Young NZers have taste for owning rental property

Grant Scobie

Young New Zealanders have more property investments than their counterparts in Australia and the United States, says a Treasury study.

New Zealand couples in the 25-34 and 35-44 age brackets are far more likely to have rental investments than Americans or Australians.

So says a paper analysing household ownership trends which showed that almost one in 10 New Zealand couples owned a rental property in 2001. One in five owned some form of investment property.

Almost one in four couples aged 45 to 64 own some form of investment property, but younger New Zealanders have a particularly strong appetite for investment.

The paper by Mark van Zijll de Jong and Dr Grant Scobie of the Treasury is called Housing: an analysis of ownership and investment based on the Household Savings Survey.

It came out just before Wizard Home Loans released data from ACNielsen showing plummeting home ownership levels. Since then, banking economists have questioned the numbers and Wizard chief John Grant said the drop seemed extremely high to him.

The Wizard data has also prompted political fallout this week, sparking calls from the Green Party for a capital gains tax. National finance spokesman John Key said this would not help to make housing more affordable and any such claims were a delusion.

"Such a tax has not made housing more affordable in countries that have introduced it, such as Australia. Nor has it done anything to alter the normal cycles of the housing market in those countries," Key said.

The Treasury paper shows we are also a nation of relatively mortgage-free homeowners. The paper says 44 per cent of couples and 56 per cent of individual homeowners have debt-free residential assets.

The amount people have borrowed is also relatively low, compared with the value of their houses.

One-third of couples have a mortgage greater than 50 per cent of the value of their property. Only 15 per cent of couples have a mortgage worth 75 per cent of their property.

The analysis shows that New Zealanders' debt levels and home ownership rates are broadly comparable with those in Australia, the US and many other countries.

"The majority of residential property owners who do owe debt are in the higher income [bracket], reflecting their ability to service debt on their home," the paper says.

It shows that 64 per cent of all couples and 33 per cent of single people own a home. More single people are buying houses. The median age of homeowning couples is 48 years and 55 years for singles.

Skin colour but not where you live affects your shot at home ownership.

Maori and Pacific Islanders are less likely to own their homes, partly because of lower incomes. Europeans have the highest home ownership rates of 68 per cent for couples and 39 per cent for individuals.

The results of home ownership by region do not vary markedly. Of the main urban areas, Auckland has 63 per cent of all couples owning and 32 per cent of all individuals, while Wellington has 65 per cent of couples and 30 per cent of individuals. Canterbury has 66 per cent of couples and 35 per cent of individuals owning their own homes.