Chief executive says it is clear the younger generation is “having a harder time”
Home ownership is becoming increasingly unattainable to the under-40s, but is still viewed as the ultimate ticket to financial security, according to a new study released by the Financial Services Council.
The ‘Money and You: Generation Rent’ study looked at New Zealanders’ views on home ownership, and particularly the challenges faced by the younger generation in accessing the property market. Results showed that approximately 83% of Generation Renters believe that home ownership is the ticket to long-term financial security, but 82% believe the home ownership dream is now unattainable.
FSC chief executive Richard Klipin said it was clear that the younger generation is “having a harder time”, and that the barriers to entry are “a combination of increasing house prices, ability to save for a deposit, and the availability of property in areas where people want to live.”
However, he said the perception that the under-40 demographic doesn’t have assets and cannot save is also not accurate, as results showed a significantly different picture in terms of saving behaviour.
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“There are around 1.5 million New Zealanders in the 18-39 category, of which roughly 40% own their own house, and 60% do not,” Klipin said.
“What we can see is that for a significant number of this community, they have between $0-$150,000 worth of assets, and there is a large proportion of the community that is saving money,” he explained. “So the notion that this part of the community doesn’t have assets is wrong.”
“One of the headline pieces of this research was to really unpack how New Zealanders feel about the rise in property prices, and how concerned they are about that,” Klipin continued.
“What we get a sense of is that across the country, people are concerned about the rise of property prices and what that will ultimately mean. It’s also a two-edged sword for those who are already in the property market, because if prices rise and you are a beneficiary of that, then happy days - but for those who are thinking not only about themselves but about their families, their kids and their grandkids, you can see that concern play out.”
The study showed that 67% of the renters surveyed had an investment portfolio of between $50k and $200k, including KiwiSaver, but excluding property. Klipin said this is “reason for some optimism,” but that, ultimately, attaining property ownership is still much more difficult than it has ever been.
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“It’s been very interesting to see the level of concern coming through in terms of affordability, and what that ultimately means in terms of behaviour and actions,” Klipin said.
“Some have unjustifiably labelled generation renters as hanging out at the beach and eating flash food, whereas actually, the research showed a reverse of that. Being savvy, tapping into resources, investing widely, and creating plans to get where you need to get to was actually much more true.”
“They’re adaptable and creative, and are turning to alternative forms of investing,” Klipin concluded.
“They’re building their financial capability with micro-investing platforms and adopting new financial technologies that weren’t around during their parents’ generation. This is reason for some optimism, but this research shows that Generation Renters needs a lot more help to reach the dream of owning a home in New Zealand.”
