Young aspiring Auckland house-buyers are not spendthrifts frittering their money on weekend entertainment and cable TV but victims of an over-priced real estate sector, says an economist.
Shamubeel Eaqub, NZIER principal economist, responded to Barfoot & Thompson managing director Peter Thompson's criticisms that first-time house buyers had unrealistic expectations, did not save hard enough, were living exorbitant lifestyles, wanted big houses with lots of amenities and expected to buy where their parents lived.
But Eaqub, a home-ownership critic and dedicated renter, said that wasn't so. "Houses are not unaffordable because young people are feckless," Eaqub said.
"Incomes have risen by a third but house prices have more than doubled [since 2001]. As a consequence fewer young people own homes today."
In 2001, 44 per cent of people in their early 30s owned their own homes, compared to 33 per cent today, but home ownership rates had fallen across the board, not just for young people, Eaqub said.
"As house prices have risen, they have become out of reach for many, and home ownership is increasingly only possible for people who already own houses. There is also no evidence that young people are wasting money any more than previous generations.
"The biggest spending increases for young couples are for housing - rents, electricity, rates and insurance - and transport which is hardly profligate."
Landlords were displaying excesses in their demands for places but easy bank lending conditions, slow new housing supply and poor rental terms were other factors which made it hard for new house-buyers, he said. Last week, Thompson encouraged first-home buyers to "forgo something if you really want to progress".
"They still want to go out on a Friday and Saturday night and have a good life as well as most probably have Sky TV," he said in a Herald Meet the CEO video.
Plenty of Auckland houses were for sale for under $500,000 and he encouraged them to hunt around Glen Eden, New Lynn, Papatoetoe, Manurewa, Manukau Heights and Hillcrest.
Herald readers said Thompson was out of touch, had ignored high student loans, the hardship of saving $100,000 on a low wage, being out-paced by house price rises, complained about foreign buyers pushing up prices and too many landlords.
NZIER's principal economist Shamubeel Eaqub. Photo / Getty Images
Eaqub said there was no quick fix to the over-valued housing market.
"Whether house prices spiral up or down, the impacts of the necessary policy solutions will not be seen immediately.
"No one single change will be enough," he said.
Shamubeel Eaqub says housing will become more affordable when there is:
• Rental policy reform to make being a tenant a viable alternative to ownership.
• Easing of planning and other rules which restrain land and house supply.
• Better funding options to efficiently supply infrastructure for new land.