Labour says data is evidence that Government policies aren’t working

More than one million renters are locked out of the home ownership dream because they can not afford the deposit new data shows.

New figures from Statistics New Zealand reveal 78 per cent of those currently renting - or 458,000 households - have a net worth of $120,000 or less which means they can not afford the 20 per cent deposit on the average New Zealand home.

Net worth includes significant assets such as savings, KiwiSaver, investments and cars against all debts.

A typical Auckland renter had a net worth of just $41,000.

Opposition housing spokesman Phil Twyford said the newly crunched data is further evidence the Government's attempts to help first home buyers aren't working.

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The data also shows 62 per cent of renters have a net worth of $60,000 or less - meaning they can not even afford the 10 per cent deposit available through a special loan through the KiwiSaver HomeStart scheme.

But Housing Minister Dr Nick Smith said the policies have helped 16,000 buy homes in the past 18 months.

He said supply would improve with intensification under the Unitary Plan.
"We would urge people to be patient rather than paying too much right now."

In Auckland, with the average price climbing past $1million just last month, the outlook for first home buyers in the City of Sails looks bleak.

"It's unacceptable that more than one million Kiwis are locked out of the housing market, locked out of the dream of affordable home ownership," Twyford told the Weekend
Herald
.

Twyford acknowledged some people chose to rent but said the "vast majority" would buy if they could afford it.

"Almost all the people I speak with want to own their own home but it has become completely unrealistic under the current policies for them to do so."

"That's a million people or 458,000 households who can't afford the deposit, that is a lot of people who can't afford their own home."

In June Smith said housing affordability was no worse in Auckland than in 2008.

He pointed to data from Massey University showed home affordability nationally was better than in 2008.

Twyford rubbished the claim this week and said numerous international tables on house affordability showed New Zealand was one of the worst for housing affordability.

He cited personal experience stating when he bought his house in 1989 its value was three times that of his household income - which is the benchmark internationally for
affordability.

According to the International Monetary Fund's latest Global Housing Watch, New Zealand now has one of the highest house price-to-income ratios in the world.

"When National came to power that indicator went up to six times - now the value is eleven times the household income," Twyford said.

"It is now so much worse for current home buyers and all it takes is a small rise in interest rates over their 25 year mortgage and they are under water."

Twyford said rising rents over the past five years and static wages had added to the woes of the first home buyer.

"One of the reasons people can not afford to save for a deposit is because rents have gone up significantly in the last few years and wages have flatlined so paying rent and saving for a deposit is impossible."

Real estate figures from Trade Me show rents are stable at the moment but in the past five years have increased 19 per cent.

Data from Auckland's biggest real estate firm Barfoot and Thompson show average weekly rents in Auckland range from $464 for a three bedroom home in Avondale, $479 for a three bedroom home in Blockhouse Bay and $675 for a home in Epsom.

Twyford said National had ignored the impact overseas buyers, investors and speculators had on the housing crisis.

He said big and bold policies were needed.

Twyford said a multi-prong approach to "squeeze investors out of the market" was needed to bring prices down.

He said Labour would:

• Build 100,000 houses through Kiwibuild to help with the current 42,000 shortfall.

• Ban non resident foreign buyers from buying existing homes.

• Change the law so if you sell a rental property within five years you pay income tax.

"At the moment Auckland is a speculator's paradise and we need to end that to give first home buyers a chance."

Daunting task not getting any easier

Rachael Lim and Christian Sayegh are struggling would-be first home buyers.
Rachael Lim and Christian Sayegh are struggling would-be first home buyers.

Auckland couple Rachael Lim and Christian Sayegh fear it will take an inheritance or a move from their home-city to realise the dream of home ownership.

The couple, in their early 20s, have been saving hard for a deposit for their first home but with soaring values the task is daunting.

"We feel like we are doing quite well and then something comes up," Lim said.

"Our rent is about to go up $40 a week so now we are thinking we might have to move back home so we can save."

Lim and Sayegh have a combined net income of around $1300 a week with $400 left after rent and expenses have been paid.

They had managed to save "a few thousand" but would require a $90,000 deposit for even the most modest suburban unit.

They had been looking at one and two-bedroom units for around $450,000 but said there was now very little in that price range.

"Even if we managed to get a deposit together prices are now so high it feels like we will never get there," Lim said.

Locked out - latest bad news for would-be home owners

• 78 per cent of renters have a net worth of $120,000 or less

• 62 per cent of renters have a net worth of $60,000 or less

• That's a total of 458,000 families or one million individuals

• Deposit needed to buy a house is 20 per cent

• Average home value in NZ is $612,527 so a 20 per cent deposit is $122,505

• The typical Auckland renter has a net worth of $41,000

• Average home value in Auckland is $1,013,632 million, requiring a $200,000 deposit

• A more typical Auckland home is valued at $842,500, requiring a deposit of $168,500

Source: QV and Statistics NZ