The New NZ - Time To Change ? Two Questions Relating To Our Housing Market
We are all being asked to question how we may like the new NZ to be in the future, so I pose two questions relating to our housing market.
- I do question why we are working so hard to stop the property market devaluation which to me is all part of a natural process. Especially after spending the last decade complaining how overpriced our houses are, and numerous govts attempting to address the issue.
Surely if property prices drop by 15 % as long as that happens across the complete stock it may be a pill we could, and should swallow. It may not be such a bad thing for those who have never been quite able to get that deposit who may be pleasantly surprised.
Possibly the pill is due as many global economists have been forecasting the probability of a recession for some time. Has Covid both fast-tracked and up-scaled the inevitable?
2. While we are considering possible changes in property why can’t NZ explore introducing the extended mortgage periods many enjoy overseas where the most common terms are 15-year and 30-year mortgages, but with shorter terms are available. In these same markets 40-year and 50-year mortgages are now available in areas with high priced housing, where even a 30-year term leaves the mortgage amount out of reach of the average family.
Imagine the potential social value that could be attached to longer mortgages. What that stability would bring to our families, potential health outcomes, the elderly, mental health, and society in general.
As an investment in New Zealand and considering the total value add to society perhaps a committed Government could even see the value return and consider a place as a large-scale mortgage lender again. Kiwibank could be their vehicle here.
Or a model where the current NZ banks look to Govt as the lender rather than offshore finance? Maybe limited to the ‘residence or place living’ only, not investment property.
Bank’s often challenge this by saying the New Zealand market is too small and they need to borrow at higher rates, but is it time to challenge this?
In 2018 the combined stock of residential housing in New Zealand was worth $941.611 billion, up from $667.718b in 2015. New Zealand houses are now worth a combined total of nearly $1 trillion dollars. (Mar 21, 2018 – Stuff newspaper).
If I want to borrow $500,000 from the bank then why can’t they borrow that money from offshore on a 30 yr fixed interest rate, add a small % and bring something of value to the table?, Imagine the value you could possibly attach to a 30-year client, looking at the business model of Apple, Amazon and Google I’m pretty sure that’s how they think.
Lets stop and do better, not a case of just doing what they have always done
To quote a couple of comments from Deloitte Insights ‘2020 banking and capital markets outlook - authors Val Srinivas, Jan-Thomas Schoeps, Tiffany Ramsay, Richa Wadhwani, Samia Hazuria, Aarushi Jain’
“Banking should become more open, transparent, real-time, intelligent, tailored, secure, seamless, and deeply integrated into consumers’ lives and institutional clients’ operations”.
“And, last but not least, concerns about climate change and social impact will force banks to reprioritize their role in society and sacrifice short-term gains for long-term sustainability”.
My challenge for all in the finance sector (and the rest of us) is to adopt a true focus on the customer and what may be better for the client, do better and make a real contribution to the host economy.
If they don’t then they may regret a missed opportunity. They may be big but they have ‘trust’ levels many would dream of and Amazon, Apple, Facebook and Google are already delivering enhanced integrations to smart cars and home appliances. These companies, and brands like Venmo, PayPal and Square, are well along in their encroachment into traditional banking services.