Wednesday, August 21, 2013
How to buy a house in New Zealand
So you live in New Zealand - a country that unlike many places such as Europe has a home ownership obsession that is cultural and all encompassing in its breadth, and perceived positive nature. You have finished your three years of Tertiary education and now you’re about thirty grand in debt, give or take a few more thousand depending on your programme. You’re one of the ‘lucky’ ones that has a job, but you did not study finance so you were unable to wrangle your way into the economically rewarding but socially destructive finance industry, and you don’t have rich parents who can afford to pay for your education and to set you up with a good loan to help fund your prospects of owning your own place.
You have been told from day one that property is your simplest and easiest investment, and that if you buy a house you are sitting on what is essentially a retirement fund in waiting. However, now new rules have been instituted so that you must have 20% of your deposit ready so that you can even think about buying a house. You do the sums. You’re making $40,000 a year, which funnily enough you remember is roughly what your Dad was making around the time you were born. You spend about $6000 of that on fuel alone to get to your job that pays for your fuel (since public transport is nonexistent or a complete joke), and you spend thousands a year on renting the un-insulated, leaky flat that you live in (because there is currently no rental WOF in New Zealand), all the while supplementing someone else’s retirement plans. You don’t even think about food costs, because then you start to think about how badly you eat. Considering that it’s far easier to pad out a loaf of store brand white bread and frozen oven chips compared to perhaps having some fresh fruit and vegetables which not only perish quickly, but are bloody costly, you know that your diet is probably contributing to high blood pressure, high cholesterol, and you’re probably chewing down a considerable helping of carcinogens with every gulp of manufactured pulp that you eat.
Combined with the aforementioned debt that you already have from the education that you acquired so that you could get a job to pay off your education, it seems that short of some sort of economic miracle, that your future is looking pretty bleak. Having a government in power that is obsessed to the point of climax with slashing public spending while granting enormous tax breaks, and tax loopholes to multinational corporations doesn’t help either, because despite paying fairly considerable taxes considering the meagre income you are on, you still have to pay to visit a GP to get the anti-depressants you need to get through the day without turning to drinking every minute of every hour. And you sure as hell can’t get any assistance from the government to try and get ahead without being demonised as a moocher, and as a bludger by those around you that ironically are in the same boat as you, but have been told that they can be in the richest group of society if they just work hard enough – even though this is not possible.
So what can you really do? This is a country that is obsessed with private property, and with a populace that can’t see that the idea of private property itself is a bit of a myth, as it is only with public services protecting the status quo, and respecting the public laws, that anyone can even have any semblance of private property protection. So you look to your neo-liberal government full of Milton Friedman acolytes, populists, and capitalist cronies to come up with solutions that may help you, the humble worker, join the accepted strata of society, and maybe have a place to call home that hopefully you won’t lose in one of the inevitable market bubble bursts that will happen in the near future, and keep happening over and over again under this economic system.
Your government, led by a former investment banker comes up with a solution. They tell you that you can tap into your retirement fund. They don’t want to take a long term approach that would strengthen worker’s rights while increasing wages, and fixing a system that rewards those that don’t actually need help, at the expense of those who do need help, all while increasing the age of retirement, and reducing the already meagre state pension (that could easily be bolstered with Robin Hood rates and establishing a capital gains tax). This would require effort, reduce political expediency, and would not allow for short term growth at the expense of long term gain. Short term growth is the current modus operandi of the ruling class as long term planning doesn’t allow them to have the power and all the heady, albeit brief, levels of extreme wealth that an obsession with short term profit can accumulate.
No, they tell you that your Kiwisaver retirement fund is the way. When Kiwisaver was set up in the early 2000s, the point was to build a co-operative system between employees, employers, and the government where everybody would win. Rather than the sole focus being on property (which under our current financial system is alarmingly predictable and cyclical in its boom and bust patterns) people could actually slowly gather in the long term, some sort of financial security for when they are entitled to retire from a lifetime of working for somebody else, and making somebody else’s financial wet dreams come true. It wasn’t perfect by any means, but for a neo-liberal capitalist society, it wasn’t a bad attempt at trying something good. After decades of a small amount being put aside each week, people could have something to fall back on that they couldn’t touch until the future when undoubtedly the national pension will be non-existent, and in case their house price predictably crumbled like it was built entirely out of playing cards.
But that’s a stupid system. I mean it’s logical and it makes sense, but what’s the point of having equity that you can’t tap now? It’s better to get your hands on it now, and get that home that you always wanted. That way you’re a good consumer, the banks are making money off you, and the finance sector can add to that growing debt that you have started to accumulate at a young age. Also now all of your finances and security will be tied up in a highly illiquid investment that you can’t get out of without any major catastrophe and you are locked into staying in your role in society – that of the humble worker bee who doesn’t get to taste any of the honey that they produce.
So, you want a house? That’s no problem. I just suggest you take swimming lessons because you’re soon going to be drowning in debt, and I suggest you pick out a nice spot to be buried in your workplace. Because the simple fact of the matter is that if you’re young, and you work for a living, the chances are that under this system, you’re going to die working anyhow.
-Bevan M. SA