Friday, June 26, 2009
A not-so-surprising interview on Breakfast today, linked to an article in the NZ Herald, seems to confirm much of what we have observed since coming to NZ.
Even 'rich Americans' (did you know we're all rich? Yes, it's true!) like us can't afford to buy a house here, and that's with having some capital to invest from the sale of our previous home. Certainly many Kiwis believe that we (immigrants) are the reason house prices are so high, and I do think that's a contributing factor, but it's only a part of the story.
Mr. Hickey's assertion that this is a reciprocating cycle is spot-on. The lack of a Capital Gains tax in NZ means that there are no penalties for owning as many properties as you like. We rent from a landlord who owns four units in this apartment complex. Four! I'd be willing to bet she owns other properties as well. And on each of these, she's getting $500/week on average rent. $500! This is in Wellington, mind you - not New York, London or Paris. I can assure you that the average wage levels are not in proportion with cost of housing, and we're not the only ones feeling anxiety over it.
Another contributing factor is that landlords don't have to do much to their properties in terms of upkeep. They can be a complete hellhole and still be legal. When we were shopping for a place to rent, we saw many that were not fit for human habitation. So other than being able to charge more rent, there's no incentive (or legal requirement) for any further investment. Just buy it, then start raking in the cash. Not surprisingly, landlords react with outrage when the government tries to impose requirements on them that will meet modern housing standards, threatening "...this will just lead to rent increases." Yeah, right mate like we can afford to pay you more.
To be clear - landlords can afford to charge these rates because housing is in such limited supply, particularly in Wellington. One could argue that the market should naturally set rental prices, and I don't begrudge property investors from getting a return on their bets. But this is a case of the rich getting richer, with no checks and balances. It's really no wonder that Kiwis of all kinds are finding it tough to buy their own home.
This all sounds like a load of whinging, doesn't it? Maybe...
As you can tell from the flavor of my last couple posts, I've decided that it's time to stop sugar-coating things on this blog and start looking at Aotearoa with a more critical eye. Why the change? Well, of course it's because I'm feeling a bit disgruntled. But also it was the surprising realisation that this blog has received 16,000 hits. Even if I subtract 10,000 of them, assuming they are friends, family, etc., that leaves 6,000 people who have visited. Some of them probably want to know what life is really like in NZ...and I mean living here, not just being on holiday. Believe me, they are very different things.
I honestly love some things about this country, but there are some things that trouble me. Increasingly, I am having difficult seeing a long-term future in NZ. Our closest friends here know I've been feeling this way for a while, but this may be news to some of you back home. Aotearoa is a beautiful place - some would argue one of the most beautiful places on earth - but pretty views alone can't sustain a person (unfortunately). New Zealand is looking out for itself, and we have to as well. My thinking on life in NZ was that we would 'stay as long as we could' and when that was no longer feasible, well, it would be time to make some hard choices.