NZ home ownership rate falls to 70-year low

Statistics New Zealand has released a new report showing that New Zealand’s home ownership rate has fallen to around the lowest level in 70-years:

Homeownership at lowest rate since the 1950s

Data on home ownership has been collected in census since 1916. Figure 15 shows that the proportion of households owning their own home peaked in the late 1980s and early 1990s, at 73.8 percent, but by 2018 had fallen to 64.5 percent. This was the lowest rate since 1951 (61.5 percent).

This decline occurred at a time when home ownership rates had been rising in other comparable countries. Between 1970 and 2000, home ownership rates rose in counties such as the Netherlands, Norway, and the UK, but fell in Australia and New Zealand (Atterhog, in Doling et al (Eds), 2006, p.20)…

Worse, the decline in home ownership has been hardest felt among younger generations:

For example, the home ownership rate for people aged 25-29 has dropped from almost two-thirds to less than half since the early 1990s.

In 1991, 61% of people aged 25-29 owned their own home, but by 2018 this had dropped to 44%.

Ownership rates have also fallen for people in their 30s, dropping from 79% in 1991 to 59% in 2018.

Moreover, this sharp decline in home ownership rates among young people has occurred despite cratering mortgage rates and access to Kiwisaver funds:

There are a number of factors that may have contributed to the stabilising of home ownership rates in recent years, for example access to Kiwisaver funds and relatively low mortgage rates. Figure 18 shows the increase in the number of people accessing Kiwisaver funds to buy their first home over the past decade, reaching 41,819 in the year ended June 2020.

Kiwisaver first became active on 1 July 2007, so the earliest that people would have been eligible to withdraw funds for buying a home was July 2010. By the end of June 2018, a total of over 138,000 people had used Kiwisaver to help them buy their first home. Two years later, this had risen to over 220,000. We do not know, however, what proportion bought their home individually, or with more than one Kiwisaver amount.

Sadly, the situation is unlikely to improve under Jacinda Ardern’s Government. Despite promising fundamental housing affordability reforms, Ardern has since committed to ever rising property prices (see yesterday’s post).

The Kiwi Dream will remain elusive to many New Zealanders.

Unconventional Economist

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