Mike's Minute: We have good news on housing

We have good news on housing. 

1) It's still a buyers' market. 

2) A good chunk of the buyers are first timers. 

It’s the debate we should at least acknowledge has been, for now, partially solved. 

Not long back we were where Australia currently is; young people couldn't afford a house and, with plenty of emotion, it was suggested they never would. 

That wasn’t actually factually true then and it most certainly isn't now. 

What is helping is two things: 

1) The slow rise of prices as we move out of the recessions and into recovery. The capacity for the wider economy to grow without major house price increases is actually a good debate, or question, but one for another day. 

2) Lending. There is a lot of it for first timers. 

Money attached to small deposits is booming. The reason that is happening is because the Reserve Bank loosened the debt-to-income rules as well as the LVR's. 

So, with less than 20% you can get into a home. 

Australia has a better system. The Government backs some people into homes with 5%. It's income related and in Australia there is an attached argument around price increases, given they aren't building houses and immigration is booming. 

But here we don’t have those problems, sadly. But of the two problems young people face (one being the deposit and the other being the price of a house and therefore the mortgage) it’s the deposit that is the biggest hurdle. 

20% of $800,000 grand is $160,000. Saving that sort of money is ruinous to dreams, so the sooner we get past that as a hurdle the better. 

A mortgage can be managed. But what is most important about all of this is the indisputable truth that housing is a Kiwi dream, if not an obsession. A house is a retirement plan and the arguments around putting your money elsewhere and spreading the basket falls largely, rightly or wrongly, on deaf ears. 

If I had my way 5% would be the key, 10% max. If young people have been locked out of housing, it's not the price that’s been the killer, it's been the deposit. 

The Reserve Bank rules have been, yet again, another of their mistakes. These news stats are hopefully partial rectification. 

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