Peter Thompson: Positive signs for residential house sales

Peter Thompson - Managing Director, Barfoot & Thompson
Peter Thompson: Positive signs for residential house sales

There were two pieces of good news in the last few weeks which suggest that the current stringent restrictions affecting residential property sales may be eased.

The most important of these was the hint that January’s slight easing of home loan restrictions by the Reserve Bank may be softened even further by the end of the year.

In a carefully worded statement the Governor of the Reserve Bank indicated that a significant factor in further movements would be the attitude of the trading banks to home loan lending if restrictions were eased.

You could read into the wording that he was making it clear that lifting the restrictions required the cooperation of the market, and no doubt there will be some blunt discussions taking place behind closed doors.

SEE ALSO: Peter Thompson: KiwiBuild – Silver bullet or dead albatross

It would be helpful to market trading if further loosening of the restrictions was to take place before year end.

The second piece of good news was more about what was not going to happen rather than what will happen.

This was the move to remove from planned legislation the restriction on non-New Zealand residents buying and holding apartments bought off the plans.

If the modifications proposed by the select committee survive as the Bill passes through Parliament, it will be a victory for economic and common sense.

Fallacy: Non-New Zealanders buying houses is causing property prices to ramp up

It is a fallacy that non-New Zealanders buying properties is ramping up property prices. The one area where these buyers are active is buying apartments off the plans. This is a critical segment of the Auckland market, and to shut them out would endanger projects getting off the drawing board.

This modification to the Bill is a sound, pragmatic decision.

During the month, data emerged which challenged the long-held belief and often quoted ‘fact’ that the falling rate of home ownership is a sign that current prices are making it impossible for New Zealanders to achieve what is almost considered a birthright – that of home ownership.

The latest figure I have seen on this is the one released by Statistics NZ in January 2017, when the level was 63%, and at its lowest in 66 years.

The data which queries this was contained in an article by Douglas Fairgray, of Market Economics, which appeared in the NZ Herald, and the data was on Auckland home ownership figures from the 2013 census.

Home ownership may not be the number one priority

Mr Fairway was using his research to put forward a case that KiwiBuild should be reserved for lower income families.

While not intended for that purpose, Mr Fairgray’s research data also throws up the fact that close to half of all Auckland households who did not own their own home in 2003 had a household income of $100,000 or greater.

More than 20% of the households had incomes of more than $148,000.

It seems a fair assumption to make that home ownership was not the number one priority of many of these households.

There will be a variety of reasons why people on such incomes choose not to own a home, and it is their right to do so.

But there is no justification for lumping them with those who do not have the financial means to buy a home, and then using that number to signify inability to buy a home.

For me, while the home ownership ratio may once have been a reasonable rule-of-thumb measure of home affordability, times and attitudes have changed, and it is now meaningless.

Rather we need to accept that home ownership for some is no longer a key priority in life.

Their priorities may lay elsewhere such as flexibility of location, a lifestyle not cramped with high mortgage repayments or the ability to invest their income in other more attractive, and liquid investments.

Changing trends around what's considered desirable

Our world is changing rapidly and within housing we see this in trends such as people wanting larger floor areas than a standard three bedroom home, the decline in the desirability of large gardens, the need to be close to major public transport corridors, the ever growing importance of school zoning, the attraction of inner city apartment living and the growing popularity of retirement villages and gated community living.

Social concerns should not focus on the number of people who do not own their own home.

Our social energies should focus on those who want the stability of a home but have the limited means to get into the market.


Peter Thompson

Managing Director, Barfoot & Thompson

barfoot & Thomspon


SEE ALSO: Peter Thompson: KiwiBuild – Silver bullet or dead albatross

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