homeownership in new zealand...new zealand population conference alan bentley , senior analyst....

Homeownershipin New Zealand:Trends over time and generations

Alan Bentley, Senior AnalystNew Zealand Population ConferenceWellington, 20 June 2019

Why it matters

$39,000

$408,000

$845,000

Not owned

Own, with mortgage

Own

Median household net worth 2018, by tenure

Homeowners typically twenty-times wealthier

Owner-occupied dwellings held in family trust not shown

Source: Stats NZ Household Economic Survey 2017-18

0

100

200

300

15-24 25-34 35-44 45-54 55-64 65-74 75+Age group, years

financial assetspropertydebt

Median household assets and liabilities 2018, by age group $ thousands

Property a big part of wealth accumulation

Source: Stats NZ Household Economic Survey 2017-18

20%

30%

40%

Fair or poor Good Very good Excellent

owner-occupiednot owner-occupied

Self-rated general health by tenure

Homeowners report better health

Source: Stats NZ General Social Survey 2016

Cold Mould

Always or

o�en

Sometimes Never Major Minor None0%

20%

40%

60%

owner-occupied not owner-occupied

Proportion of households reporting mould and cold problems

Homeowners' homes have less mould and cold

Mould problem: House or flat with dampness or mould problemCold problem: In winter, house or flat colder than desired


15%

20%

25%

30%

6 or less

7 8 9 10 Completely

satisfiedReported life satisfaction (out of 10)

owner-occupied not owner-occupied

69% of homeowners reported a life satisfaction score of 8 or more, compared with 56% of non-homeowners

Homeowners appear happiest with their lot


Context

50%

65%

74%

1916 1936 1954 1991 2013

Proportion of dwellings owned by their occupants

Homeownership rate lowest since 1954

Source: Stats NZ, Censuses of Population and Dwellings

Generations

36%

50%

88%

30 40 50 60 70age

2018Homeownership rates increase with age

People who own: includes ownership by household, own with mortgage, and since 2007, in a family trust excludes people living with parents

Source: Stats NZ, Household Economic Surveys 1988-2018

1944-19481954-19581964-1968

1974-1978

1984-1988

10%

50%

80%

20 30 40 50 60 70age

Trends in homeownership by birth cohort

Majority of today's 70-74 year-olds have enjoyed homeownership since their 40s

LOESS trend lines


Birth cohorts shown if we have observations at that age for all five birth years in that cohort


1944-1948

1934-1938

1924-1928

1954-1958

1964-1968 1974-19780%

20%

50%

80%

20 30 40 50 60 70age

Trends in full homeownership by birth cohort

Many of today's 70-74 year olds paid off their mortgage in their 40s and 50s

LOESS trend lines

People who own: includes ownership by household, without mortgage, and since 2007, in a family trust excludes people living with parents

Birth cohorts shown if we have observations at that age for all five birth years in that cohort


age 25 to 34

age 35 to 44

age 45 to 54 age 55 to 64 age 65 to 74

35%

50%

65%

90%

1988 1995 2000 2007 2014 2018Year to June

Proportion of people who own by age and yearDeclining proportion of young home-owners

LOESS trend lines



age 30 to 39

age 40 to 49

age 50 to 59

age 60 to 69

age 70+

5%

50%

80%

1988 1995 2000 2007 2014 2018Year to June

Proportion of people who fully-own by age and yearFull homeownership becoming less common

LOESS trend lines

People who own: includes full ownership by household, and since 2007, in a family trust excludes people living with parents


25 to 34

<5% 25% >50%0%

5%

10%

15%

Household expenditure on housing costs

Prop

ortio

n of

peo

ple

year1988

Distribution of homeowners spending on housing costs, by age and yearHousing becoming a bigger cost


25 to 34

<5% 25% >50%0%

5%

10%

15%


Prop

ortio

n of

peo

ple

year19882016



55 to 64 65 to 74 75+

25 to 34 35 to 44 45 to 54

<5% 25% >50%<5% 25% >50%<5% 25% >50%

0%10%20%30%40%

0%10%20%30%40%


Prop

ortio

n of

peo

ple

year1988



55 to 64 65 to 74 75+

25 to 34 35 to 44 45 to 54

<5% 25% >50%<5% 25% >50%<5% 25% >50%

0%10%20%30%40%

0%10%20%30%40%


Prop

ortio

n of

peo

ple

year19882016



Capital value Income

1992 2000 2007 2018 1992 2000 2007 20180%

100%

200%

300%

400%

25 to 34 35 to 44 45 to 54 55 to 64 65 to 74

Change in homeowners' median capital value and median income, by age

Income growth has not kept pace with value growth

LOESS trend lines


age 45 to 54

age 55 to 64

age 65 to 74

age 35 to 44 age 25 to 34

2

3

4

6

7

1992 2000 2007 2018

Homeowners' median income to capital value ratioRising value-to-income ratios

LOESS trend lines


25 to 34

<2 40%

10%

20%

30%

40%

50%

Income to capital value ratio

Perc

ent o

f hou

seho

lds

year1992

Distribution of capital-value to income ratioCapital values rising faster than income


25 to 34

<2 4 10 >200%

10%

20%

30%

40%

50%


Perc

ent o

f hou

seho

lds

year19922018



55 to 64 65 to 74 75+

25 to 34 35 to 44 45 to 54

<2 4 10 >20 <2 4 10 >20 <2 4 10 >20

0%10%20%30%40%50%

0%10%20%30%40%50%


Perc

ent o

f hou

seho

lds

year1992



55 to 64 65 to 74 75+

25 to 34 35 to 44 45 to 54

<2 4 10 >20 <2 4 10 >20 <2 4 10 >20

0%10%20%30%40%50%

0%10%20%30%40%50%


Perc

ent o

f hou

seho

lds

year19922018



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 19940%

25%

50%

75%

100%

year

Share of housing wealth by age

Housing wealth a generation ago

Housing wealth: Owner-occupied housing wealth


less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 19950%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 19960%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 19970%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 19980%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 20010%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 20040%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 20070%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 20080%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 20090%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 20100%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 2004 20110%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 2004 20120%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 2004 20130%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 2004 20140%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 2004 20150%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 2004 20160%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 2004 20170%

25%

50%

75%

100%

year


Housing wealth



less than 20

20 to 39

40 to 59

60+

Housing wealth

1992 2004 20180%

25%

50%

75%

100%

year


Housing wealth has been transfered to older generations



less than 20

20 to 39

40 to 59

60+

less than 20

20 to 39

40 to 59

60+

Housing wealth People

1992 2004 2018 1992 2004 20180%

25%

50%

75%

100%

year

Share of housing wealth by age (population age-structure shown for comparison)

Housing wealth has been transfered to older generations



And for the next generation?

Summary

Why homeownership matters

Health, wealth & happiness

Trends

Decline in homeownership rate, over past 3-decades

• majority of today’s pensioners have enjoyed homeownership since their 40s(many paying down their mortgage during their 40s and 50s)

• actute decline for young adults• housing costs becoming a bigger share of expenditure, at all ages• capital values rising faster than income

Consequences

Transfer of housing wealth from young-adults to retirees

Supplementary slides

1992

1995

1998

2004 2001

1992 1995

1998

2001

2004

25 to 34 35 to 44

0 to 2 2 to 4 4 to 6 6+ 0 to 2 2 to 4 4 to 6 6+15%

55%

75%

85%


Homeownership by age, year, and income-to-value ratioLess young homeowners at each value-to-income ratio


homeownership in new zealand...new zealand population conference alan bentley , senior analyst....

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