scholarly journals The performance of the New Zealand economy: Savings and housing

2021 ◽  
Author(s):  
◽  
David Law

<p>Recent policy changes and looming pressures in New Zealand have the potential to significantly impact the living standards of those who will enter retirement in the coming decades. In particular, a voluntary subsidised savings scheme known as KiwiSaver was introduced in 2007. Population ageing will increase the costs associated with New Zealand Superannuation (NZS), a universal government-funded pension paid for out of general taxation. In addition, rapid house price growth has made home ownership difficult for many, yet home ownership is likely to improve the living standards of retirees. These developments raise a number of important policy questions, which this thesis addresses. A variety of empirical approaches are employed, ranging from descriptive analysis to the application of regression techniques, including those designed to address specific econometric problems such as sample selection bias and unobserved heterogeneity. Data is primarily sourced from longitudinal and cross-sectional surveys. However, when required this is supplemented with house price, life expectancy and administrative data.  Chapters 2 and 3 of the thesis provide an evaluation of the performance of KiwiSaver, a subsidised voluntary savings scheme aimed at increasing the retirement wealth of a target population. The first of these chapters uses data from a cross-sectional survey conducted in 2010 and designed specifically for the purpose of evaluating KiwiSaver. Four key dimensions of performance are assessed using a variety of empirical techniques. Results suggest that only one-third of contributions to KiwiSaver represent additional savings. Regression analysis, designed to account for sample selection bias due to survey routing, finds no relationship between KiwiSaver membership and expected retirement income outcomes. Measures of target effectiveness and leakage suggest that KiwiSaver has been only modestly successful in reaching its target population and that leakage to the non-target population was high, at 93%. Finally, the scheme’s possible effect on national saving was examined, accounting for its costs, membership projections, government behaviour and additional savings by members. KiwiSaver’s effect on net national saving appears limited at best.  Chapter 3 analysis the extent to which membership of KiwiSaver has been associated with greater accumulations of net worth. The chapter uses two linked sources of data, Statistics New Zealand’s longitudinal Survey of Family, Income and Employment (SoFIE) and administrative data from the Inland Revenue Department on KiwiSaver membership. These data cover the period 2002 to 2010. Two approaches are employed to measure KiwiSaver’s impact, difference-in-differences (where the outcomes of interest are changes in net worth) and various panel regression techniques. Results appear consistent with those of Chapter 2. That is, neither approach suggests KiwiSaver membership has been associated with any positive effect on the accumulation of net worth.  Chapter 4 examines the implications for national savings of three retirement income policy options designed to improve the fiscal sustainability of NZS. These options include lifting the age of eligibility for NZS by two years, lowering the rate of indexation of NZS payments and making private saving compulsory then using those accumulations to reduce NZS entitlements. A model is developed that employs population and longevity projections allowing estimation of the contributions that many overlapping age cohorts might make to national savings in response to policy change. Government contributions to national savings, resulting primarily from reduced NZS payments, are also considered. Results suggest that even seemingly modest changes to retirement income policies could lead to substantial cumulative changes in national savings by 2061. However, lifting the age of eligibility for NZS appears able to generate superior improvements in the government’s fiscal position compared to the other two policy options over the medium term.  Chapter 5 examines patterns of home ownership and housing affordability across groups and over time, as well as various factors associated with the likelihood of each. The analysis draws on two surveys, the Household Economic Survey (HES) and SoFIE, and covers a period when the median house price in New Zealand increased by over 50%. A model which may be suggestive of whether or not an individual or couple is likely to find home-ownership affordable is applied. This model incorporates information relating to four important influences on affordability, in particular, income, net worth, house prices, and the structure of mortgage contracts (including the interest rate and mortgage term). While housing affordability was high for some groups during at least part of the period of analysis, for other groups affordability was persistently low, such as for singles and those on relatively low incomes. However, for nearly all groups examined housing affordability declined substantially over the period.  The final analytical chapter of the thesis extends the analysis of Chapter 5 to examine the potential benefits to housing affordability of the introduction of price level adjusted mortgages (PLAMs). These require lower repayments during the early years of a mortgage and higher repayments during latter years as compared to conventional mortgages. The analysis uses SoFIE and the model of housing affordability from Chapter 5, but with one important difference, a price level adjusted mortgage is assumed under various rates of inflation. Results are then compared to those derived from the housing affordability model under the assumption of a conventional mortgage. Findings suggest that PLAMs could indeed significantly improve housing affordability for prospective homeowners if they were available.</p>

