Ed McKnight: Economist at Opes Partners on the number of first-home buyers turning to their parents for financial assistance

Almost half of first-home buyers in New Zealand expect help from the Bank of Mum and Dad, according to a new report. 

OneChoice's Kiwi Housing Trends survey of more than 500 Kiwis found that 48% needed financial assistance from family to get onto the property ladder. 

But of those who did receive support from their parents, 70% said they were worried about the pressure it placed on them. 

Opes Partners’ Ed McKnight told Mike Hosking first-home buyers are really keen to get onto the ladder right now, as houses are more affordable than they were before the Covid-19 pandemic. 

The main thing he’s been seeing, he says, is parents getting a loan against their paid-off house and passing it along to their kids to use as a deposit – in many cases the kids are taking responsibility for paying off that loan as well. 

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Episode Transcript

Speaker 1 (00:00):
Furtherit of news on housing at the moment, and it
involves the first home buyers. So one, they're making up
a big slice of sales as we know. Two the
younger than they have been, which I suppose is encouraging.
Three they're buying more standalone homes that came to us
yesterday and today. News that well. Four the old bank
of Mum and Dad is a major player in the market.
This is a new survey shows forty eight percent of

(00:20):
these first home buy has got some sort of family help.
Ed mckknight is the prison resident economist at Opus Partners
and he is with us. Ed, very good morning to you,
Good to talk to you, Mike. Is that forty eight
percent changed materially in the last handful of years or not.

Speaker 2 (00:36):
Well, it certainly has been increasing. What I'm seeing is
that first home buyers are really keen to get on
to the ladder right now because they see that house
prices are full and they think, okay, that's a bit
cheaper than it was a couple of years ago. Incomes
have increased faster than house prices since twenty twenty. In factor,
house is now more affordable than it was before the
COVID nineteen pandemic in the housing boom that came along

(00:57):
with it, and so I am seeing a lot of
first home buy talked to the old bank of mum
and dad and say, now's the time for me to
make a move. Can you help me get on the ladder?

Speaker 1 (01:06):
And do they do you break it down? Is it
money or is it back up or some sort of
guaranteel with the bank.

Speaker 2 (01:11):
Well, the main thing I see is that Mum and
Dad have a house. I've paid off the mortgage, It's
gone up in value. They might not have much cash
that they have saved up that they can hand over
to little Sammy and Jimmy for their first home, and
so what they'll often do is go to the bank,
get a loan against their house, a top up mortgage,
and pass that across to the kids to use as

(01:32):
the deposit. Now, in many cases, the kids might take
responsibility for paying that loan and those repayments as well.
Just make sure that Mum and Dad aren't actually having
to fork out a lot of cash for it, but
they're using the equity inside their homes to help with
that deposit. That's what I see most of it.

Speaker 1 (01:47):
Okay, this twenty seven percent of first home buyer is
they're or thereabout it. And this myth still persists that
you can't afford a house. And I mean, obviously, in
some people's cases they can't and they won't and I
get that, but you can't argue that twenty seven percent
isn't a good slice of the market. First home buyers
are doing well, thank you, aren't they.

Speaker 2 (02:06):
Yeah, this is just such a great news story. First
home buys are buying a higher percentage of the houses
than they ever have in New Zealand. They just on
that perception around not being able to afford a house. Look,
if you can't afford a house, you've got a very
good incentive to go talk to your local newspaper and
make a big song and arms about it. If you
can afford to buy a house, well there's no new
story there, so it doesn't necessarily get reported. But this

(02:28):
is certainly very good numbers and first home buars should
be very happy. They're taking advantage of the fact that
house prices, especially in parts of Wellington, are thirty percent
lower than they were at the peak of the market.

Speaker 1 (02:39):
Exactly. Good on you, Ed, Nice to talk to you again.

Speaker 2 (02:41):
Ed.

Speaker 1 (02:41):
Mcnoight, who's the resident economist at Opus Partnership.

Speaker 2 (02:45):
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