Statistics New Zealand last week released the results from the 2013 Census, which revealed another fall in the country’s home ownership rate (see below chart).
According to the Census, the share of New Zealand households owning or paying-off a home fell to 64.8% in 2013, from 66.9% at the 2006 Census, with the rate of home ownership also falling by 9% since 1991.
The fall in home ownership comes despite record low mortgage rates which, according to the Reserve Bank of New Zealand, has lowered the ratio of interest payments to household disposable incomes to 1991 levels (see next chart).
This suggests that low interest rates are failing to make New Zealand housing “affordable”, with Kiwis struggling under the weight of high mortgage principle (rather than mortgage interest).
Unfortunately, the situation in New Zealand is paralleled here in Australia where, according to Saul Eslake, home ownership levels have fallen to their lowest level in 50 years (see next chart).
All of which highlights why politicians should focus on ending policies that distort the housing market and force-up its cost, including freeing-up land supply, planning and infrastructure bottlenecks, as well as ending tax lurks like negative gearing.
To its credit, the New Zealand Government is moving in the right direction, whereas Australia’s governments have yet to even acknowledge that problems exist.
