New research by the Westpac-Massey University Fin-Ed Centre shows that while New Zealanders overwhelmingly want to own a home, most renters aren’t even looking to buy in the current market.
The study, which surveyed nearly 800 Westpac customers aged between 18 and 45, found 58 per cent were already homeowners and nearly 37 per cent were renters. Of the renters, two-thirds were not currently looking to buy a home
A large majority of renters identified saving a deposit as the biggest hurdle to home ownership, with over 80 per cent rating “insufficient deposit” as an important to very important factor in their decision for not purchasing a house. Some 63 per cent also rated “insufficient income to cover mortgage payments” as an important to very important factor.
Westpac’s head of retail Ian Blair says while many believed it was tough to save a deposit, most respondents were in fact optimistic.
”It’s encouraging that nearly two-thirds of those surveyed aspire to own their own home one day. While saving a deposit has historically been difficult, this clearly shows that the prosepct of the Kiwi dream of owning a home is still alive and well in the current market.”
But, for 22 per cent, renting for life remains a possibility and, of this group, 6.1 per cent said they had a high expectation they would never buy a home.
The report’s co-author Dr Jeff Stangl from Massey University’s School of Economics and Finance says
when asked about the experience of renting, fewer than 20 per cent of respondents said it was a positive experience. They cited the lack of stability and security renting can bring, as well as interfering landlords and they were particularly aware they were missing the opportunity to build personal equity in a home.
“What struck me at a very personal level is that many people feel stuck renting. They can’t afford to buy but they are also at the mercy of the landlords. They have no stability and don’t feel like they can call the place they’re living in ‘home’,” Dr Stangl says.
Respondents are also aware of the risks of long-term renting.
“Renters are very concerned about getting on the property ladder – 90 per cent of the people we surveyed believed it would only become more difficult to purchase a home in the future,” Dr Stangl says. “A similar number recognised the disadvantages of arriving at retirement age with no equity in a home.”
Despite the significant concerns expressed by potential homebuyers in the study, Dr Stangl believes that many of those surveyed were relatively optimistic and, at times, unrealistic in their responses.
“I was surprised that 63 per cent of people believed they could save their deposit in one to five years. In Auckland, particularly, that seems optimistic if you’re saving a 20 per cent deposit on a $700,000 house.”
To download a copy of the report ‘Understanding housing decisions in the New Zealand residential property market’ authored by Dr Jeff Stangl and Dr Susan Flint-Hartle, go to: http://bit.ly/fin-ed-property