Statistics New Zealand has released the results from the 2013 Census, which revealed a fall in the country’s home ownership rate by individuals (see below chart).
According to Statistics New Zealand, only 49.8% of people aged 15 years and over owned or partly owned the home they lived in, compared with 53.2% in 2006. It was the first recorded fall in the home ownership rate below 50%.
While the drop in home ownership occurred across all age groups, younger people have been hit the hardest as the share of homes owned by rental investors has risen.. In 2013, 43.0% of people aged 30–39 years owned their home, down from 54.6 percent in 2001. For those in their 40s, 60.8% owned their home in 2013, down from 71.5% in 2001. By contrast, home ownership was highest for those aged 70–74 years at 77.5%.
Similar data released last month by Statistics New Zealand on home ownership by households revealed similar trends, with the share of New Zealand households owning or paying-off a home falling to 64.8% in 2013, down from 66.9% at the 2006 Census and falling by 9% since 1991 (see next chart).
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).
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 on supply, whereas Australia’s governments have yet to even acknowledge that problems exist.
