tried to buy your first house recently?
According to this site, it now takes three quarters of the average take-home pay to afford a standard mortgage payment on a median-priced house. In Central Otago, the average payment for the average house has ballooned to 105.2 per cent of the average salary - which means it is unaffordable to the average worker. In Wellington, if you cant pay $548.00 a week, you can't get an average house - unless you have got a really good mortgage or have a really high deposit - like $100,000. To bring the affordability percentage closer to 40 per cent would require a halving of house prices or a doubling of the average income.
However, investors are now snapping up houses traditionally bought by first home buyers and treating this investment as their superannuation scheme. They are charging quite good rent to students who are trying to pay off their student loan and save what they can for a deposit for a house by working long hours.
This whole mess is a real failure of public policy. Why can't the government subdivide housing stock, ensure that the right people are in the right houses and not only keep inflation down but increase incomes of those in the state sector. Why? They cant increase the incomes any as they are employing so many people in order to keep unemployment down. Low wages and low unemployment is much better than high wages and high unemployment, isn't it?.
But its not as bad as low wages, low unemployment and an increasingly high proportion of unskilled unqualified immigrant renters on the dole or in low paid unskilled jobs paying money to homeowners who own investment properties. This money is often subsidised by Work and Income. The uptake of investment properties is so serious that first home buyers with a good income are completely shut out of the increasing value of the housing market due to our low wage economy and the high number of immigrants. This, along with investors, is making the demand for the low end of the housing market even higher.