…I know the title of this post will tempt people to close the browser, but stay with me…
The recent changes to home lending criteria are likely to shut young familes out of the housing market, if not temporarily then possibly permanently for many. Raising 20% deposit towards a house is going to be extremely difficult for anyone to achieve. Assuming a house value of $400k in one of our main centres, you are needing to raise $80k just to have a sniff at a home loan.
In my situation we have a large mortgage and a significant amount of our household income goes into paying it off. We know it will get easier as we gain more equity in the coming years but it is hard yards at the moment and we need to watch every penny in order to meet our financial obligations. We have had to cut our cloth significantly in order to enjoy living in a warm, spacious home in a nice neighbourhood, and while it is very tough at times to make those payments, in my opinion you can't put a price on giving your children a "home" as opposed to a "rental" – living in someone else's home. I used to think this was just a "rite of passage", that this was just a stage of life everyone went through to gain their own property and home, however I am more recently thinking that we may be fortunate to be in a position to service a mortagage at all. Many people in similar financial circumstances to our family are now not even going to get that opportunity because young families these days cannot realistically save $80k just to get a first foothold on the property ladder. It is no surprise to me that many people give up any hope of ever owning their own home.
From a Catholic perspective this raises some questions for consideration:
1. For a family who desire to own their own home, the increasing pressure to maintain a double income in order to save for a mortgage deposit or to service said mortgage will be huge. This could then impact on family life and remove the option to have one "stay at home" parent. As an educator I have noticed in recent years a decreasing number of parents available to assist with school events, or to engage with school life – these parents are so busy working to keep the families' finances in order that they are choosing to forego increased involvement in their child's life. They are tired, busy, financially stretched people! For a Church which upholds the importance of family life, it should concern us that economic imperatives are forcing families to make tough decisions around work and to sacrifice aspects of family life.
2. Families in rental situations are subject to the whims of landlords and market realities. This means that they may find it difficult to set down roots, to fully commit to a community and to feel a sense of long term involvement. Get this on a larger scale, which appears likely given these mortage reforms, and all of a sudden you will see larger degrees of transience and movement.
While our pews may be predominently grey, and this may not be a pressing issue to many in our parishes, a future reality may be that young families are priced out of particular communiities and are involved in long term rental patterns, and/or both parents working. Is this ideal for our Catholic families, and how might impact on parish life if younger people cannot commit long term?
In the bigger picture – is the 1/4 acre dream now over for young New Zealand families?