Family support key to homeownership in New Zealand
New research from Kiwibank’s State of Home Ownership Report showed Kiwi parents are playing a significant role in helping their children get on the property ladder.
In fact, family assistance has emerged as one of New Zealand’s largest informal “lenders,” providing much-needed support as younger generations struggle to afford homes.
The Kiwibank report revealed some stark findings:
- 32% of non-homeowners believe they will never be able to purchase a property.
- One-third of current homeowners say whānau support was essential in achieving homeownership.
- A significant 76% of Kiwis believe that without parental financial help, future generations will be locked out of the market entirely.
Younger generations, unsurprisingly, are more reliant on their parents for assistance. The data highlighted that 65% of Gen Z homeowners received financial help compared to just 21% of Boomers.
“Homeownership remains a cornerstone of the Kiwi dream,” said Chelsea Ladbrook (pictured above), Kiwibank mobile mortgage manager, in a Stuff report. “Our research shows that Kiwi are leaning on whānau to get them on the ladder. Thankfully, parents can support their children in several ways.”
Seven ways parents can help their kids buy a home
Kiwibank said parents are finding creative ways to assist their children, from leveraging their own assets to offering financial guidance. Here are seven common approaches:
Leverage home equity
Parents can use the value of their property as security for a child’s loan.
“This option involves no immediate financial transaction, making it less taxing on parents’ cash flow,” Ladbrook said. “With that said, it does carry some risk, so we strongly recommend parents seek independent legal advice.”
Co-own a property
Co-ownership allows families to share the financial responsibility and equity.
“At Kiwibank, we offer co-own as an option, which families can use to pool resources,” Ladbrook said.
Act as a guarantor
Guaranteeing a loan can boost approval chances. Ladbrook warned, however, that “if payments aren’t met, parents’ assets could be at stake. This is why independent legal advice is crucial.”
Provide a loan
Parents can lend money interest-free or with agreed terms, but Ladbrook stresses the importance of planning.
“Clear communication and planning are essential to ensure it works for everyone involved,” he said.
Gift money
Providing a non-repayable gift for a deposit is a common option, but banks will require proof that it’s not a loan.
Cover living costs
Allowing children to live rent-free or for reduced board can help them save for a deposit faster.
Offer guidance
Advice and connections to trusted professionals can sometimes be as valuable as financial support.
“Sometimes, advice is the most impactful support parents can give,” Ladbrook said.
Communication and planning are crucial
Ladbrook highlighted that there is no universal solution for parents looking to help their children.
“There’s no one-size-fits-all approach,” he said. “Open communication and careful planning are essential to ensure any support works for everyone involved.”
While assisting children into their first home can be incredibly rewarding, the Kiwibank mortgage leader urged parents to consider their own financial security carefully and consult with independent financial and legal advisers before proceeding.
For many families, whānau support is keeping the Kiwi dream of homeownership alive. In a challenging housing market, parents are increasingly the key to unlocking the door to homeownership for their children, Stuff reported.
Read the Stuff news here.
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