2021 ◽  
Author(s):  
◽  
David Law

<p>Recent policy changes and looming pressures in New Zealand have the potential to significantly impact the living standards of those who will enter retirement in the coming decades. In particular, a voluntary subsidised savings scheme known as KiwiSaver was introduced in 2007. Population ageing will increase the costs associated with New Zealand Superannuation (NZS), a universal government-funded pension paid for out of general taxation. In addition, rapid house price growth has made home ownership difficult for many, yet home ownership is likely to improve the living standards of retirees. These developments raise a number of important policy questions, which this thesis addresses. A variety of empirical approaches are employed, ranging from descriptive analysis to the application of regression techniques, including those designed to address specific econometric problems such as sample selection bias and unobserved heterogeneity. Data is primarily sourced from longitudinal and cross-sectional surveys. However, when required this is supplemented with house price, life expectancy and administrative data.  Chapters 2 and 3 of the thesis provide an evaluation of the performance of KiwiSaver, a subsidised voluntary savings scheme aimed at increasing the retirement wealth of a target population. The first of these chapters uses data from a cross-sectional survey conducted in 2010 and designed specifically for the purpose of evaluating KiwiSaver. Four key dimensions of performance are assessed using a variety of empirical techniques. Results suggest that only one-third of contributions to KiwiSaver represent additional savings. Regression analysis, designed to account for sample selection bias due to survey routing, finds no relationship between KiwiSaver membership and expected retirement income outcomes. Measures of target effectiveness and leakage suggest that KiwiSaver has been only modestly successful in reaching its target population and that leakage to the non-target population was high, at 93%. Finally, the scheme’s possible effect on national saving was examined, accounting for its costs, membership projections, government behaviour and additional savings by members. KiwiSaver’s effect on net national saving appears limited at best.  Chapter 3 analysis the extent to which membership of KiwiSaver has been associated with greater accumulations of net worth. The chapter uses two linked sources of data, Statistics New Zealand’s longitudinal Survey of Family, Income and Employment (SoFIE) and administrative data from the Inland Revenue Department on KiwiSaver membership. These data cover the period 2002 to 2010. Two approaches are employed to measure KiwiSaver’s impact, difference-in-differences (where the outcomes of interest are changes in net worth) and various panel regression techniques. Results appear consistent with those of Chapter 2. That is, neither approach suggests KiwiSaver membership has been associated with any positive effect on the accumulation of net worth.  Chapter 4 examines the implications for national savings of three retirement income policy options designed to improve the fiscal sustainability of NZS. These options include lifting the age of eligibility for NZS by two years, lowering the rate of indexation of NZS payments and making private saving compulsory then using those accumulations to reduce NZS entitlements. A model is developed that employs population and longevity projections allowing estimation of the contributions that many overlapping age cohorts might make to national savings in response to policy change. Government contributions to national savings, resulting primarily from reduced NZS payments, are also considered. Results suggest that even seemingly modest changes to retirement income policies could lead to substantial cumulative changes in national savings by 2061. However, lifting the age of eligibility for NZS appears able to generate superior improvements in the government’s fiscal position compared to the other two policy options over the medium term.  Chapter 5 examines patterns of home ownership and housing affordability across groups and over time, as well as various factors associated with the likelihood of each. The analysis draws on two surveys, the Household Economic Survey (HES) and SoFIE, and covers a period when the median house price in New Zealand increased by over 50%. A model which may be suggestive of whether or not an individual or couple is likely to find home-ownership affordable is applied. This model incorporates information relating to four important influences on affordability, in particular, income, net worth, house prices, and the structure of mortgage contracts (including the interest rate and mortgage term). While housing affordability was high for some groups during at least part of the period of analysis, for other groups affordability was persistently low, such as for singles and those on relatively low incomes. However, for nearly all groups examined housing affordability declined substantially over the period.  The final analytical chapter of the thesis extends the analysis of Chapter 5 to examine the potential benefits to housing affordability of the introduction of price level adjusted mortgages (PLAMs). These require lower repayments during the early years of a mortgage and higher repayments during latter years as compared to conventional mortgages. The analysis uses SoFIE and the model of housing affordability from Chapter 5, but with one important difference, a price level adjusted mortgage is assumed under various rates of inflation. Results are then compared to those derived from the housing affordability model under the assumption of a conventional mortgage. Findings suggest that PLAMs could indeed significantly improve housing affordability for prospective homeowners if they were available.</p>


