Can Gen Y still own a home?
When it comes to buying property across New Zealand, there appears to be growing pessimism among younger Kiwis – but should this really be the case?
Credit agency Veda released a report which suggests Gen Y individuals aged under 28, are less positive about the idea of owning a home and accept the possibility of long-term renting.
Young New Zealanders appear have been taking out less in mortgages, with their borrowing inquiries down one third from June to August compared with the same time last year. They are instead adding more to credit cards and personal loans. Borrowing through these channels has increased 19.7 per cent and 12.1 per cent respectively.
"Gen Y may be showing a similar pattern to that of baby boomers prior to the 1987 downturn, when consumer spending was fuelled by unsecured borrowing," said John Roberts, managing director of Veda New Zealand and International.
He also spoke of increasing loan value ratios and interest rates perhaps fuelling the decline in mortgages among young people.
"They might be destined to be renters for life which is likely to have an impact on net savings for this group in New Zealand for years to come," he added.
Why you shouldn't turn your back on home ownership
Despite this decline in mortgage lending for young people, it is important to remember that home ownership is not an impossibility.
With the right financial advice in place and accurate expectations of when you will see returns, the long-term rewards of property investment can be achieved.
By looking beyond the short-term debt of personal loans to the possibility of rental yields with positively geared property, anyone can get on the right track with buying growth property – it just requires patience and an excellent savings plan.
For advice on how to get out of renting and into property investment, feel free to contact Goodlife to organise a plan.
Here's to your financial independence!
Authorised Financial Adviser / Investment Property Expert