Home ownership
New Zealand has a strong tradition of home ownership and investment in the housing sector. Total housing wealth exceeded $300 billion at the start of 2004.
However, the numbers of New Zealanders living in their own homes and those that depend on or choose to live in rental housing have been changing over many years. The number of people living in houses they own peaked at 74 percent in 1991 and declined to 68 percent by 2001.9 This drop predominantly occurred among the 20-39 year old (household formation) cohort, yet the decline stretched across all metropolitan and urban areas and income bands. Over that time period, the already low home ownership rates amongst M-aori and Pacific peoples fell further and faster than other ethnic groups. This change occurred during a period of overall growth in the New Zealand population and in the number of New Zealand household units, which increased from 1.08 million in 1986 to 1.34 million in 2001.
This observed decline in home ownership has occurred for a number of reasons, including less affordable house prices in some areas in some periods, demographic changes, delayed family formation, removal of housing assistance in the late 1980s, and changes in preferences. Structural changes to the economy and financial sector, such as periods of negative real interest rates and constrained investment choices in the 1970s, may also have contributed to the high home ownership rates of the past.
Home ownership and affordable rental housing have been important public policy issues for many years. The Department worked with an across-government team, led by HNZC, on the development of the New Zealand Housing Strategy. We will be taking the lead in implementing aspects of the strategy related to building quality and regulation of the rental housing market and will be working with HNZC and other agencies to ensure the housing sector is effectively responding to increased demands for affordable, good-quality housing.
The Department will continue to work with HNZC, the Treasury and the Ministry of Social Development on developing policy options for improving home ownership outcomes for those most in need. Work undertaken to date in this area has led to the development of an integrated package of home ownership assistance to be implemented from 2005/06.
In addition, the Department will be reviewing the Unit Titles Act 1972. This review will ensure there is an appropriate regulatory framework for governing the diverse types and complexity of medium- and high-density multi-unit developments.
Future work of the Department is also likely to include improving our understanding of the home ownership rate decline and considering supply-side interventions that may remove further barriers to home ownership (eg, through planning and zoning changes and working with developers) to make housing more affordable to those on modest incomes.