Rethinking the kiwi dream

First published in Metro Magazine, New Zealand, 2013 by Leilani Tamu in collaboration with artist Janet Lilo

In 1965 my grandparents bought our family home in Sandringham for £15,000. They were new immigrants from Samoa with limited means and six children, and their ability to service a mortgage and end up with a freehold property is remarkable. What wasn’t remarkable was the formula they employed to achieve their goal: hard work combined with a commitment to their children’s future.

Like many Pacific migrant families in the 60s and 70s, both of my grandparents worked two factory jobs, while the eldest child stayed home and looked after the younger siblings. They were lucky: New Zealand’s economy was in its heyday and factory work was plentiful. And although £15,000 was a lot of money in 1965, paying it off was within the realm of possibility given their two income streams.

Forty-seven years and three generations later, my nana is still living in the house. The property is now valued at approximate-ly $900,000, with adjacent properties on the same street going for well over a million. My grandparents made a good investment decision back in the 60s which should, in time, deliver a good return for my mum and her siblings. The irony is that most of them are heavily indebted with their own mortgages, so any return will probably go towards paying off current debt.

Today, it is virtually impossible for any-one of my generation to enter Auckland’s housing market without taking on astro-nomical debt. With average property prices

at $600,000 and a constrained employment market, buying property is well out of my league – even though I have finally man-aged to pay off my $40,000 student loan.

In response to all this, my husband and I have decided to buck the trend. We’re not going to invest in property. We’ve en-gaged a financial advisor and established an investment portfolio, and to make this viable we’ve also agreed we will rent until we retire.

To make this decision we weighed up all of our options, did the maths and made a commitment to doing things differently. It’s pretty clear that superannuation isn’t going to be around when we retire, so investing funds into KiwiSaver, for the two of us and our daughter, is a priority.

Given this, I find it particularly concern-ing that first-time homeowners are able to use a portion of their KiwiSaver funds as a deposit to enter the property market. The gamble is that our generation is borrowing from our future to invest in the present on the basis that the return on investment

will be greater. Given the inflated nature of Auckland’s housing market, this is not a safe bet. Moreover, the underlying as-sumption is that people are buying prop-erty for investment rather than primarily buying a family house, as my grandpar-ents did.

Despite the robustness of our invest-ment approach, we have been struck by how strongly people believe we should invest in property. The cultural mindset that underpins this perspective seems to be based on the premise that the same fac-tors that helped secure my grandparents’ goal will prevail in the future. This doesn’t take into account the heavily indebted student-loan status of my generation, the inflated nature of Auckland’s housing market, the limited job market, high inter-est rates and a relatively insecure superan-nuation future.

If the global financial crisis has taught us one thing, it’s that we need to do things differently and fast. Perhaps then, it might pay for both Labour and National to reflect on their current housing policies, which perpetuate the status-quo: that the average Kiwi family should invest in property.

Maybe it’s time for us all to rethink the Kiwi dream of owning property and accept that wealth and security can be achieved through other means. At the very least a bit more financial education on alternative models of investment would be helpful.

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