Own homes out of reach for many Kiwis

 

Middle-income households are being locked out of home ownership, a new report on home affordability from the Auckland Council shows.

At the maximum price of NZ$650,000, even KiwiBuild homes would only be affordable to the top 40 per cent of Auckland households.

A household would need to be earning NZ$105,200 with a 20 per cent deposit to even afford a household at KiwiBuild’s ‘affordable home’ price cap of NZ$650,000, the report says.

With a 10 per cent deposit, households would need to earn NZ$118,300 a year – in the 60th percentile of income.

 “Affordability has fallen sharply across all income groups,” says Harshal Chitale, the council’s senior economist.

“Households in the bottom 35 per cent of incomes are unlikely to be able to buy anything,” Chitale says.

Chitale says that a “considerable share” of KiwiBuild homes would need to be built for far less than this cap to meet the housing needs of even Kiwis earning above-median incomes.

Auckland house sales data shows that the median dwelling price increased from NZ$494,000 in 2012 to NZ$847,000 in 2017 – an increase of 71 per cent.

During this period, the median household income increased from NZ$78,100 to NZ$97,300 – or just 25 per cent.

Chitale says housing affordability has “deteriorated considerably” in Auckland from 2012 to 2018, and the highest declines were felt at income levels between the 50th and 70th percentile.

The government’s KiwiBuild programme will deliver 100,000 affordable homes for first-home buyers over 10 years.

Housing and Urban Development Minister Phil Twyford told JUNO that all KiwiBuild homes in Auckland will be under the NZ$650,000 price cap, and three-bedroom homes in Papakura – the first KiwiBuild homes – will be sold for NZ$579,000.

“This report shows the desperate need for the KiwiBuild programme,” Twyford says.

“The national housing crisis is locking a generation out of the dream of home ownership.

“Many New Zealanders would be surprised that this now includes professional families,” he says.

You can view the report here

First published 6 July, 2018

Story by Claire Connell

JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. This story reflects the views of the contributor only. Content comes from sources that JUNO considers accurate, but we do not guarantee that the content is accurate.


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