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Focus on owning a home. Many may be homeless somewhere else.

Posted in Personal Finance, and Starting Property Investing

Do we believe the government will be able to provide us with a home? For free? Actually, not even in advanced nations that the government could provide a home for every citizen. In fact as we know, sometimes the property prices spiral out of control and the incomes just could not catch up and in the end, some could only rent. Well, there are quite a number of affordable home programmes and our newly installed government has also promised 1 million affordable homes within 10 years. Do read the details here.  However, this does not take away the fact that one would still NEED to pay for them. Usually, through the incomes earned on a monthly basis coupled with a 90 percent loan from the banks. (Comparison of loans from 15 different banks here) This is why my advice remains the same, save for a home because it may save us in the future when we realised that inflation is wrecking havoc with our earnings. Of course I would still prefer today and the future and not yesterday. 

Reported in TheStar was an article about New Zealand which is the envy of many because of their dairy-fuelled economy. Full report here.  It says that despite the rise in prosperity, thousands of residents are sleeping in cars, shop entrances and alleyways. Statistically speaking, New Zealand has the highest homelessness rate among the 35 high-income OECD countries. These are the OECD countries.  The reason is because of sky-rocketing rents and the prices of property has soared. (Auckland has a median property price to household income of 10 which is extremely high.)  Fortunately for these homeless population, the country’s popular Prime Minister Jacinda Ardern has unveiled its first budget with an ambitious plan to build social infrastructure. She is looking to fix the housing crisis and this was the reason she had a successful election campaign in September.

Economy wise, New Zealand is on a winning roll underpinned by a strong dairy sector, booming tourism and migration. However, despite this success, the infrastructure in New Zealand has fallen behind. Housing issue is one prominent one. In fact, the Maoris, the indigenous people of New Zealand, account for a third of the homeless despite their number making up just 15 percent of the population. A study by Yale showed that 1 percent of New Zealanders are living without a permanent shelter in 2015. This situation would have deteriorated because the number of people eligible for government housing support doubling since 2015. Salaries have meanwhile lagged the house price growth of over 60 percent in the past 10 years. The worst homelessness is in Auckland where the house prices have risen 90 percent in the past decade! Article concluded with remarks by Kirsty Buggins, director at the Wellington Night Shelter who said the centre was almost always full. “Sometimes all we can do is give them blankets and bedding.” Here’s that full article for reading. 

Many times, the economy may move faster than many but it is extremely important for the government to have some control over the property prices. Frankly, I do not believe in fully relying on the demand and supply forces. Remember yeah, prices move because of transactions. Here’s an earlier article explaining how.  However, it does not move because EVERY HOME in the whole development moved up. It will move up when the buyer is okay with slightly higher price and after a few years, the homes are priced much higher than a few years before. What can really help is for the government to continue understand and build homes which are necessary. It’s a balance between location, price and size. Of course, they could also make certain locations become interesting too, for example MRT stations now cover a much wider area, including areas which has yet to be developed fully. Please do save up and get a home yeah. Happy following.

written on 21 May 2018

Next suggested article:Homelessness can also happen in advanced property markets

 

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