Pacific housing: From renting to ownership

While rent has a place in the New Zealand housing mix, ultimately people want to be able to achieve their dreams of owning a home.

We know home ownership is a problem in this country and many people feel as though it's unachievable.

But a charity housing trust says it can help get Pacific families into the market amid the recent changes to interest rates.

New Zealand Housing Foundation (NZHF) has been helping Kiwis achieve their dream of ownership since 2007, support manager Henrietta Devoe says.

She told Pacific Mornings' William Terite that while Housing Foundation is a community provider, "we are quite different to other housing providers and Kainga Ora, the government social housing arm.

Watch Housing Foundation's Henrietta Devoe and Greg Freeman on Pacific Mornings.

"Community providers and Kainga Ora are social renting housing providers. They help families into rental accommodation.

"Our goal is to help families move from renting to ownership. We support hard working renting families own their home," she said.

There are four types of property ownership in Aotearoa. Freehold, leasehold, unit title, and cross lease. Each type means different rights, responsibilities, and restrictions for the owner.

A recent report, authored by Deloitte and commissioned by Westpac, shows ownership rates have dropped below 60 percent - the lowest since 1945.

And this number will continue to decline with fewer than half the population likely to own a home in the next 25 years, the report stated.

According to Kainga Ora/Housing NZ, 21 per cent of Pacific households own their home, compared to 31 percent of Māori, and 60 per cent of New Zealand Europeans.

In its Fale mo Aiga Pacific Housing Strategy 2030, the government says the aim is to help Pacific people own and live in affordable, quality, fit-for-purpose, healthy homes that will improve their wellbeing.

NZHF community engagement manager Greg Freeman says there are home ownership options like shared equity, rent-to-wn and leasehold that can help tens of thousands of people into home ownership.

"Our product is around helping families who are already renting and getting into their first home through a shared home ownership model. So really distinct, we're unique in the New Zealand market.

"We've been going for over 16 years with around 1200 families. And we have focussed recently on South Auckland, Māori, and developments over the next two to three years that will amount to over 200 homes.

There has been slow momentum in the housing market since the election and the Reserve Bank’s “tough love” on high interest rates. Photo/supplied

Three weeks ago, the Reserve Bank announced it had cut the official cash rate (OCR) by 25 basis points to 5.25 per cent - the first cut since March 2020.

The move has been seen as positive for homeowners under pressure from high interest rates.

All the major banks - ASB, ANZ, Westpac, BNZ, and Kiwibank - have moved swiftly to lower their mortgage lending rates. A welcome relief for many New Zealanders.

But there have been challenges for those seeking to buy a home, Freeman says, and it is a lack of deposit.

"When you're renting, it's really hard to save, on top of paying your rent for your future first home. So it's like a deposit.

"We're in an environment where the cost of living is going up as well. So it's just really difficult to to get out of that rental trap."

He says Housing Foundation is offering families to buy a share of the home.

He says this helps them go and get a mortgage that's affordable to them.

"What I mean by affordable means 30 per cent of their gross income. We won't let them borrow more than that. What we consider to be affordable.

"They bring to the table their mortgage and their savings, and we will put in the rest of the money to match the full price of the home.

Watch Housing Minister Chris Bishop discuss how the government intends on getting more Pacific people into homeownership, and ensuring we’re not consigned to a life of being long-term renters.

"So they've swapped their rent for paying the mortgage. And that's the key to this exercise in the family. Then they're in their own home, their brand new home, which they are owning a majority share," Freeman says.

Devoe says for an example, a family with an income of $100,000 can afford mortgage payments of $30,000 per year or about $580 a week.

She says this is usually cheaper than what it costs them to rent the same property.

"The family also has to pay about $70 a week for council rates and their house insurance.

"We have a lot of solo parents coming through, which is awesome, as well as couples. Also there could be a brother or sister, or even friends, like close friends from childhood, which consider themselves sisters, that's an example," she says.

Freeman adds that sometimes it's an extended family - mom and dad, adult, child or children.

"So the larger homes we have, certainly looking at an extended family type of situation."

Devoe says it's life changing for these people, given that for most New Zealanders, they feel they will never be able to reach home ownership.

"That it's impossible. 'We never thought this would happen to us.' Their dreams have been fulfilled. They never thought they would own a home.

"I encourage all our aigas to come through if you meet the criteria on our website at nzhf.org."

While rent has a place in the New Zealand housing mix, ultimately people want to be able to achieve their dreams. Photo/supplied