Homeownership in New Zealand is on track to fall below 50 percent in the next 25 years, but there's one scheme that could help some households get a foot in the door.
Photo: RNZ / Cole Eastham-Farrelly
The number of New Zealanders who own their home is predicted to fall below 50 percent in the next 25 years.
That's according to new figures in a report released by Westpac today.
It strongly recommends boosting shared ownership possibilities, estimating that 152,000 lower- and middle-income household could be eligible for the scheme.
The Housing Foundation, which is a Charitable Housing Trust, has been helping Kiwis get a foot in the door of their own homes since 2007.
Today The Detail speaks to Dominic Foote, the foundation's chief executive, about the scheme. He says the concept may seem new in New Zealand but is standard practice in many other parts of the world.
"Classically a home is $800,000, and a family is able to sustain a mortgage of $450,000, and they've got $50,000 of deposit, that's $500,000, and you can't buy a home in Auckland for $500,000," he says.
That's where the Housing Foundation comes in to assist. In this example, he explains that the foundation chips in the remaining $300,000 so the family can purchase the home.
Foote says families who buy homes through this initiative generally buy out the foundation's share within the first decade of ownership. But there's never additional financial pressure to do so.
"We work with families on lower incomes, The Housing Foundation calculates how much that family can service as mortgage repayments. The ration we use is 30 percent. So, 30 percent of a gross household income of $100,000 is $30,000, divide that by 52 weeks in a year and that's roughly $600 a week that the family can put towards a mortgage," he says.
Foote says that as time goes on, a family's financial situation tends to improve.
"Families change their behaviours, they're less likely to spend money on things that aren't needed so much, they're thinking more about how they increase their income so they can buy us out," he says.
But Foote says the financial advisors at the foundation make sure the mortgage payments a family is making never take up more than 30 percent of their income.
But shared ownership can only go so far in helping solve the housing crisis.
Bernard Hickey, creator of The Kākā, says New Zealand has the least affordable and amongst the most dangerous and unhealthy housing stocks in the developed world.
"Essentially both government and councils and ultimately voters, through the 1990s and through the first 20 years of this century have consistently decided not to invest in either the infrastructure or in the actual houses themselves to cope with population growth that either they didn't expect or chose to ignore," he says.
Hickey thinks shared homeownership schemes are a good attempt to solve the housing problem, but more needs to be done.
"The problem needs to be solved by changing the incentives for investing in homes, to get rid of the tax-free nature of capital gains on residential land and to use the government and council balance sheets to build the infrastructure and the houses to swamp the market with supply and to make not just buying a home but renting a home much more affordable."
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