After an unfruitful day of searching for a house in Montreal, where we encountered no new property listings and faced a rejected offer, my husband and I found ourselves contemplating the prospect of committing to a financial investment for the next 25 years. During this time, we reminisced about the housing market we had left behind in New Zealand.
Following a fruitless day of house hunting in Montreal, which resulted in no new property listings and a rejected offer, my husband and I were left contemplating the daunting prospect of committing to a 25-year financial investment. Then, we began reminiscing about the housing market we had left behind in New Zealand.
The prevailing belief in New Zealand regarding real estate is that a house is primarily an investment and secondarily a home. This rhetoric is evident in the country’s real estate policy and is reflected in every aspect of the home-buying process, including advertising homes and discussing market fluctuations. It also contributes to the exorbitant cost of housing in the country.
According to Michael Rehm, a senior lecturer in property at the University of Auckland, people purchased homes primarily for shelter in the past, with investment being a secondary consideration. However, the current mindset is that the investment aspect of the house is now the main focus, with the home itself being secondary.
Many New Zealanders’ retirement is funded by selling their homes, along with one or more additional properties, due to the lack of private sector pensions and inadequate social safety nets. This practice has been made feasible for several decades, mainly because of the consistent and sometimes rapid yearly increase in real estate prices.
The affordability of houses in New Zealand has been steadily decreasing. In November of 2021, the average property prices peaked at nearly $900,000, approximately $200,000 higher than Canada’s peak in early 2022. Although prices have since dropped, like in other parts of the world, increasing interest rates has offset the decrease—currently, fixed interest rates for a two-year term stand at 6.35 percent.
First-time home buyers are severely affected by high prices and interest rates, as they must provide a minimum of 20% deposit on a house. Moreover, the banks that are mostly owned by foreign entities display a high level of risk aversion. Typically, lenders meticulously scrutinize individuals’ financial circumstances to assess their ability to pay off their mortgages. In some instances, people have been denied mortgages due to their daily expenditure on items such as a Tim Hortons coffee or buying Christmas presents from the local version of Walmart in New Zealand.
House hunters have various options, including less expensive condos or homes that require renovation work but are structurally sound. Although these properties may have an outdated appearance, potential buyers in Montreal benefit from receiving comprehensive information about a home’s history as soon as they add it to their favorites list. This package may contain details about previous water damage, pest issues, renovation receipts, foundation quality assessments, and estimated annual electricity usage. Additionally, some homeowners who have lived in a property for over 50 years may even provide handwritten receipts from tradespeople, sometimes with smiley faces.