2021 ◽  
Author(s):  
◽  
Danae Bloxham

<p>The ‘kiwi dream’ of home ownership has become less attainable because of increases in housing costs. Unaffordability is linked with the house price to income ratio, especially within urban environments where incomes have fallen to 50% below property prices. This not only affects access to affordable housing, but also access to quality housing. A home should be dry, warm and safe – these are the key fundamentals of quality housing and people of all ages should have access to a home in which these qualities are not compromised by their personal income. A home that is well insulated, heated, structurally sound and located close to transport nodes should be affordable for all New Zealanders.   Home ownership in New Zealand plays a central role in our national identity. The design research will cater for the younger generation that are most affected by the housing crisis – first home buyers ranging between the ages of 25 and 30,wanting to get their foot on the property ladder and realise the ‘kiwi dream’ of home ownership.   A key issue of New Zealand’s high house prices is the influence of land costs. An intensification strategy to reduce the amount of land per dwelling is one solution to combat house prices. Intensification of New Zealand’s cities should also be targeted at an increase in urban housing along railway corridors, transport hubs and in town centres, improving both housing affordability and transport costs – two main factors of household expenditure. When these two strategies are combined with careful design and space efficient techniques, solutions can be created within a small footprint, without compromising comfort and functionality.   This thesis proposition is tested in Khandallah, one of Wellington’s wealthiest suburbs, with high access to public amenities, transport and services. The suburb already has the infrastructure needed to accommodate intensification. It’s comparatively low density housing holds great opportunity for medium density and infill development. The suburb has a large range of community facilities, schools and open spaces and dwellings are typically of low density with large sites – developed through meandering roads and col-de-sacs of single houses on single sections. With Wellingtons housing needs changing, a greater need for diverse housing throughout all of Wellington’s suburbs is necessary to cater for the growing population. Khandallah has the infrastructure to support intensification and young families should have the option of buying into a suburb of their choice.   The aim of this research is to develop a model for affordable, high quality suburban housing that is responsive to New Zealand’s housing preferences, providing a solution for greater access to desirable housing that occurs through interrelated well designed small homes. This thesis argues that doubling suburban density while retaining site coverage will make housing more affordable. This is tested through planning and spatial design strategies of a range of small homes less than 80m2. These homes will be developed through examining the design of internal spaces; the limits of the small home and relationship with external spaces and the limits of the suburb. The relationship between homes will allow a development of private and common utilities, optimising open space and shared amenities within an intensification strategy for the suburb. The design research produces an argument for clusters of small homes as future housing that will have a positive impact on New Zealand’s housing affordability as ‘starter homes’ and ‘downsize homes’.</p>


Urban Science ◽  
2021 ◽  
Vol 5 (4) ◽  
pp. 77
Author(s):  
Chung Yim Yiu

There are substantial rebounds in house prices in many developed economies after the outbreak of COVID-19. It provides a special opportunity to test the real interest rate hypothesis empirically as a “synchronized” price rebound implies a common cause of house price hikes across the economies. This study conducts a panel regression analysis on five economies, namely Australia, Canada, European Union, New Zealand, the United Kingdom, and the United States of America, to test the hypothesis. The data range from 2017Q1 to 2021Q1. The results confirm that the real interest rate imposes a negative and significant effect on house price growth rate after controlling for economic growth factors, unemployment factors, and cross-country fixed effects. The empirical result of the five housing markets shows that a 1% fall in the real interest rate caused a 1.5% increase in house prices, ceteris paribus, in this period. It also provides casual evidence refuting the economic growth hypothesis and the migrant hypothesis in New Zealand. The results provide far-reaching practical implications on housing policy and on the ways forward to solve housing affordability problems.


