What is the common misinterpretation that countries with high housing wealth are better off than others? Why have countries with lower rates of owner-occupied homes also the lowest unemployment rates?


Try before buy

Home Ownership rate = Housing Wealth vs. Lifestyle?

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How close would you think is the solution?


Housing shortage—what is the proposed solution? Housing has dominated the headlines for years now. Do the proposals cover what first-home buyers and renters have been so long waiting for? Or is that just election talk about - subsidies for first-home buyers, as you can read here or is it to please potential opposition voters in favor of capital gains tax? What is in for renters looking for landlords who are able to provide housing in similar quality in comparison with the average standard of owner-occupied homes?


Two issues strike the nerves of renters; the need for quality rentals and jobs in areas with rental homes. Good paid jobs would resolve related issues around housing expenditures and affordability - well, at least most of them. Looking at the international trends what works or not, you don’t need to be an economist. Let me show you something.



How does New Zealand’s OECD profile compares?


New Zealand’s statistical OECD profile for 2013 shows an annual economic growth apart from 2008, but the household disposable income not (OECD—Organisation for Economic Co-operation and Development). How can you fix an housing shortage (the gap between supply and demand) by driving investors out of the market and shrinking the household disposable income since 2007?


The common misinterpretation is that countries with high housing wealth are better off than others—that is not true. I am not a friend of statistics but I have to use them to explain.


Take for instance countries with the highest home ownership rate like Greek (73.2%), Spain (83.2%), and Italy (67.9%) - interestingly these countries also have the highest unemployment rates (Spain e.g. with nearly 27%). So what is home ownership worth in areas without jobs? Who can pay the bills without income?


In contrast  the richest countries in Europe like Switzerland (the lowest rate of 38.4%), or Germany (41%) have the lowest numbers of owner-occupied homes, but also the lowest unemployment rates and quality houses on low price. This may seem odd given the economic strength of those countries but the key factor is the renting culture.


In NZ the housing issues have been going on for decades “buying/selling, interests/inflation”, well, but how do renters benefit from all this?  The QV.co.nz statistics in July 2014 are an impressive reading, national average house price 479k. So, housing wealth must be very impressive for somebody who has not seen the wooden rain-shelters built until the 70s and the leaky homes in the 90s and 2000— a proof for how wealthy home owners really are.


Jobs and demographic changes moved the focus to Auckland and Christchurch that adversely affects the rest of the country. Demographic changes also mean more people prefer to rent a home for various reasons, what is in for those people?


Klauster Properties Ltd - Renter’s Blog

Rent or Own - Decision at some stage in life?

Housing Wealth vs. Lifestyle


NZ has inadvertently adopted the UK housing market, the deregulated rental market and a deregulated mortgage market. In contrast Switzerland and Germany have highly responsive housing supply, significant rental controls, and tighter credit regulations. 


When all these factors are combined, is there any wonder why the housing market has experienced several  boom/bust cycles similar to England? 


Industrialization and globalization have bigger impacts on people’s lives than home ownership, saying, lower home ownership rates (if you follow the international trends) are not a weakness of the housing market. Are not renters the adaptable workforce of industrialized nations?


When the rental housing takes up a larger share of the market, then because of social changes, employment opportunities and lifestyle. For articles about the non-housing wealth, renter’s retirement and renters in future (Millennials) - follow the links and more to come.



TRY before BUY


As take away, TRY—as long you rent to sort your financials before BUYing anything. Building up non-housing wealth is the first and important step, whatever the next step will be. Good luck




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