Most retired New Zealanders and those over a ‘retirement age’ own their own homes. Having a paid-off home by the time regular employment income stops should be a first step for financial security in retirement. Statistics about home ownership levels are therefore directly relevant to any discussion about retirement income policies. There was no detail on this issue in the Retirement Commissioner’s 2016 Review.
At first sight, the most recent Census data (from 2013) suggest that home-ownership rates have fallen substantially since a peak in 1986.
Census 2013 tells us that 60.7% of all occupied dwellings were owned by the occupying households. The equivalent in 1986 was 72.6%.
There is a significant problem with the Census data on home-ownership. There are too many gaps in the questions asked in the 2013 Census (and earlier equivalent questions) for us to be certain about any recent trends in home-ownership rates. The gaps mean we have no ownership information for about 362,000 of all dwellings; that’s 20.7% of all 1.76 million dwellings on Census night in 2013.
There are two main holes in the data. First, we have no information about who owns the 185,448 dwellings that were unoccupied on Census night (10.6% of all dwellings). Neither do we know why they were unoccupied. They might be holiday homes, between tenants, on the market, under renovation or the usual occupiers (owners or renters) may have been away on holiday or on business. We just don’t know and that affects our understanding of the owner/occupier status for more than one tenth of all dwellings.
The other major hole in the data is the occupiers who didn’t answer the question or who gave an unclear answer. That was another 176,835 dwellings or 10.1% of all dwellings.
These data gaps have been growing in total since the 1986 Census – the total 2013 gap (20.7%) was 19.4% in 2006. Part of that is probably caused by the rise in family trust ownerships, though the Census questions tried to capture these. Gaps in the questions also contributed.
If we turn the examination around and try to deduce home-ownership rates from the proportions of occupiers who pay rent, a slightly different picture emerges. There were also gaps in renters’ data in 2013 but 29.2% of all occupied dwellings (453,100) specified the weekly rent then being paid. We can probably assume that these rent-payers were arms-length occupiers, in other words, not connected to family trust ownerships where the occupiers might be nominal tenants.
In 1936, ‘rent payers’ were 38.6% of occupants - the proportion has fallen in the 77 years to 2013.
Of more recent note is that the proportion of ‘rent-payers’ has been relatively flat since the early 1950s though rising slightly in the last 17 years, as the chart shows:
Rent-payers were 26.9% of occupieddwellings in 1976. In 2013, 29.2% of all occupiers were paying rent to the owner. That’s up from a low of 22.7% in 1991. However, rent-payers have been less than 30% of all occupied dwellings since 1956 (simple average over the 12 censuses was 25.3%).
If home-ownership really was falling, we should expect rising, rather than relatively flat rent-paying occupancy rates since 1956. Given the gaps in the data, we cannot draw any definitive conclusions from the two charts.
StatsNZ has tried since 1996 to understand the impact of family trusts on housing tenure. However, uncertainty about the influence of family trusts on ownership statistics has grown over the 17 years to 2013. We do know that the number of dwellings affected by family trust ownership grew by at least 28% in the seven years to 2013 (to 13.7% of all occupied dwellings).
The home-owning proportion of the population may have fallen since the 1986-1991 Censuses, when ‘declared’ ownerships in 1991were 72.4% of all ‘declared’ occupiers. However, given the gaps in the data, a more reliable indicator of tenure trends may be the proportion of occupiers who are paying an identified amount of rent rather than the so-called ‘owners’. That proportion of rent-payers hasn’t changed much in the last 60 years.
We cannot draw any particular conclusion about home-ownership trends from Census data. On ‘ownership’ all we can really say is that, of the 79.3% of all dwellings for which we have some details on tenure in 2013, 60.7% either own them directly or through a family trust. That is not good enough. The questions did change for the 2018 Census but, potentially, opened up the possibility of further gaps. However, until we see data from the 2018 Census, we will not be able to see whether the known gaps have worsened. We expect that will be the case.
No-one really knows whether home-ownership rates are currently falling and, in the context of New Zealanders’ financial preparation for retirement, we need better information. We cannot even start a discussion about home ownership issues without answers to some fairly basic questions. If policy decisions are made on the basis of the Census data, there is a risk that the wrong decisions will be made.
Terms of reference for 2019 Review
The Terms of Reference for the Retirement Commissioner’s 2019 Review do potentially allow for coverage of some of the issues raised in this section. The Review is asked for:
“An assessment of the impact that the following will have on government retirement income policies, including KiwiSaver and New Zealand superannuation:
(b) declining rates of home ownership…”
Based on this section’s analysis, and the inadequate data currently available at the links cited, the 2019 Review will not be in a position to make the requested assessment. We suspect that the 2018 Census data, when or if they are eventually delivered, will not help.
We do not know that there are “declining rates of home ownership” so the assumption on which the request for the assessment on this issue seems flawed.
Questions that the 2018 Census should be answering on home ownership (but probably won’t):
1Do the occupiers own the dwelling they are currently living in? That includes ownership through a family trust, a will trust, a family-controlled company or other indirect ownership.
If the answer to question 1 is ‘no’, how much rent does the occupier pay? If the answer to that is nothing or is a nominal amount, then who specifically owns the home (name and contact address) and what is their relationship to the occupier?
How much does the home-owner (including a family trust or other indirect owner) owe on a mortgage of the home? How much of that mortgage is to finance an investment in a family business or in another property?
The occupier should also have completed a dwelling census return in respect of any dwelling that is owned (directly or indirectly) by the occupier and that is unoccupied on the day of the Census. That did not happen. Such a return should have included information on why the dwelling is unoccupied on Census night.
Without New Zealanders’ answers to these questions, we cannot have a useful discussion about home-ownership levels and whether there are public policy issues that need addressing in this regard either generally or in specific regard to financial preparation for retirement.
For the reasons stated in this section, Census information on home ownership at any age is incomplete. Of all those over age 65 in 2013 who stated their ownership position, 74.5% ‘owned or partly owned’ their ‘usual residence’. 5.1% gave no or an ‘unidentifiable’ response – source: StatsNZ 2013 Census Quickstats about people age 65 and over (2015) accessible here.
A century of censuses – dwellings and households (2015) accessible here. The chart shows ‘owned’ dwellings (including family trust ownership) as a proportion of all occupied dwellings, including those where ownership status was unclear.
Again, from A century of censuses – dwellings and households (2015) accessible here.
In 1991, unoccupied dwellings were 10.4% of all 1.30 million dwellings and ‘unknowns’ were 3.4% of all 1.18 million occupied dwellings. The 1991 Census was therefore missing data on a total of 162,750 dwellings or 12.5% of all dwellings. That total had risen to 20.6% of all dwellings in 2013.
There is considerable disquiet about the 2018 Census and the quality of the data it will eventually produce. See, for example, 2018 Census – what happened?, Leith Hufferdine for Stuff, 11 October 2018 (accessible here). Some suggest that the overall response rate was only about 90% - see Statistics NZ pushes Census 2019 deadline further as issues continue, Thomas Manch for Stuff, 12 December 2018 (accessible here).
Loans should exclude intra-family debt to finance the transfer of the asset between family owned or controlled entities.