Buying your first home, be it a do-up, apartment, investment or dream home, is a really big deal. An an expensive one. A recent survey shows that to get onto the property ladder, more people than ever are relying on gifts and loans from family member to achieve their goal.
A growing number of Auckland’s first home buyers are funding their start on the property ladder thanks to gifts and loans from family.
Research found nearly half (47 percent) of people who bought their first home in the last five years received some form of financial assistance from a family member.
In comparison, less than a third (31 percent) who bought prior to 2010 received assistance and financial help was even less likely in preceding decades, representing as little as 13 percent of purchases before 1970.
This means that for sellers, they may need to appeal to a wider range of people, if multiple generations have a say in the final purchase. More than 40% of the assistance comes in the form of gifts, 30% as a loan and the remainder is family acting as guarantors, sharing the purchase or from an inheritance.
New Zealand;s house prices are comparatively some of the most expensive anywhere in the world, so it makes sense that there needs to be some creative and helpful solutions when it comes to buying.
Unlike in the past, where more first homes were purchased to live in, first home buyers are increasingly choosing investment properties, that they rent out. As an example, in 1970, 94% of first home purchases were made by spouses/partners to live in. Nowadays, more transient working conditions and financial factors mean that it is not always practical to live in a home that you own.
Whether you are the family member offering the financial assistance, or you are receiving it, it is imperative to have a full understanding and formal legal documentation of the agreement, so that there are no misunderstandings. Ensure all parties are fully informed and consent entirely before going ahead.