Parents shift from guarantees to smaller cash gifts, advisers say
New Zealand first-home buyers are leaning less on their parents to get into the market, with KiwiSaver withdrawals, low-deposit lending, and three years of flat house prices doing much of the work the Bank of Mum and Dad once did.
Advisers told OneRoof that where parents are still helping, they are more likely to hand over a modest cash gift than put their own home on the line as a guarantee.
Smaller cheques, not no cheques
Kiwibank chief economist Jarrod Kerr said a growing number of buyers were drawing on KiwiSaver for their deposits, reducing the need for large family contributions.
“Maybe it’s only $10,000 or $20,000 now, whereas it used to be a significant contributor,” Kerr told the publication.
The figures back the KiwiSaver trend. First-home buyers withdrew a record $2.2 billion from KiwiSaver in the year to March, up 25% on the year before, according to the Financial Markets Authority.
National prices sit about 13% below their early-2022 peak and have barely moved in three years, making deposit targets easier to reach. New buyers are also facing less competition from investors.
Independent economist Tony Alexander’s latest NZHL Property Report found a net 46% of agents were seeing fewer investors looking to buy, while the share reporting more first-home buyers was the highest since late February.
Gifts replace guarantees
Christchurch-based Gareth Veale, director of GV Financial Services, said most of his first-home clients could pull together a 5% deposit on their own, with families adding a gift on top rather than guaranteeing large loans.
“Mum and dad aren’t stupid; they’ll want to limit their exposure,” Veale told OneRoof.
Float Mortgages adviser Geoff Christopher said he was seeing parents choose cash gifts over guarantees, a pattern he had not observed for years.
“Gifting is still a massive part of what is going on,” he said.
Some wealthier families are using savings to lift their children’s deposit to 20%, giving them access to banks’ special rates. Others with home equity are borrowing through their own loans and passing the funds on.
A different story across the Tasman
The trend contrasts with Australia, where Alexander said brokers were reporting parents growing wary of helping buy homes that could fall in value as that market goes through a correction.
In New Zealand, election policies could further reduce reliance on family help. National has campaigned on raising the income cap for an existing first-home buyer scheme to $300,000. Labour has pledged to make employer KiwiSaver contributions compulsory from 1 July 2028 and to lift the minimum employer rate to 6% by 2032.
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