Foster (pictured) said rising prices in the property market over the past few years had been caused by several supply and demand factors.
“Interestingly, housing affordability in New Zealand has been impacted by sentiment as much as physical factors,” he said. “For instance, easy access to cheap borrowing since 2020 has increased demand by giving many Kiwis the capability to pay more for homes than they otherwise would. Likewise, a fear of missing out and being permanently locked out of the property market has accelerated demand and exacerbated prices.”
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OneChoice found 77% of those surveyed said homeownership in New Zealand was unaffordable in 2022 and 61% expected it to worsen over the next decade.
Foster said housing affordability in New Zealand had, in turn, reshaped perceptions of the “Kiwi dream” of homeownership.
“Over 81% believe the ideal has changed over time and 69% believe the ‘Kiwi dream’ becoming less traditional, suggesting the market will change completely in years to come,” he said. “In fact, 53% of Gen Z Kiwis admitted they have felt pressure from their parents’ generation to aspire to more traditional versions of the ‘Kiwi dream’, while Gen Z are most likely to cite owning any kind of home as their dream outcome, 28% say they are least likely to describe the ‘Kiwi dream’ as owning a free-standing house on a quarter-acre block.”
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The report found given rising interest rates and inflation, 76% of Kiwis felt they had no choice but to rent, with 95% saying rent in New Zealand was overpriced. Of those surveyed, 29% expected to be renting for another three to five years before being able to afford to buy a home.
“For the past 60 years, we’ve lived with the notion of a quarter-acre lot with a house and a lawn,” Foster said. “This worked well while land was relatively cheap, private transport was cheap and we had plenty of time on our hands, but now we live in a different world. People are working more, spending more time commuting and we have so many more demands on our time.”
Foster said younger people might still aspire to the idea of a family home as a means of building wealth.
“However, they don’t necessarily want the maintenance and drudgery that goes with owning a quarter acre,” he said. “Times have certainly changed.”
