The house price expert still stuck renting

Infometrics economist Brad Olsen​ hasn’t given up on owning a home, but he is worried that young people will be pushed to speculate on cryptocurrencies in a bid to earn enough to get a house deposit.
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Infometrics economist Brad Olsen​ hasn’t given up on owning a home, but he is worried that young people will be pushed to speculate on cryptocurrencies in a bid to earn enough to get a house deposit.

Economist Brad Olsen spends a lot of his time being interviewed about house prices.

But while the 24-year-old is an expert commentator on the market, he’s still nowhere near being able to buy a house himself, and is renting in Wellington.

With the rate of house price increase running at 30 per cent year-on-year in recent times, he’s not surprised that a new survey suggests nearly one in three young people have abandoned hope of ever owning a home.

In October house prices set a new record after 15​ months in which they rose by at least 1​ per cent in every month, Olsen said.

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“I certainly do hold the view that I will be able to get into a house eventually, but I don’t forget just how difficult it looks. If I want to buy in Wellington I’ve got to pull together $280,000-odd (for a deposit) for what in general seems to be pretty poor-quality housing.”

“I’m going to pay $1 million for something that's going to make me ill.”

He says the struggles of house-buying didn’t come as a surprise.

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“Having worked in this area for so long now and having been interested in economics for some time, I had a fairly good idea of how cooked the market was fairly early on in life,” he said.

A new survey from Sharesies shows that other would-be house buyers are not feeling so optimistic.

Its annual investor sentiment survey shows 27​ per cent of non-homeowners among the 1686​ people, including 685​ Sharesies investors, said they had no aspirations to own a home.

That compares to 12​ per cent in each of the last two years.

“I wonder if people have looked at house prices, and said, for every step forward I have been taking, house prices have moved 10​ steps further away,” Olsen said.

“I wonder if they can no longer see much of a path for them because prices are insane,” Olsen said.

It wasn’t only on the housing front that renters were struggling, he said.

Wage growth was lower than inflation, so not only were houses moving further beyond their reach, but their incomes were going backwards in real terms too.

Sharesies co-founder Brooke Roberts​, said: “It’s no secret that the housing market is unattainable for many, and you can no longer blame millennials and their love for avocado on toast as the reason for being locked out.”

A survey by investment service Sharesies may indicate a growing number of renters are giving up on the idea of ever owning a home.
SIMON O'CONNOR/Stuff
A survey by investment service Sharesies may indicate a growing number of renters are giving up on the idea of ever owning a home.

But, Roberts said giving up on owning a home did not mean giving up on building wealth.

“When we started Sharesies, the psyche in New Zealand was investing equals homeownership, but we have really seen that change over the last two years,” Roberts said.

Andrew Lessells​, national president of the New Zealand Union of Student Associations​, said many young people were faced with the double challenge of paying off their student loans and getting on to the housing ladder.

“I do still aspire to owning a home, but it’s a big challenge,” he said.

“The reality is that a lot of people have given up on ever being able to afford it. Why would you aspire to something you can never do?”

“People have just given up hope. They have been sold so many false promises in the past,” he said.

Sharesies’ survey revealed a rise in the proportion of people who thought they need to amass an investment portfolio of $1m to retire happily.

Brooke Roberts, one of the founders of Sharesies, says 71 per cent of the general population no longer feel money is a taboo topic, and are happy to join in on the dinner chat or general kōrero.
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Brooke Roberts, one of the founders of Sharesies, says 71 per cent of the general population no longer feel money is a taboo topic, and are happy to join in on the dinner chat or general kōrero.

“We’ve seen these expectations steadily rise over the years, with 40​ per cent of the nation believing they need over $1m​, compared to 34​ per cent in 2020,” Roberts said.

That rose to 61 per cent of Sharesies investors, up from 55 per cent in last year’s survey.

Another big change in attitude identified in the survey was that people were becoming less whakama, or shy, about speaking about money to their friends or family, she said.

But as for Olsen, he says while some commentators are increasingly willing to “write off” young people’s hopes of every owning a house, he is not convinced.

It’s getting harder, and more expensive, but it is still possible for many, he says. “I would never say young people are completely stuffed.”

OTHER FINDINGS OF SHARESIES SURVEY:

  • Half​ of people are comfortable with their savings and current money situation.
  • Only 46​ per cent of Aucklanders felt comfortable with their financial situation, compared to 55​ per cent of Wellingtonians.
  • 31​ per cent of Sharesies investors had become more “aggressive” with their investment strategies since the pandemic began.
  • 73​ per cent of Sharesies investors said they were not given sufficient financial education in school.
  • 45​ per cent of Kiwis feeling they understand financial jargon, compared to just over half 57 ​per cent of Sharesies investors.
  • 38​ per cent of people think they are knowledgable about the sharemarket. More men think they are than women.