Editorial: Still aim for own home
OPINION: Getting on the property ladder has never been easy.
Probably because so many of us want to do it.
About three-quarters of us nationwide apparently, although that could be about to dip.
Dip because the Reserve Bank wants to slow down riskier bank lending in case of a crash in the housing market.
The bank reckons that 30 per cent of new mortgage lending is high risk and wants that figure down to 12 per cent, and the way to do that is to increase the deposit required to around 20 per cent.
Right now around 70 per cent of first homes are bought with less deposit than that.
This approach, if it goes ahead, is aimed at the Auckland market, but we all get caught up in it.
The plus in Timaru is that house prices are lower, but so are incomes. We still come out on the better side of the ledger though. To buy the average Timaru house will require five years of an average salary here. In Auckland the ratio is seven years.
But why buy a home at all?
Rates, insurance, maintenance ... what a hassle.
Yet ... mortgage rates are low, and at the end of it you've got something to sell. Most of all though, there's the pride in owning your own home, even if half of homeowners are doing that in partnership with the bank.
I feel for young people starting out, what with their student loans and all, although it wasn't plain sailing when we bought our first homes and interest rates hovered around 20 per cent. At least then though there were government incentives to help you get the deposit.
There still are of course, although perhaps not as generous as back then.
The Welcome Home Loan scheme allows first-time home owners on modest incomes to buy with little or no deposit, while those in KiwiSaver can get up to $5000 plus their own contributions and those of employers towards their first home.
If all that sounds a bit hard, should young people abandon the idea of owning their own home?
Please no. They should have the chance to experience that feeling of pride, that they are getting somewhere.
And heck, someone has to own the houses.
- The Timaru Herald