2021 ◽  
Author(s):  
◽  
Genevieve Walshe

<p>In 2016 I visited Sargfabrik cohousing in Vienna and was intrigued and captivated by the rich, diverse and friendly atmosphere within the semi-public spatial and architectural realm, which I thought would never happen in New Zealand. Sargfabrik led me to realise that the common realm of New Zealand urban housing architecture is impoverished. It can, and should, be better.  In the 1950s and 1960s, the Kiwi dream was focused on the acquisition of a standalone dwelling; New Zealand prided itself on being an egalitarian, property owning-democracy, supported by innovative housing policies. Today the ‘Kiwi dream is changing as home ownership is no longer a rite of passage for all New Zealanders. Despite rising income inequality and decreasing housing affordability, the contemporary Kiwi dream remains focused on ownership, due to the stability and security associated with this tenure type. If New Zealand is to address the housing equality issue it should investigate the potential of international models of tenure and ownership, such as co-operatives or the Baugruppe (building group) and Baugemeinschaft (building community) models, to allow increased accessibility to stable home occupation and ownership for all New Zealanders through diversity and flexibility of tenure type over time.  Today the contemporary Kiwi dream acknowledges the advantages and benefits of higher density housing models, such as increased security, lack of maintenance, centralised management, ability to ‘lock and leave’ allowing travel, and proximity to town centres. A New Zealand collective urban housing model can represent the contemporary Kiwi dream through a balance between collective and individual needs. Solutions to the New Zealand housing crisis must follow a movement towards flexibility, to accommodate demographic change over time and the DIY spirit of New Zealanders, add community connectedness, challenge loneliness and embrace the sharing economy.  This design-led research proposes that the common spatial and architectural realm can facilitate potential formation of community in New Zealand urban housing architecture. It argues that the Sargfabrik cohousing model can be translated and adapted for a New Zealand urban context. The differences in housing context between Vienna and New Zealand, and the architectural implications of these differences for New Zealand urban housing architecture, are extracted from the research. It argues that a new collective urban housing model can achieve the design diversity and flexibility of New Zealand’s preferred suburban housing and the rich atmosphere of Sargfabrik’s common realm. This occurs through questioning and defining the contemporary Kiwi dream. The ways international flexible tenure and ownership models could work in a New Zealand context are also considered.</p>


2021 ◽  
pp. 660-678
Author(s):  
Tony Fahey ◽  
Michelle Norris

This chapter identifies the provision of affordable housing as a key challenge for contemporary welfare states. Rising house prices have undermined many of the mechanisms governments traditionally used to promote housing affordability and have made the challenge of affordability more urgent and more difficult. These forces have also intensified long-standing tensions regarding the role of housing in welfare states, particularly its contribution to achieving two primary distributional aims of social policies: providing a social safety net for the economically vulnerable and mitigating broader social inequalities. Much research on the first aim has focused on policy inputs—particularly social housing provision—rather than on the outcomes they achieve. Consequently, we know less about the affordability benefits generated by social housing than we should. However, in many countries, reductions in exchequer capital subsidies for social housing provision mean that the sector is now largely self-funded from tenants’ rents. Therefore, the large social housing sectors in Western Europe are no longer a guarantee of affordable rents. Subsidies for home ownership are often criticized as a regressive measure, which conflicts with social policy’s equality aim. However, homeowner housing remains the most widely and progressively distributed form of wealth and its contraction in the face of strong house price inflation in recent decades will precipitate increased wealth inequality. Policy responses to this inflation have concentrated on regulating home buyers’ access to mortgage credit, which may impede their ability to buy. Therefore, policies are also needed to improve the supply side of housing and make it more responsive to demand.


