Key downplays survey showing first home buyers need parents' help; says always has been tough; Home Start will help; suggests Hamilton commute for Sth Auckland workers

Key downplays survey showing first home buyers need parents' help; says always has been tough; Home Start will help; suggests Hamilton commute for Sth Auckland workers
Prime Minister John Key addressing a post-cabinet news conference. Lynn Grieveson/Hive News

By Bernard Hickey

Prime Minister John Key has shrugged off suggestions in a survey that a two tier gap is opening up between first home buyers with rich parents who can help them get into the market and the rest without rich parents.

He said first home buyers needed to save hard and look for poorer quality homes away from the centre of Auckland. He even suggested they commute from Hamilton and said the Government was doing enough to fill a housing shortfall estimated by economists at 15,000 to 20,000 dwellings.

A Barfoot and Thompson survey released over the weekend to coincide with start of the 'Our First Home' reality TV series on TV One reported 47% of first home buyers now have to rely on a handout from their parents to get on the property ladder. Only four years ago fewer than a third of first home buyers had to rely on parents. Back in the 1970s that figure was just 13%.

Key said he thought this had been happening for some time and the Government's expanded Home Start subsidy programme for first home buyers of new homes was aimed at addressing that.

"For those that get it it's a a big advantage. For those that don't, it's a disadvantage, but the Government's Home Start programme is designed to allow people to build a nest egg," Key said.

"If you have two people in that programme and you put in the minimum contribution of three per cent and you do that for five years and they both earn the minimum wage, with an employee contribution and an employer contribution and a government contribution, as long as you buy a new home then your deposit from that programme would be NZ$50,000 and in Auckland, there's plenty of homes you could buy for NZ$500,00 or less," he said.

"They won't necessarily be in Grey Lynn or Ponsonby or Parnell. If you Google Auckland homes NZ$500,000 or less, there's quite a few that come up."

Earlier, Key told Radio Live there had always been divisions between the haves and have nots in New Zealand.

"The question is not how well off are your parents, but what opportunities do you have to make a big contribution and create your own resources. That opportunity is probably more alive than it's ever been given access to education, particularly further education," Key said.

"So I don't think that just because you were born into a poor household means you're going to be poor, because by definition, I was bought up in a state house by a single mother and it didn't turn out that way," he said.

Key rejected the suggestion that the increasing need to use parents' wealth to buy a first home had created a society of haves and have nots.

He again referred to the Government's Home Start programme as a way for two wage earners to save a deposit and buy a first home.

"It's not new. I can remember my friends getting help from their parents thirty odd years ago," he said.

Housing shortage

Key also downplayed an ANZ report showing a housing shortage of 18,000 dwellings in Auckland that was getting worse because of repeated under building. ASB has estimated the shortfall at 17,000 and Reserve Bank Governor Graeme Wheeler referred to an estimated shortage of 15,000 to 20,000 in a speech last week.

"In Auckland, much more needs to be done, especially in creating opportunities for residential construction in Auckland central," Wheeler said in the speech.

Key said a large number of housing consents were granted last year and the Government's Special Housing Areas would release land for 39,000 new homes over the next three to five years.

"There's plenty of capacity for people to catch that up," Key said.

'Commute from Hamilton'

Key denied in the press conference suggesting that workers in South Auckland who were unable to buy a house instead commute from Hamilton.

"I accept that people will commute further out, but I've never mentioned Hamilton," he said.

The Waikato Times reported over the weekend that Key said in an interview with the newspaper while visiting the region that those who could not afford in Auckland should head to the Waikato.

 He was reported as saying that moving south of New Zealand's biggest city ought to be a "serious consideration" for buyers struggling to find the cash for Auckland homes.

"They pay less for their home so obviously they're going to pay more to commute. It's a tradeoff that people decide all around the world and it will give them a far higher quality of home at a lower price," Key was quoted as saying.

Key said the option would be particularly attractive to those who could work from home, the Waikato Times reported.

He was reported as saying the Waikato Expressway made it a "really legitimate option, especially for people who work in the southern part of [Auckland] city".

(Updated with pic)

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Poor people and strugglers should commute from Hamilton to South Auckland
 
That's exactly the sort of tripe that got Tony Abbot into hot water with the electorate
 
Try this
Poor people don't have cars or don't drive very far
http://www.abc.net.au/news/2014-08-15/joe-hockey-poor-people-cars-claim-misleading/5671168

If my memory serves me well, I believe Helen Clark suggested embattled potential Taupo home buyers should consider buying in Turangi and face the commute for the jobs in Taupo.

and expensive petrol? rationing? yeah makes sense.
not

John Key suggests people on the miniumum wage could get together a 10% deposit for a $500,000 house. I'd be interested to know how he suggests they pay the mortgage.

.. or *gasp* have children. Forget minimum wage, even median wage won't get you anywhere now. You can mortgage yourself up to your eyeballs but one little bump in the road like illness or unemployment and you are screwed.
John Key doesn't want to face tough problems, he's actively trying to hide them. Give us firm statistics on foreign ownership and investor/speculator ownership. Investigate local government fees for new home building. Investigate the building materials monopoly.
Na, too hard and too embarrassing. Let's just come up with ridiculous suggestions like blowing $200 a week on fuel to commute Hamilton to Auckland for three hours a day on New Zealand's deadly roads.
.. and where the hell has this idea that $500,000 is "affordable" come from? Affordable is about $280,000 for an average home on an average income in Auckland.

