Mortgage affordability in NZ: All about the Kiwi Dream

How many New Zealanders are living the dream?

Mortgage affordability in NZ: All about the Kiwi Dream

While it may be a stretch to suggest that the Kiwi Dream of mortgage affordability has turned into a nightmare, it is certainly an ideal that is giving many New Zealanders pause. Many Kiwis who responded to a recent survey have said the dream is unattainable, with even more saying housing affordability is getting worse and that they experience mortgage stress. Here is what you need to know about mortgage affordability in New Zealand and the Kiwi Dream.

All about the Kiwi Dream: affording a home

According to the OneChoice Housing Trends report released in June 2022, 51% of New Zealanders surveyed say that the Kiwi Dream is unattainable. But how exactly is the “Kiwi Dream” defined? When asked to define the term, 68% of New Zealanders surveyed said it meant simply becoming financially independent. Owning any kind of home came in second in responses, at 53%.

Taking extended time off every year for holiday came in at No. 3 with 43%, owning a free-standing house on quarter acre finished fourth with 39%, and having children came in at fifth with 36%. The definition of the Kiwi Dream has changed over time, according to 81% of respondents.

This deep dive into what the Kiwi Dream is, how it is defined, and how it is viewed by New Zealanders was commissioned by OneChoice and conducted by CoreData between April 12-18 of this year, and included a quantitative online survey of 1,128 responses from New Zealanders 18 years and older. The report also investigated New Zealanders’ perceptions of housing in the contexts of buying versus renting, living in the city versus living in the country, and first-time homebuyers purchasing properties.

Housing affordability is getting worse

According to the report, the majority of New Zealanders feel that housing affordability is getting worse – 77% of respondents expressed the view that homeownership is unaffordable.

That belief seems unlikely to improve anytime soon: when asked whether they felt living affordability would change in the next 10 years, a whopping 61% of respondents said they thought it would actually become more unaffordable. Some 23% of respondents said housing affordability will remain the same, 7% were more optimistic in saying that New Zealand will become affordable, and 9% said they were unsure of what housing affordability will bring in the future.

First-time homebuyers in particular are coming up with strategies to afford properties in the future, with 62% saying they will have to cut back on living expenses in order to do so. Fifty-six percent (56%) say they will wait for property prices drop more, while 46% say they will look to buy a home in a more affordable area, 45% say they will avoid holiday costs and travel, and 40% say they will be forced to buy jointly with either a partner, their friends or their family.

Rent is overpriced

When asked how they felt about the cost of rent these days in New Zealand, a shocking percentage of Kiwis said they believe it is overpriced—in fact, roughly 95%. Of those, 66% said rent in New Zealand is very overpriced and 30% said it is somewhat overpriced. Just 5% of Kiwis asked said rent is reasonably priced.

Three in four New Zealanders—or 76%—said they would prefer not to rent but do not have the option. Some 24% said they would rather rent to afford to live in the location of their choosing. The survey also found that 29% of Kiwis said that, prior to purchasing a home, they expected to rent for between 3-5 years. Twenty-four percent expected to rent 1-2 years before owning a home, 18% said 6-10 years, 9% said both less than a year and more than 10 years, and 5% said they either did not expect to ever afford a home or were unsure.

Kiwis experiencing mortgage stress

The majority of Kiwi homeowners surveyed said they are experiencing mortgage stress. Fifty-three percent (53%) said that paying off their mortgage feels like a bigger burden and is limiting their lifestyles. Fifty percent said they feel slightly overwhelmed with debt, while 44% said paying off the mortgage is creating stress and anxiety and 34% said they were not confident when they would be able to pay off their mortgage.