Mike Hosking: First time home buyers need a leg up

One of the great myths of the modern economy is the idea that young people can't afford a house.

Now, the facts are that for every house sold, about a quarter of them, sometimes a little bit more, about 27% are in fact first-timers. That figure has been remarkably solid over any number of years in any type of market.

Can it be expensive? Yes. Do some people miss out? Yes. Are some areas better or worse than others? Yes.

But in a world where the negative sells, if you can convince people that the young are victims, it can become very political very fast. Of course, no government can manipulate the market, and for all the governments that are promised a solution, it more often than not ends and tears.

And for every lever you pull, there is a counter reaction elsewhere, which is why it is often best to leave the market to its own devices.

Australia though is dabbling in housing as we speak. The latest scheme involves getting first buyers or first time buyers into their own place with a 5% deposit. Any first timer, any salary.

Personally, I've always liked the idea of getting, young people into housing, easier entry, the better often the real impediment, and it's true here, of course, is not the mortgage, but the down payment.

I mean, 20% of a million bucks, which is basically the equation in a lot of New Zealand is $200,000. That's a mountain for most and an insurmountable one. Even $100,000 is hard work, but what about 50? $50,000 5%, that's not hard.

Small town New Zealand, you go to a cheaper place. $600,000 house, $30,000. That's doable. That's your average Kiwi saver. Why aren't we doing that? Do you lose on housing? Really?

Is it a good long-term investment? Yes. In Australia, they kept the price to a first home type level. So for example, at the moment in Sydney, it's 1.5 million less in Melbourne, but what it will do is get more people into houses.

Do people want that? Yes, they do.

The Reserve Bank worries about a price surge, but this is being done ironically in the middle of a price surge. Australian housing is often running. The debate about affordability is raging hot, and yet the government is all for it.

And note, it's a labour government.

So what about us? Does our housing market need a boost?

Yes, it does. The first timers need a leg up, see?

What's stopping us?

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Episode Transcript

Speaker 1 (00:00):
One of the great myths of the modern economy is
the idea that young people can't afford a house. Now,
the facts are that for every house sold, about a
quarter of them, sometimes little bit more about twenty seven
percent are in fact first timers. That figure has been
remarkably solid over any number of years. Than any type
of market can be expensive. Yes, to some people miss out. Yes,
are some areas better or worse than others. Yes, But

(00:21):
in a world where the negative cells, if you can
convince people that the young are victims, it can become
very political, very fast. Of course, no government can manipulate
the market, and for all the governments that are promised
a solution that more often than not ends and tears,
And for every levy appulled, there is a counter reaction elsewhere,
which is why it is often best to lead the
market to its own devices. Australia, though, is dabbling in

(00:42):
housing as we speak. The latest scheme involves getting first
buyers or first time buyers into their own place where
they five percent deposit any first timer any salary. Personally,
other always liked the idea of getting young people into housing.
Easier entry the better. Often the real impediment and its
true here, of course, is not the mortgage but the downpayment.
I mean twenty percent of a million bucks, which is

(01:02):
basically the equation in a lot of New Zealand is
two hundred thousand dollars. That's a mountain for most and
an insurmountable one. Even one hundred thousand dollars is hard work.
But what about fifty fifty grand? Five percent? That's not
hard small town New Zealand, you go to a cheaper
place six hundred thousand dollars house thirty grand, that's doable.
That's your average key, we say, but why aren't we
doing that? Do you lose on housing rarely? Is it

(01:24):
a good long term investment? Yes? In Australia they cap
the price to a first home type level, so for example,
at the moment in Sydney it's one point five million
less in Melbourne. But what it will do is get
more people into houses. Do people want that? Yes they do.
The Reserve Bank worries about a price surge, but this
is being done ironically in the middle of a price surge.
Australian housing is often running. Their debate about affordability is

(01:46):
raging hot, and yet the government is all for it
and note it's a labor government. So what about us?
Does our housing market need a boost? Yes it does.
To first time is need a leg up, see What's
stopping Us? For more from the Mac Asking Breakfast, Listen
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