2021 ◽  
Author(s):  
◽  
Genevieve Walshe

<p>In 2016 I visited Sargfabrik cohousing in Vienna and was intrigued and captivated by the rich, diverse and friendly atmosphere within the semi-public spatial and architectural realm, which I thought would never happen in New Zealand. Sargfabrik led me to realise that the common realm of New Zealand urban housing architecture is impoverished. It can, and should, be better.  In the 1950s and 1960s, the Kiwi dream was focused on the acquisition of a standalone dwelling; New Zealand prided itself on being an egalitarian, property owning-democracy, supported by innovative housing policies. Today the ‘Kiwi dream is changing as home ownership is no longer a rite of passage for all New Zealanders. Despite rising income inequality and decreasing housing affordability, the contemporary Kiwi dream remains focused on ownership, due to the stability and security associated with this tenure type. If New Zealand is to address the housing equality issue it should investigate the potential of international models of tenure and ownership, such as co-operatives or the Baugruppe (building group) and Baugemeinschaft (building community) models, to allow increased accessibility to stable home occupation and ownership for all New Zealanders through diversity and flexibility of tenure type over time.  Today the contemporary Kiwi dream acknowledges the advantages and benefits of higher density housing models, such as increased security, lack of maintenance, centralised management, ability to ‘lock and leave’ allowing travel, and proximity to town centres. A New Zealand collective urban housing model can represent the contemporary Kiwi dream through a balance between collective and individual needs. Solutions to the New Zealand housing crisis must follow a movement towards flexibility, to accommodate demographic change over time and the DIY spirit of New Zealanders, add community connectedness, challenge loneliness and embrace the sharing economy.  This design-led research proposes that the common spatial and architectural realm can facilitate potential formation of community in New Zealand urban housing architecture. It argues that the Sargfabrik cohousing model can be translated and adapted for a New Zealand urban context. The differences in housing context between Vienna and New Zealand, and the architectural implications of these differences for New Zealand urban housing architecture, are extracted from the research. It argues that a new collective urban housing model can achieve the design diversity and flexibility of New Zealand’s preferred suburban housing and the rich atmosphere of Sargfabrik’s common realm. This occurs through questioning and defining the contemporary Kiwi dream. The ways international flexible tenure and ownership models could work in a New Zealand context are also considered.</p>


2021 ◽  
Author(s):  
◽  
Danae Bloxham

<p>The ‘kiwi dream’ of home ownership has become less attainable because of increases in housing costs. Unaffordability is linked with the house price to income ratio, especially within urban environments where incomes have fallen to 50% below property prices. This not only affects access to affordable housing, but also access to quality housing. A home should be dry, warm and safe – these are the key fundamentals of quality housing and people of all ages should have access to a home in which these qualities are not compromised by their personal income. A home that is well insulated, heated, structurally sound and located close to transport nodes should be affordable for all New Zealanders.   Home ownership in New Zealand plays a central role in our national identity. The design research will cater for the younger generation that are most affected by the housing crisis – first home buyers ranging between the ages of 25 and 30,wanting to get their foot on the property ladder and realise the ‘kiwi dream’ of home ownership.   A key issue of New Zealand’s high house prices is the influence of land costs. An intensification strategy to reduce the amount of land per dwelling is one solution to combat house prices. Intensification of New Zealand’s cities should also be targeted at an increase in urban housing along railway corridors, transport hubs and in town centres, improving both housing affordability and transport costs – two main factors of household expenditure. When these two strategies are combined with careful design and space efficient techniques, solutions can be created within a small footprint, without compromising comfort and functionality.   This thesis proposition is tested in Khandallah, one of Wellington’s wealthiest suburbs, with high access to public amenities, transport and services. The suburb already has the infrastructure needed to accommodate intensification. It’s comparatively low density housing holds great opportunity for medium density and infill development. The suburb has a large range of community facilities, schools and open spaces and dwellings are typically of low density with large sites – developed through meandering roads and col-de-sacs of single houses on single sections. With Wellingtons housing needs changing, a greater need for diverse housing throughout all of Wellington’s suburbs is necessary to cater for the growing population. Khandallah has the infrastructure to support intensification and young families should have the option of buying into a suburb of their choice.   The aim of this research is to develop a model for affordable, high quality suburban housing that is responsive to New Zealand’s housing preferences, providing a solution for greater access to desirable housing that occurs through interrelated well designed small homes. This thesis argues that doubling suburban density while retaining site coverage will make housing more affordable. This is tested through planning and spatial design strategies of a range of small homes less than 80m2. These homes will be developed through examining the design of internal spaces; the limits of the small home and relationship with external spaces and the limits of the suburb. The relationship between homes will allow a development of private and common utilities, optimising open space and shared amenities within an intensification strategy for the suburb. The design research produces an argument for clusters of small homes as future housing that will have a positive impact on New Zealand’s housing affordability as ‘starter homes’ and ‘downsize homes’.</p>


