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Opting out of the quarter-acre dream

Thursday 5th December 2013

Your own home on your own quarter-acre section – the plan of generations of New Zealanders.

But today first home buyers are being priced out of the market by costs which are soaring relative to incomes, and squeezed even further by new lending restrictions.

Is the great Kiwi dream becoming just that – a dream?

Chris Gilbert spoke to four people who, 30 years ago, would have been keen home buyers – but now are not so sure.

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Hayden Ellis is the sort of young professional banks would be lining up to sign up for his first mortgage. He’s 24, works full-time and rents a central Wellington apartment with his partner. For Hayden, buying a house goes against his desire to maintain a freedom of lifestyle.

Hayden Ellis: "I think owning a home closes you in, makes you adult, which is not fun."

"I just don't see it as a good decision for young people in this country, in the current situation. It doesn't seem like a reasonable goal for young people to have when there is so much more on offer."

He sees home ownership as sacrificing the  freedom to move, when he may want to travel the world. But he also says you need time to figure yourself out, follow your passions, and retain the flexibility to swap career paths.

"You become a graduate and get a career. Then after two years you discover, not only was your degree not what you're into, but now have a job that makes you unhappy every day of your life. You should have the ability to ditch that and become a dog walker if that will make you happy. You can go home to your renter, but know that even if your house isn't that great, it's not yours and it doesn't matter.

"I think owning a home closes you in, makes you adult, which is not fun."

Hayden says he definitely wants to own a home one day – just not for at least another 10 to 15 years.

Hayden’s not untypical of today’s generation of twenty-somethings.

BNZ's Nine Reward's Consumer Trends survey shows that the age group most opposed to the new minimum deposit rules imposed by the Reserve Bank in October are those aged between 25 and 29.

The new rule limits the amount of lending banks can approve for customers who have a loan-to-value ratio of over 80 per cent, meaning most aspiring home owners now have to have a minimum deposit of 20 per cent of the property’s value in order to secure a mortgage.

As such, the percentage of 25- to 29-year-olds who intend to invest in property has declined since October from 10 per cent to seven.

Dan Reardon, 34, can relate to Hayden's reluctance to being 'closed in' by owning your own home. "That's actually a really good answer," he says, "and if I was ten years younger, I'd say the same thing."

Dan works full time as a public servant. Like Hayden, he says home ownership is just not a priority for him.

"It's a cheesy answer, but my priorities are the work I do, my friends, and social connections. I know that doesn't really cost anything, but it's where I seem to focus my priorities rather than the idea that I'm going to be saving for 'X' property."

He reflects on his visits to family and friends in Australia, and says how much easier it seems to buy a house there. He says the kiwi home-owning culture definitely exists, but expresses frustration at the baggage that comes with it.

"There's a perception that somehow, if you don't own a home, you're not really a good bet. You're somehow flighty, or not as reliable a person if you don't own a good block of land in Upper Hutt. But I think that's not a social pressure so much an annoyance. I think it's rubbish."

A sociologist at Massey University, Leslie Patterson, says three decades ago most people followed a familiar life-pattern of secondary education, followed by marriage, home ownership and children. There is anecdotal evidence of milllenials achieving these events later in life, and it's now showing up in research.

"It's a big signal about a big change in the way that young people move from childhood into adulthood. Which I think is something to think about when discussing how young people imagine whether they might become home owners or not"

Dr Patterson says, 30 years ago, most women became mothers at the age of 20 or 21. The family home was bought during their mid-20s.

She says today the first child has been delayed by nearly 10 years, to 29 or 30. The insertion of tertiary education has also been part of elongation between life events. And she says there are other, cultural and political forces at work which deter people from buying a house at the age their parents would have.

Dr Patterson says 30 years ago young people had "tramlines" which they could follow to lead them into secure work and home ownership. But today those tramlines are no longer there and people are really expected to sort of find their own pathways.

"The labour market has been deregulated – this is a generation that is facing the perils of precarious work much more intensely," Dr Patterson says.

"Young people might use the language of 'flexibility' to describe that work, but really, they are compelled to be flexible because their labour is much less valued and protected than it used to be."

Ani Eparaima, Tuhoe, and Anton O'Carroll, Nga Ruahine Rangi and Ngati Ruanui, are both 37 and feel frustrated at the lack of confidence they feel to invest in a home in Aotearoa.

Ani's main reason for choosing renting over buying, like most people, is primarily financial.

Anton says he is unwilling to buy here, because he has a partner in Australia where houses are more affordable and the average income is higher.

But Anton and Ani both have family homesteads they can return to. They don't feel the desire to build a new home from scratch.

"I have a place within Aotearoa, it's not mine, but it belongs to me and I belong to it," says Anton.

"It's our kainga back home. To buy something else in Wellington, where I probably won't live out my life, I don't see myself doing that".

Ani says where she rents at the moment is in a safe community, where people talk to each other and in access of quality schooling. She says buying a home in such a location is simply not affordable.

Ani Eparaima says, as much as she would like to be able to confidently invest in New Zealand, the identity issue of owning land here is falling away. "International investment has sort of killed that old school New Zealand flavour for me".

Although Hayden is 13 years younger than Ani, he shares her sentiments.

"That's what I'm talking about when I ask why struggle so much in your youth just to own a home? I think there's way better ways to like a country than to own a horrible house in Stokes Valley."

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