Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Any worker can own a home


7 February 2013

Any worker can own a home

Housing has been deemed unaffordable so often that it is now considered a fact. The key evidence has been the ratio of house prices to incomes which currently stands at 5.4, with 3 being the proposed ideal level.

The NZ Property Investors’ Federation (NZPIF) has examined this figure and found that it is potentially misleading. The NZPIF looked into other research to examine the validity of the housing affordability crises and came up with some startling results.

It appears we don’t have a Housing Affordability Crises, but a Housing Expectation Problem and a Housing Priority Dilemma.

The ratio of house prices to incomes is a crude measure of housing affordability as it doesn’t take account of interest rates, which have been falling since the late 1980’s.

The Federation also questions why a ratio of three times the household income is a desirable house price level. Assuming that a new home buyer saves their annual income as a 20%deposit, then five times their income would be an appropriate house price level.

The current House Price to Income ratio statistic also fails to account for Government subsidies and grants.

To properly examine housing affordability in New Zealand, the NZPIF have developed an on-line calculator at www.NZPIF.org.nz/afford-a-home. The calculator is based on the scenario of an Auckland couple with two children, potentially the demographic that would find it hardest to obtain home ownership.

Users can enter their household income and the calculator will show what allowances and grants are available to them, how much they will need to save, what value home they can expect and how long it will take them to pay off the mortgage.

The calculator shows that such a family on one income of $30,000pa will take 6.5 years to save a deposit for a home and 23.5 years to pay off the mortgage. Assuming they start saving before they are 35 they will have a debt free home by retirement.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Fulton Hogan's Heroes: Managing Director Nick Miller Resigns

Fulton Hogan managing director Nick Miller will leave the privately owned construction company after seven years in charge. The Dunedin-based company has kicked off a search for a replacement, and Miller will stay on at the helm until March next year, or until a successor has been appointed and a transition period completed. More>>

ALSO:

Gordon Campbell: On Electricity, Executions, And Bob Dylan

The Electricity Authority has unveiled the final version of its pricing plan for electricity transmission. This will change the way transmission prices (which comprise about 10% of the average power bill) are computed, and will add hundreds of dollars a year to power bills for many ordinary consumers. More>>

ALSO:

Half Empty: Fonterra NZ, Australia Milk Collection Drops In Season

Fonterra Cooperative Group says milk collection is down in New Zealand and Australia, its two largest markets, in the first 11 months of the season during a period of weak dairy prices. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news