Using your Kiwi Saver for property purchase.

This article is shared with you by the Auckland law firm
conveyancing team at Quay Law.


The Government’s saving scheme is behind a shift back to first home buyers – but the Reserve Bank could stymie the increase.

KiwiSaver launched in July 2007, around the same time the New Zealand property market hit the doldrums.

The initiative allows those in a compliant scheme to withdraw some or all of their savings to put toward the purchase of their first home.

Remax Leaders Real Estate property specialist Andrea Skews says the market has started to rebound, largely thanks to young first home buyers and their access to the funds required to make a deposit.

“Two to three years ago we probably had a larger buyer pool in the four-bedroom, two bathroom second home buyers where they move up, that’s definitely slowed down and shifted back to the first home buyers,” she says.

“In my buyer pool personally now, I’d probably have 80 percent who are first home buyers.”

Brendon Ojala is director of Velocity Financial, a Wellington-based firm.

“I think there is probably a slight increase in ease of access for those first home buyers because of KiwiSaver,” he says.

Prior to the housing market crash in 2007, the majority of banks required a five percent deposit on a house. From 2008 onward, this rose to around 20 percent. Now Mr Ojala says these rates are coming down again, attracting young buyers.

“Those two things are certainly having an impact on first home buyers getting into the market.”

He is worried rumours the Reserve Bank may require banks to comply with a minimum deposit cap on mortgages could have a massive impact on this market, which is slowly but steadily recovering from 2007.

“Without a doubt that would impact first home buyers,” Mr Ojala says.

“Right now, if you’re on an average salary and you’ve been on KiwiSaver for five years you can get into an average-priced house because you only need five percent. If the Reserve Bank says ‘right, you need 20 percent’, it’s going to be years and years before many people can have that saved.”

While Mr Ojala says it is unlikely the minimum cap is instituted without a lot of noise from the brokerage industry, a generation which has just gotten used to the idea of being able to own a home may receive another blow.

Source: 3 News 3 February 2013.