2018 ◽  
Vol 13 (2) ◽  
pp. 61-68
Author(s):  
Fennee Chong

AbstractNew Zealanders’ overwhelming favour of residential property investment has resulted in residential properties being overvalued with a house-price-to-income multiple equals to 5.9 for the country and 10 for its largest city – Auckland. With the deterioration in housing affordability; currently ranked the fourth worst in the world for Auckland (the largest city in New Zealand), investing directly in residential property become riskier. Under this scenario, a more passive property investment option such as REIT could be more viable. The objective of the paper is to assess whether REIT could offer a better risk and return contour then direct residential property option to potential property investors in New Zealand. Empirical findings from this study show that there is a significant difference between the rates of return of these two types of property investment options. Further analysis using Treynor ratio indicates that investing in REITs generated a higher return on a risk-adjusted basis. This finding has implications for investors looking for a more affordable and liquid way to tap into the property asset class.


2019 ◽  
Vol 11 (2) ◽  
pp. 129-132
Author(s):  
Farhad Sakhai ◽  
Golnoosh Golmohamadi ◽  
Ali Rakhshan Fadaei

Background and aim: The important issues that are effective in learning to read in the last two decades and much research has been done is the phonological awareness .Phonological awareness guarantee much success in reading, so it is more powerful Prognose as reading skills. Matrial and method: This study is cross-sectional and analytic-descriptive study that focuses in first-grade students in the target population consisted of 30 students from 60 schools in Tehran natural and 30 students with average hearing loss, a cluster sample selection and their phonological awareness skills using a visual phonological awareness test which includes phonological awareness sub-skills, were examined. The obtained data were analyzed using the u- Mann-Whitney and t-test. Results: The results showed that phonological awareness skills two groups are different (001/0>p), while the difference observed with probability (001/0>p) is of the determine the number of phonemes, syllables and determine rhyme words sub skills. Individual with hearing loss Compared to subjects with normal hearing abilities have poor awareness skills. The weakness in the sub- skills of determining the number of phonemes, syllables and determines how many words rhyme is more. Conclusion: Considering the difficulties faced by children with hearing impairment in the course of learning to read and the double importance of reading in them, it seems to necessary to consider integrated educational system for students with hearing impairment.


RSBO ◽  
2016 ◽  
Vol 12 (1) ◽  
pp. 41 ◽  
Author(s):  
Elisabete Rabaldo Bottan ◽  
Iara Fiorentin Comunello ◽  
Constanza Marín ◽  
Eduardo Mazzetti Subtil

Introduction and Objective: To evaluate the level of knowledge about oral cancer of students attending public school in one city of Santa Catarina (Brasil). Material and methods: A descriptive cross-sectional study, using primary data collection. Students of last year of elementary school and first year of high school, enrolled in public schools in the city of Itajaí (SC), in 2012, were the target population. The non-probability sample was obtained by convenience. Data were collected through a self-administered questionnaire structured with 13 questions divided into three fields. The level of knowledge was made based on pre-established scores. Results: 1149 instruments were analyzed (80.8% of the target population). The average age of the group was 15.5 years and 54.5% were female. The majority (78%) never had received information about oral cancer. Only 27.9% had cognizance about self-examination of the oral cavity. With regard to knowledge, 87.5% classified as unsatisfactory. For most issues the cognitive field did not identify a significant correlation between knowledge and the variables gender and education. When asked if they would like to participate in educational and preventive activitiesabout oral cancer and other issues related to health, 72.6% expressed interest. Conclusion: The group did not have adequate knowledge on the subject of oral cancer. Facing this reality, and the positive attitude of respondents, the researchers designed and offered an educational program to the research subjects.


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