Is it time to change our attitude towards home ownership?

In New Zealand home ownership is held up as the only path to financial freedom - an essential right of passage to adulthood. That’s not so in many other countries, where long term renting is a viable choice for many. Are us Kiwis too obsessed with property?

With that question in mind, we’re taking a closer look at New Zealand’s property culture and asking whether it’s time for a change. 

What created New Zealand’s property obsession?

One obvious reason for New Zealand’s property obsession is financial reward. If you owned the average Kiwi home for just two years from January 2020, you would have made a tax-free capital gain of almost $135,000 a year, which is more than the  average annual household income reported by Stats NZ.

Unsurprisingly, data from our Money and You - Generation Rent report also show Kiwis think housing is the road to riches - almost 85% of respondents considered buying a property as a ticket to long term financial security. 

Our obsession could also have historic origins. In the 1800s the Crown attracted early settlers from overseas by offering them large plots of land to live and work on, while promising them a better life. People came from all over the world, attracted to the ideas of self sufficiency, open spaces and owning something for themselves. Since then it seems those ideas have been baked into our national psyche.

Another thing pushing Kiwis toward property ownership is the state of our rentals. For decades New Zealand had one of the most unregulated rental markets in the OECD (Bloomberg Economics, 2022), with very little security of tenure and negligible minimum standards for housing quality. As a result, renters may look to home ownership as a way to secure a stable, healthy home. 

Jon Duffy, CEO of Consumer NZ, thinks our ways of thinking about property are here to stay:

“Property ownership is such an intrinsic part of NZ society that I don’t see our habits and our attitudes to property changing any time soon", he said in episode 10 of our Money and You video series.

The problem with property

Back in the early 1990s 73.8% of households owned a home in New Zealand, but by the time of the 2018 census that number had fallen to 64.5% (Stats NZ). Since then property prices have increased exponentially, so logically current home ownership rates could be even lower.

Duffy says for some, buying property is just not possible:

“There’s already an acceptance in parts of society that certain people are lifelong renters. It’s not usually an active choice, it’s just not financially feasible for those people to enjoy a good standard of living and own a house.”

Consumer NZ data shows that of people who aren’t on the property ladder, 42% are concerned that they are permanently locked out by prices.

For the younger generation, wondering whether you’ll ever be able to own property in a society that places such a priority on home ownership can be a significant source of stress. In fact, 79% of Kiwis aged 18-39 surveyed for our Generation Rent study said they were very or somewhat concerned about house prices (compared to 52% of 60+ year olds). 

What’s the alternative?

Historically property has been a great tool for building wealth in New Zealand but over the next couple of years that may change. 

With the market showing signs of slowing down, some Kiwis may now be considering alternatives to buying property.

Renters don’t have to worry about maintenance, interest rates, or all the other costs and time consuming requirements of property ownership. 

Watch the below snippet from our research launch of 'Money and You - Generation Rent', where our panelists discuss alternatives to owning property, and the differing attitudes and approaches that exist elsewhere in the world.