Despite boost to net worth, not all owners thrilled at runaway housing gains

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Almost half of New Zealanders who own their own homes are worried about rising house prices despite the fact those increases are boosting their net worth.

Of those surveyed by the Herald this month who said they owned or were paying off their own homes, 16.8 per cent said they were extremely worried by rising house prices and 33.1 per cent said they were a little worried. Of those who didn't own homes, 35.7 per cent were extremely worried and the same proportion were a little worried.

Almost 11 per cent of homeowners were more worried that house prices would fall. But the risk of a house price bust was also cited by homeowners spoken to yesterday as one of the reasons they were worried about ongoing house price increases. They also said they were worried about their children being locked out of the property market.

Escalating house prices have shaped as a key political battleground for the upcoming election.

The Government argues the issue is mainly down to regulatory obstacles such as the Resource Management Act preventing private sector investors meeting demand. Labour agrees supply is an issue but would intervene directly in the market to build homes. It would also introduce a capital gains tax to curb investment by speculators it claims are at least partly responsible for driving prices higher.

Labour's Housing spokesman Phil Twyford said the survey results suggested New Zealanders had "gone over the tipping point on this".

"Even people who own their own homes who benefit from rising prices can see that it's bad for their kids and their grandchildren and bad for New Zealand."

"It's a risk to our economy, and it's a major driver of inequality, between rich and poor, owners and renters, young and old and Auckland versus the rest of New Zealand.

Mr Twyford said it was going to take "bold reform like a capital gains tax and building large numbers of affordable houses" to address the problem.

Housing Minister Nick Smith said he was not surprised by the survey's findings.

"It's why housing reform is such a high priority for the Government. All the long-term data points to being out of kilter and the connection with house price bubbles and the global financial crisis, rightly is raising concern about its broader impact on people's financial security."

Dr Smith said concerns were not just about high prices "but a nervousness that if it drops significantly that has a huge impact on people's equity".

"The concern about the next generation being able to pull together a deposit and to reasonably get on to the housing ladder is very legitimate. There's no question that it is tougher today than 25 years ago. What I have confidence in is the Government's broad programme of measures that I think will make the material difference to improving that."