Ownership still pays
Buying a home was one of the best investments anyone could make. Historically this has always been so, but now, with falling interest rates, many will wonder if home ownership is still a good investment. The former president of the Real Estate Institute, Mr Peter Cook, is adamant that home ownership is still an excellent investment. House prices usually rise more than the level of inflation and owners do not have to pay tax directly on their investment, he says. Traditionally New Zealand is a country of home owners. For more than a century it has been a preferred option. We have one of the highest rates of home ownership in the world. Seventy-four
per cent of the homes in the country are owned by the residents. Home ownership fits in with the lifestyle New Zealanders enjoy — a large proportion of land is available for housing. Residents appreciate open spaces, fresh air,- tending their gardens and being in control of their own destiny — things they would not be able to enjoy in rented accommodation, Mr Cook says. Home ownership enables people to choose the suburb and neighbourhood they want to live in and the schools they wish their children to attend, he says. Christchurch is a particularly attractive city to buy in compared to Auckland, Wellington or other large North Island centres.
The average New Zealand house price according to Real Estate Institute figures is $97,000. In Christchurch it is possible to buy a house for much less than this. In the established suburbs, comfortable homes can be bought for between $65,000 and $BO,OOO. In the more modest beach suburbs comfortable homes can be bought for less, Mr Cook says. Significant numbers of people are moving south from Auckland, attracted by the lower housing and living costs. People who cannot afford to buy a home in Auckland can afford to buy one in Christchurch. Figures show the average house price for the Auckland region to be $157,861, $131,504 for the Wellington region, $95,200
for the Canterbury/Westland region and $67,706 for the Otago region. Christchurch offers more job opportunities than smaller centres further south, says Mr Cook. Finance has never been more readily available from so many sources. Often home buyers do not need a savings record. But Peter Cook cautions that it is never wise for home owners to overcommit themselves. “Current interest rates which vary between 14.75 per cent and 15.5 per cent are still quite high compared to the rate of inflation. “Big concessions are available through the Housing Corporation’s Homestart loans and interest rates," he says. Interest rates are income-related. Low income earners could pay as little as seven per cent, making home ownership an attractive option for most people. Repayments on a $50,000 loan with an interest rate of seven per cent would be $77 per week. Repayments at the top interest rate of 15.1 per cent would be $l5O. Those earning $4BO a week and more would pay the top rate of 15.1 per cent. This is comparable with the interest rates of other lending institutions. With falling interest rates, people must judge for themselves if now is the best time for buying property. As interest rates fall, property prices rise as houses become more affordable, says Mr Cook.
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Press, 10 July 1989, Page 17
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547Ownership still pays Press, 10 July 1989, Page 17
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