More people choosing to rent
Home ownership has dropped to under 65 per cent, following a trend running back to the 1990s when almost three out of four families owned their own home.
Fewer people now own their homes than five years ago, with home ownership dropping most for people in their thirties and forties, according to official figures.
Some 64.8 per cent of households own their own home, or held it in a family trust, according to latest Census figures, down from 66.9 per cent in 2006. Some economists say that's likely to reflect the house price boom in the 2000s.
Poorer and younger people find it increasingly difficult to get into the market. Between 2001 and 2007 real house prices doubled, roughly equal to about 12 per cent a year on average in one of the biggest booms in the developed world.
During the price boom, average house prices peaked at close to 6 times the average disposable income, more than double the ratio in the early 1990s.
But there may be other reasons, such as people waiting till they are older before settling down and buying a home, and a changing ethnic mix, with more Asian migrants who are more likely to rent than buy.
High levels of home ownership are seen by some as a factor in social stability and a "home owning democracy", with homeowners likely to have stronger links to their community.
On the other hand, with such high house prices, renting makes much better financial sense.
Recent research suggests on average it is about $138 a week cheaper to rent than own a house.
And if people need to move to find work, it is much easier to leave behind a rental than sell a home. Buying a home also ties up a large amount of money in a single asset.
Infometrics managing director Gareth Kiernan says "affordability" would have hit home ownership rates, especially for younger people in their early thirties.
"It's increasingly difficult to get into the housing market," he said.
Last year, just 43 per cent of people in their thirties owned their own home, down heavily from 54.6 per cent in 2001. But the decline in home ownership was seen across the board from people in their twenties to seventies, Statistics NZ figures showed.
There was a significant shift in affordability from 2001 when house prices started rising rapidly, Kiernan said. The gap between renting and buying had widened substantially in recent years "with renting being cheaper".
The only thing renters miss out on is the potential capital gain from buying, which can turn around the financial equation, especially if they have a low deposit.
Home ownership may be declining also because people were taking longer to settle down.
It was not clear that falling home ownership was actually a problem, though there was an issue with the length of tenure for people who rent.
In Europe, people can rent for long periods and so gain some security, while in New Zealand people could be kicked out with six weeks notice.
"That's potentially something of a concern," Kiernan said.
Motu Research senior fellow Arthur Grimes said the home ownership rates had to be treated carefully, because they could be skewed, for example by rising numbers of Maori and Pacific Islanders in a given region, who tend to have low home ownership rates.
Adjusting for that in one area in the 2006 Census, home ownership rates did not actually decrease, though they appeared to.
"The raw trends can be correct and they can be misleading," Grimes said. Home ownership rates did fall sharply in the 1990s, but whether real home ownership rates had continued to fall since then was a "moot point" with rising numbers of people who tended not to buy their own home for cultural or other reasons.
But Grimes said rising house prices did not necessarily cause falling home ownership.
If investors had better access to borrowed money and thought high prices were warranted they would be able to squeeze out first home buyers.
"But high house prices may be more of a disincentive to investors (who are in it just for the money) than to homeowners."
The Census figures show flats and apartments are becoming more common in big cities. For example, flats and apartments now make up 37 per cent of private homes in Wellington city, up from 32.7 per cent in 2001. Wellington has the highest percentage of joined homes among cities and districts in the country.
Grimes said the "fixation" with home ownership was "very Anglo- Saxon" and it was not clear why.
2013: 64.8 per cent
2006: 66.9 per cent
1991: 73.8 per cent (around peak levels)
1936: about 50 per cent
Why the change?
House prices are rising and renting is more affordable
Home ownership dropping for people in their thirties and forties, possibly as they delay settling down, so they rent for longer.
Flats and apartments more common in big cities
Rising Asian population who are less likely to own
The Dominion Post