This morning, rather than using those excellent new electric trains, I drove to work in a Suzuki Swift. It’s an import without a band expander, and thus locks me below 90 on my FM dial. Being a newsy sort of a guy in a newsy sort of a mood, that meant gritting my teeth and checking in with Mike Hosking on ZB.
What I heard shocked me to my core. Hosking – usually so callous, so indifferent – was up in arms about something. And up in arms about an important issue, affecting predominantly young and low income people: housing. He broke it down very fairly and sensibly, to his enormous baby boomer audience. What he essentially told them was this: you are ruining it for everyone with your not-at-all cute hobby of house trading.
I was so impressed at the power and persuasiveness of his argument – particularly its closing note – that I’ve transcribed it for you lucky Spinoff readers.
So behold, the wisdom of the Hosk:
“So generation rent is becoming a reality. We started talking about this on the programme maybe a bit over a year ago. The biggest victims of the house price rises and the new rules around lending have meant more and more people can’t afford a house – so they rent. The stats are stark – out this week, home ownership has dropped from 1991, from 74% down to 64%. The rental numbers have gone up, from 23% to 32% and still rising.
Now, none of this would be an issue if people didn’t mind renting. But we do. We rent with a view to buy. Very few people rent because they want to; the rent because they have to. And it wouldn’t be an issue also if you were taking that money you saved from renting and putting it somewhere so you could retire on it. But the reality is – always has been in this country – that home ownership is not just a lifestyle choice, it’s a means of saving. And the greater fear – and we should all be aware of this, because it’s real – is that if you don’t start saving young, you might never start at all.
So what to do? Well, for a start, the Reserve Bank can take responsibility for their over-reaction to prices and allow banks to actually do what they do very well and so profitably by allowing them to lend to people who can afford it with a more realistic deposit than 20%.
We can also change the way we rent and treat rentals, which is completely different internationally from the way we rent in this country. In many cities that have the same sort of price issues we have in Auckland, it’s very common to rent for years. You’re allowed to paint the place and make changes to your place – make the place your own. Here it seems to be a six monthly or yearly sort of a thing, with a sense of uncertainty attached to it. We also need to make major changes to apartments. In heavily populated places, anywhere you look on the planet, apartments tend to be the go to option for millions of people. They’re completely different here. You need a greater deposit; they’ve been badly planned and built in many cases.
They need to move into the modern world, and be seen as realistic accommodation with realistic values and investment returns. The cold hard reality of having generation rent is that the homes are still owned by somebody. But the somebodies are increasingly a small number of people who got into the market years ago, and used the equity to fund further purchases.
Listen to this excellent Mike Hosking rant here. Starts at around the eight minute thirty mark.
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