The many paths to the home ownership dream

By Catherine McGrath, Westpac NZ CEO

This article appears in NEWMARKET. Spring 24 edition. For more, click here.

Home ownership remains a driving ambition for many New Zealanders, but for aspiring first home buyers it can feel like a huge mountain to climb, and many are unsure where to start or what their options are.

I remember wanting to buy my first home, thinking it was all pretty unaffordable, and the whole process feeling overwhelming. And I became one of the lucky ones, because we worked out how we could buy a home together as a family, and it meant I had the benefit of my parents’ wisdom as I made that first step onto the homeownership ladder.

In the 30 years since I bought my first home, affordability has deteriorated with house price inflation outstripping wage growth. But it’s not all doom and gloom – there are some excellent opportunities for first home buyers in the current market. CoreLogic data shows average house prices have fallen by about 13% since the start of 2022 and it remains a buyers’ market, with first home buyers accounting for almost a quarter of new lending.

So how do you take the step of moving from renting to owning – or helping a family member do so?

FIRST HOME BUYERS HAVE MORE OPTIONS THAN THEY THINK

It starts with recognising that saving up for a 20% deposit and borrowing the rest is just one of many ways to get into your first home.

■ Westpac is one of a small handful of banks who work with Kāinga Ora to offer First Home Loans. Through this pathway we’ve helped first home buyers into nearly 1,300 homes in the past year with as little as a 5% deposit, by having their loans underwritten by Kāinga Ora. Other potential options include:

■ Withdrawing your KiwiSaver funds to contribute towards a deposit.

■ Buying a new build that only requires a 10% deposit.

■ Using equity in a family member’s home to support your own first home purchase through Westpac Family Springboard.

■ Applying for a low equity loan – banks can provide up to 15% of all new lending to owner-occupiers with deposit of less than 20%.

Then there’s shared home ownership options, which involve a shared equity or leasehold partner – usually a community housing provider – contributing equity or land to reduce the size of the deposit you need and reduce loan repayments. In the case of shared equity, you then pay the provider back at a manageable rate until you own 100 percent of your home. Or in the case of leasehold, you pay ground rent, set at an affordable level, to the housing provider.

Our research suggests more than 150,000 Kiwi households could benefit from shared homeownership arrangements, but most don’t know about their options, and community housing providers face barriers to scaling up these options.

GETTING INTO A FIRST HOME SOONER

A key priority for Westpac is to make more people aware of their low-deposit options, and ensure our own business is set up to encourage and support as many aspiring homeowners as possible into their first home.

In April we launched our First Home Sooner programme. It’s aimed at connecting first home buyers with our network of Home Loan Experts based around the country – including our brand new Newmarket branch at 378 Broadway – to help them understand the options available and plan their homebuying journey. In summary, while there are challenges for many aspiring first home buyers, the home ownership dream could be closer than they think.

For more, visit westpac.co.nz