Correct.  I just used the asb borrowing calculator and 2 min wage earners, with no other debt or children can only borrow around 270k! Making it a new home for 320k in Auckland (50k kiwisaver/grants used), which will never exist, or 310k for a second hand house in auck (40k kiwisaver/grants for non-new home).
They would need to both be on 40k each, or around $20 an hour, before they could borrow enough to buy a 500k house and maximise there 50k deposit at 10% under the welcome home loan.
If they earn much more than 40k each, then they'll hit the max income limit and miss out on all the FHB grants/deals and need 100k dep for that 500k house. So its a small window using these things in the auck market. 
 
Outside of auck though, I suggest FHBs fill their boots and put as much kiwisaver money into property as they can, then do it up to get the tax free capital gains, and be away laughing all while paying less to service the mortagage (lock away at 5.79% for 5 years) than they would have in renting. 

'Qu'ils mangeant de brioche'
 
- Marie Antoinette

Indeed Kunstler predicts a similar  outcome for bankers/investors..
http://kunstler.com/clusterfuck-nation/piketty-dikitty-rikitty/

It is interesting following the evolution of John Key and housing.
 
He used to have an up beat message about improving supply by removing barriers so that the next generation of kiwis would have better opportunities to get ahead. That those with a poor start in life could through hard work expect to do well.
 
Now John Key talks about taxpayer funded subsidies and the shrinking of saving schemes so that kiwis (and non kiwis) can pay ever higher amounts of debt to exchange the same nonproductive assets -existing housing. How this can be seen as anything but a system that only benefits a privileged elite I do not know.
 
The upbeat social mobility message is gone. John Key is a diminished man, defending the indefensible.

Good comment. This is the antithesis of Key's childhood experience. His family did it tough, but I'm damn sure that his opportunities would have been diminished had the state not provided for the family. The irony is that the artifical barriers are associated with privately owned homes. In terms of business opportunities, I believe that the banks are more likely to lend to homeowners than the aspiring business person just starting on his or her way. 

I see the CV of John Keys house went from 9.9M in 2011 to 13M in 2014.  

Surely going by experience Key would be excited by the fact that the rich are getting richer, and the poor...well not so much, isn't it what he lives for?
Anyone in the middle class that still think the Nats are there for them are beyond deluded.

Not a single word about how his immigration and foreign ownership policies are screwing the life chances of young New Zealanders.

The man is scum. Pure scum.

He's damn good at his job though. He's got the masses convinced he's a "good bloke" while robbing them blind to enrich the elite.
 

Or, I suspect myself that the voter looked Labour and the Green's and feared that they would get obviously screwed over. Key smiled and they fell for it, meanwhile he's backstabbing them but they are not looking. So maybe its the worse or worser syndrome.
4th term for JK by the looks of it.
 
 

Why not just look else where?

Ad hominem argument is soooo tiresome.  Moderators, suggest you simply flag 'em so the rest of us can step right over the reeking piles.
 
The Waikato/Hamilton suggestion, wherever it came from, is worth a second thought.
 
If TLA's had economic nous (and some do, but it;s very patchy) the Waikato crew would be pitching hard to South Awkland businesses with the sort of incentives we have seen here in the Mainland, as Selwyn DC eats Christchurch City Councils' lunch:

  • Industrial land bought by the TLA at rural prices, land-banked, and released for industrial development.  Keeps the CG in the community coffers and takes advantage of TLA's preferential borrowing rates.
  • Zero development contributions (hey, it's actually true - see here)
  • Dormitory suburb (Rolleston) for workers right across the main road:  walkable, bikable, all a them greenie box-ticks.
  • Right at the junction of north/south/west rail lines, so a natural location/location/location deal for transport-dependent businesses like dairy (dryers, packing plants), ag support, inland port complexes and so on.

Why not?
 
 
 
 

" I was bought up in a state house by a single mother and it didn't turn out that way," he said."
 
I guess Keys brain fading now extends to not remembering which generation he grew up in?
 He seems to have missed the part about how in the 70s only 13% needed parental help and now 50% do.  He may have succeeded, but the chances of a poor person succeeding today are greatly diminished.

I want to live overlooking the harbour in Auckland and have the best views money can buy.  Unfortunately I live in Hamilton because of John Key and the Nats, who have taken away my right to do this!
Move on guys, live where you can afford and don't be dreamers or blame someone else because your 'dreams' don't come true.

It never used to be a dream. Owning your own home in auckland used to be a realistic aspiration for most.  

which harbour?  I can't afford the Waitemate...  but there is a lot of land around parts of the Manukau and not too extravagant prices...

I just bid up to 110k over 2014 CV on a 30 year old house in Massey. Alas outbid by the Chinese even there.

Young people in NZ are screwed beyond belief thanks to this government.