Bankers dispute home ownership figures

Economists are questioning data showing rapidly falling levels of home ownership, saying the trend might be accelerating but the latest figures were far too extreme.

Deutsche Bank senior economist Darren Gibbs and BNZ chief economist Tony Alexander both queried data supplied to Wizard Home Loans by ACNielsen, saying the ownership survey did not tally with national real estate sales.

But ACNielsen hit back at the criticism, saying the data was valid and the economists were the ones using a baseless comparison.

The survey showed that nationally 173,000 fewer people owned a home in March this year compared with last March. In Auckland, 95,138 fewer people owned their own place.

But Mr Gibbs disputed this, saying it was simply impossible.

"The figures provided by ACNielsen are plainly ridiculous," he said.

The 173,000 drop was "a remarkable result considering that the Real Estate Institute only recorded 101,000 sales in that year. So even if every home sale in that year had been a sale by a homeowner to a landlord - a ludicrous assumption - the ACNielsen figures still wouldn't stack up," he said.

Mr Alexander said he had also looked at reports of the survey and wondered how it could be possible, given the sales reported by the institute.

"It does seem a bit extreme," he said. The survey was only over one year, so it was just measuring short-term change. But it had come at a time in the housing cycle when decreasing home ownership would be expected due to the affordability squeeze, he said.

But Lindy Osborne, ACNielsen director of financial research, defended the results saying 10,000 people took part in its consumer finance monitor.

Economists were wrong to compare the number of house sales with the number of people who did not own a house.

She asked why they would consider making a comparison without any merits and took two entirely different factors - house sales compared with people - to reach the wrong conclusion.

Owen McShane, director of the Centre for Resource Management Studies, backed the Wizard figures saying they pointed to a worrying trend.

Even more people were renting, he said, or living with family because they could not afford a home. But the number of rental bond deposits being lodged was not rising because more people were sharing accommodation.

Houses were becoming more expensive in Auckland where for the price of one house, two could be bought in Houston and many other major United States cities where incomes were higher than in Auckland, Mr McShane said.

John Grant of Wizard said he was also somewhat surprised by the data out yesterday and following the criticism would look into the issue. "I'm sure there's an explanation for it," Mr Grant said.

The figures did seem quite high and they surprised him but he defended the survey, saying it highlighted a trend which was becoming more prevalent.

Housing Minister Chris Carter said last week the Government was introducing its $2.5 million home ownership education programme which would help people decide if home ownership is right for them, what they need in a home, goal setting and budgeting, the home buying process, financing, maintaining a home, building a home, selling or refinancing a home, and building or relocating a house on to multiple-owned Maori land.

State house tenants are a target as part of efforts to encourage about 6000 people renting from the state to consider home ownership.

The Demographia International Housing Affordability Survey out in January showed it takes Aucklanders the equivalent of 6.6 years' full wage or salary to pay off a house, compared with those in Dublin (six years), Washington (6.3) and Melbourne (6.4).

Out of 99 cities, Auckland, Wellington and Christchurch were all ranked "severely unaffordable", based on a comparison of median house prices with household incomes. Auckland ranked as 15th most unaffordable (last year 16th), Christchurch 29th and Wellington 39th.