Ashley Church (age mid 50’s, so he qualifies for an interview!), is a popular property commentator in the New Zealand Herald.
His predictions on property values have been pretty much on the mark.
He describes the current policies of the Government and Reserve Bank as actually making entry to home ownership more difficult for young people; the very people the Government is trying to help. Here’s a link to one of his recent articles:
https://www.oneroof.co.nz/news/40252;
“Most of my focus is on younger, first home buyers because home ownership can change the whole nature of society,” Ashley told “The Long View” in a phone interview.
Most older people, while there are exceptions he said, have made provisions for themselves in later life.
But he offers some surprising data on the question of whether millennials have a more difficult time than baby boomers had, in buying their first homes.
“All generations have different challenges. Older people remember paying 20 percent interest rates on their mortgages. These were times when mortgage repayments were taking up 52 percent of median household income. Today, repayments can require 37 percent of median household income.”
Ashley said it is “hard to get your head around” the concept that entering the home ownership market has always been tough. But tough in different in ways for different generations.
Asset rich-income poor
Some weeks agon, this publication met a South Auckland woman in her late 50’s who had a limited income and found weekly payments, even buying food, a challenge. Ironically she had purchased her family home in 2004 which today has a healthy seven figure value. She turned down in July this year, an offer of $1.2 million.
“Come back with $1.5 million and I will sell,” she responded. The property could well have exceeded that asking price since the offer.
Ashley commented, however, that this woman’s ability to raise a bank loan to bring some slight improvement to her lifestyle, could be inhibited because of her low weekly income; banks still like to see an income that can service mortgage debt.
Reverse mortgages
But the “income poor-asset rich” circumstances of many older New Zealanders have seen the growth of reverse mortgage business. The concept enables older people to access extra day to day money via a mortgage loan against their real estate assets, usually a family home carrying little or no mortgage debt.
These agreements are fine, said Ashley, provided the borrower is aware that older people are living longer. Consider how the future might unfold and how the debt can be accommodated.
Family benefit” revival?
Many older Kiwis will remember the family benefit scheme, where young Parents from the 1940’s up to the mid 80’s could “capitalize”on a Government weekly allowance for their children- effectively taking the money up front as a lump sum to invest in a family home.
Ashley said there is merit in looking at a revival of this scheme in some form, although it would have limitations.
The Lange Government in the eighties, introduced a new family support scheme which now means there would have to be some system where, if a family’s earnings changed for the better, there would need to be a way for the family to keep a home with either less or no continued Government support, depending on the improvement in family income.
Lying behind the family benefit scheme was the philosophy that home ownership creates more stable communities.
Interviewed by Tony Edmonds
