Getting first-home buyers onto the property ladder

Hopeful first-home buyers are finding it increasingly difficult to get their foot onto the first rung of the property ladder due to affordability issues and LVR restrictions.

Mark Collins from non-bank lender Liberty recently spoke to NZA about the value of initiatives such as KiwiBuild and KiwiSaver in getting Kiwis into their first homes.

Watch now: How can first-home buyers get onto the property ladder?

“At Liberty, where we can lend up to 90%, which means we get a lot of first-home buyers because not many people have 20% deposit these days, and we're finding that almost exclusively people have to use their KiwiSaver and are doing so,” Collins said.

Collins said that interestingly, they generally find KiwiSaver to still not be popular in Auckland and the major cities. 

Read more: Scheme challenges KiwiSaver industry to keep costs low

“The average house price here is sort of $800,000, so if you need 10%, you're talking at $80,000 that's a big KiwiSaver chunk,” Collins said. “Whereas what we find is in the regions, that's a much lower amount. So, we're getting a lot of our top 90% of stuff coming out of the regions.”

Collins said that unlike banks, Liberty accepts gifted deposits, which means Kiwis can combine a small gift from their parents plus some KiwiSaver to purchase their first property.

While KiwiBuild is a great start to creating more affordable housing, Collins said there are several issues which still need to be addressed.

Read next: KiwiBuild calls in prefab industry to help deliver on promised homes

“We obviously need new more houses in Auckland,” Collins said. “And if the government is getting behind it with developers, one of the biggest risks developers have, obviously, is they need to be able to sell it afterwards. Having the government there reduces the risk. The two unanswered questions [are]: Can we actually build them fast enough? How do we finance these things?”