Home ownership versus renting - is either likely to make you more happy?

Johanna Knox used to own her own home, but being on a single income and facing higher house prices, it's no longer possible.

"This was 20 years ago, and the difference from then to now is just incredible, especially when you consider how little wages have gone up."

Knox's situation is increasingly common - new Census data shows New Zealand's home ownership rates are at their lowest level since 1951.

Ross Giblin/Stuff Welllington woman Johanna Knox used to own a house but now, being on a single income and facing higher house prices, it's no longer possible.

For a solo parent such as Knox, whose income as a freelance editor and writer can fluctuate, securing a home loan is impossible.

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"The word 'precariat' started being used a few years back, and that's exactly what I'm part of," the Wellingtonian said.

According to the 2018 census, only 64.5 per cent of New Zealanders own their own home, compared to nearly 74 per cent in the early 1990s.

CHRIS MCKEEN/STUFF Economist Shamubeel Eaqub says Baby Boomers are to blame for young Kiwis being shut out of home ownership.

​Shamubeel Eaqub said it was driven by a lack of affordability in New Zealand.

According to the Real Estate Institute, in 2013 the median New Zealand house price was less than $400,000. Now, it's nearly $600,000, a 50 per cent increase.

Over that same period, wages have only increased by 20 per cent.

Eaqub said the Baby Boomer generation had been perfectly positioned to ride a wave of favourable economic conditions.

He said the "entire economic experiment of the last 30 years" had led to a big transfer of wealth to Boomers, or those born in the post-World War II period.

"There was a big surge of inflation in the 1960s and 1970s that robbed older folk of their assets and transferred wealth to Baby Boomers. They then rode the wave, asset prices are now at levels that we haven't seen in any generation in the past.

"The ownership of assets is concentrated among older people and it's getting harder and harder for younger people to get in."

He said the Boomer generation had "sat idly by enjoying the unprecedented growth in assets, believing themselves to be smart investors".

"They failed to see and act on the deep and structural policy problems they let accumulate over their time as the biggest bloc of voters. They also failed to see that much of the gains they enjoy is at the expense of the generations of their children and grandchildren."

The Coalition Government's attempts to level the playing field since coming to power in 2017 have stumbled, with KiwiBuild failing to deliver on the thousands of homes that were hoped to provide more affordable options for first-home buyers.

The First Home Grant and First Home Loan schemes have also been criticised for having income and price limits that are too low for the market in many parts of the country.

Loan-to-value restrictions that required at least a 20 per cent deposit for owner-occupiers also put a handbrake on some first-time buyers.

They are now about 24 per cent of the market, just less than investors with a mortgage.

Economist Brad Olsen, of Infometrics, said property price growth had rapidly outpaced growth in earnings.

"The rapid rise in house prices continues to drive a wedge between New Zealanders who have property and those who don't.

"Those who don't have property are facing a higher deposit burden to overcome, with higher house price to income ratios, which has contributed to getting on the housing ladder even as interest rates have fallen.

SUPPLIED Economist Brad Olsen, of Infometrics, said property price growth had rapidly outpaced growth in earnings.

"The key reason behind these higher house prices, which have led to the falling home ownership rate, is the lack of housing supply.

"Planning restrictions and higher insurance and household costs have made it more difficult to build, own, and maintain a home, and so unlocking additional housing supply is key if New Zealand's housing issues are to be fixed."

Economist Cameron Bagrie, of Bagrie Economics, said the low interest rates modern first-home buyers pay were no real benefit.

"People say lower interest rates make housing more affordable. It doesn't. It just means you can borrow more at a lower rate but doesn't change the basic valuation relative to incomes. Lower interest rates just mean you can borrow more to buy it."

Data compiled by British firm Swinton Insurance puts New Zealand behind the United States, at 64.2 per cent, Canada, at 66.4 per cent, Norway, at 82.6 per cent, the UK and Australia at 65 per cent and Romania at 96.8 per cent.

New Zealand is still ahead of countries such as Switzerland, at 42.5 per cent.

None In Tauranga, Lisa Bryce and husband Brendon are still working towards buying.

In Tauranga, Lisa Bryce and husband Brendon are still working towards buying.

Lisa said the level of deposit required, even for a basic "fixer-upper" was a big hurdle to get over.

They are aiming to save enough to put down for a house the money in three years.

"I don't know what the norm is but I feel like three years is pretty good for us and we're fortunate that we both work and we can generally survive on one income while saving the other."

Ross Giblin/Stuff Johanna Knox believes a new approach to property ownership may be needed.

In Wellington, Knox isn't even sure that home ownership should be something we strive for, anymore.

"I think we need structural change for sure. But whether simply pushing for more people to be able to own their own homes is the change we need? I don't think it is.

"Partly because there are always going to be some people who still won't get over the line. I think the change needs to be bigger, more innovative.

"We need to stop thinking of personal home ownership as the goal, and bring in some completely new ideas."

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