Monday, 12 August 2013

First Home Buyers are the Political Football.

I think almost everyone can agree that New Zealand has a housing crisis.  In Auckland housing affordability and supply is an issue.  In Christchurch supply is in hot demand, and this also affects affordability.  But for many first home buyers it is being able to get onto the home ownership bandwagon that is difficult.  The above barriers are part of the problem, and saving for a deposit is the third barrier.
I am a first home buyer. I've been looking properly since January in a rural Waikato town.  The limit, if you are accessing KiwiSaver funds and Housing New Zealand's as part of your deposit, is a house costing $300,000 in the Waikato outside of Hamilton city.
I admit I am picky.  I want at least a 700m2+ section so I can have a vege garden and fruit trees (sustainability and knowing where your food comes from springs to mind).  I want a house at least 120m2 (I hate small spaces and I'm thinking to the future).  I want a house with indoor/outdoor flow (or at least the potential).  I want a kitchen with generous bench space, a good oven (preferably with fanbake) and a dishwasher space (I have my own). I want a wicked shower (long hair needs good pressure).  I want a safe place for my cats, free of mean dogs and vehicles that will squash them.
If I'm going to spend in the high $200s I don't want there to be things that still need doing that cost lots.  If it's going to be in the low $200s it has to have location and great bones.  I want a house with the X factor. Hardiplank properties need not apply.
I don't want much (ha ha), but I do want a house I'll love living in, because once I have mortgage, I won't have a life, so I'd better like like hanging out at home!  But finding the right house at the right price - that is the challenge!!
It concerns me greatly that my pre-approved mortgage term is rapidly coming to an end.  It worries me that I haven't found a house and that the Reserve Bank is beating its chest repeatedly over an over inflated housing market.  The Reserve Bank wants banks to cut back on lending to people like me who do not have a 20% deposit.
On Sunday John Key announced National's new housing policy.  It comes into action on 1 October.  In some cities and regions they have upped the top cost of a house for those buying using their KiwiSaver and HNZ subsidy.  But not in the Waikato (outside of Hamilton).
They expect you to have a 10% deposit.  For a $300,000 house that means I'd need a $30,000 deposit.  I'll be at least $7,000 short currently. 
The newspapers claim that Auckland is the big winner out of National's latest housing policy.
But I feel for those purchasing in the Auckland market.  While it is great news that they are pushing the house cost up from $400,000 to $485,000 for Auckland first timers, the government (typically) has moved the deposit goal posts, because an Aucklander will need $48,500 at least for their deposit.
Labour of course have said that the government has come up short with its tweaking without addressing the drivers of the housing problem.  The Greens are calling the policy "poly filler".  Even first home buyers are saying that they doubt the changes John Key is bringing in will make any difference to the situation.
There are some good reasons for that.
Currently Auckland needs 30,000 new homes built each year to keep up with the population that requires housing in Auckland.  However, only 4,000 houses annually are currently being built.  That's well short of what is required.
In Australia they give each new first home buyer (on application according to criteria like here) $7,000 to put towards paying for their new home.  In some states they offer an additional $4,000-$8,000 if it is a new build.
Is anyone actively encouraging new builds in New Zealand?
It is a bit hard with developers land banking and councils dragging the chain on consents for new housing developments (which National has announced changes to combat this).
Then there are the supposed overseas buyers coming in and buying up our housing stock to rent out, or the property "mum and dad" investors that have been encouraged to build up their "housing portfolio" who snap up house after house.
We have a shortage of state houses.  Once upon a time a state house was usually accessible for the average family.  Not now.  It is well documented in Auckland, Wellington and Christchurch (especially since the earthquake) the number of families double bunking with other families, living in garages or living in one room at a boarding house due to the high cost of market rents and availability of rental accommodation. 
Recently David Shearer and several Labour colleagues did a tour of empty state houses in the wider Wellington city region.  There has been a 40% increase in vacant state houses since the beginning of the year.  Yes some are damaged, some don't meet the earthquake code... but maybe these should be a priority to be fixed.  It seems that Housing New Zealand and the government are dragging the chain on ensuring there is sufficient housing for those in need of it.
National's Amy Adams announced as part of the budget an injection into social housing of $16.4 million.  However when we have councils selling their social housing stock it negates any gains and causes bigger problems.
I think what we have here is a lot of chest puffing over how to solve the housing problems we have in New Zealand, but no one has hit on the silver bullet. 

But as a first time buyer, what I would like to see is that we are treated fairly and not as the political football we are currently.  But right now it is just a cloud dream for too many of us first time buyers.

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