...but the OECD does. Sharechat produced this summary - link - which highlights the issue of discouraging the use of home purchase as saving. Which is worth having just a little pick at:
All this talk about home affordability begs the question - is saving for a home the best way to secure your future. Probably like most people, I have been solidly of the opinion that the answer, in the medium term is "yes". However, were I contemplating a purchase in today's market, I think the answer would actually be "No" and this is what the OECD is driving at, and what the New Zealand Herald doesn't understand. The article they ran today which proclaims "Average wage not sufficient to buy a house in Otara" is exhibit A. They fail even to connect up the evidence in their own story - which shows house prices accelerating away from rents - to come up with the obvious answer, which is: "don't buy one".
Let me give you a real life example from a person I met just a couple of weeks ago. He had been saving, with his partner for a house, their incomes are a bit above the average, but in this case that only serves to highlight that they too would be better off waiting before they buy:
They were renting a place for $650 a week. This property was then put on sale for $900,000. The question was - should they buy it? They possessed the means, having been saving for a home deposit over the last three years - and they'd accumulated nearly $100,000 - and have high incomes.
The interest cost for the amount they would have to borrow would be around $70,000 a year. In addition to this they would have a number of the cash costs associated with ownership - from rates to repairs. Plus the loss of the interest on their savings of about $5,500 a year. All told the weekly costs were looking like about $1,450. That's a heck of a hike up from $650.
Sure, if the housing market grows by north of 8% they will receive almost all their weekly after tax interest back in untaxed capital gain - but you can't buy groceries with it. Plus, after almost seven solid years of growth they are wise enough to know that the investment is not without market risks. In addition, as any purchaser of a leaky building will know, there are specific risks which cannot always be foreseen. They would be seriously over-weight in an asset class that looks distinctly toppy, and has zero sector or geographical diversification.
a) damn the torpedos - and buy it
b) wait and be happy with the reduced risk
c) diversify - not sure what to do - by a smaller rental to get a modest hedge against the market continuing to trek skywards for years.
After a cold hard look they decided on c). I'm with them - but they could just as easily have chosen b).
Now if you are on the average wage the differentials in rent versus purchase cost are not as great - but they are still strong. NZ property magazine shows rents only barely 4% of property value in some places. With interest rates at 8%+ that means its a no brainer. If you can't afford one yet, wait, and save the difference. Given time, the heat in the property market will dissipate, and you'll be in a great position to bargain with plenty of cash on hand - and without needing 90% of the value in debt it will be much more affordable for you.
Unless of course, you believe that house pricess can grow, after tax, much faster than inflation forever, in which case if you haven't got a house now -- you might as well start honing your skills for living on the street.