Three reasons frustrated buyers shouldn't give up

OPINION: If you’re a first home buyer, you’re probably looking at the latest house price news with a sinking feeling in your chest.

When Covid-19 first hit, the expectation was that house prices would fall.

On the information we had at the time, that was a realistic prediction. Countries were shutting down, their economies along with them, and the expected job losses would have led to some forced sales, pushing prices down.

READ MORE: Find out if your suburb is rising or falling

Instead New Zealand’s stunning response to the virus (well done everyone) has kept our country healthy, freedom of movement intact, and our economy doing much better than expected.

But it’s also seen house prices soar away again.

The latest OneRoof Property Report found that in the seven months since lockdown, property values across the country jumped up five per cent.

So if you’re staring at that in disbelief, and wondering when you’ll be able to buy a first home, here are some things to consider.

1. KiwiSaver is your best weapon

Putting money into KiwiSaver stops you from having to save everything yourself.

You get the employer match of up to three per cent of your salary, as well as the government tax break of $521.43.

That means you can double your money before you even get any investment return.

Just don’t forget, that to get these matches, you have to put money in yourself.

2. Time changes how you’ll use KiwiSaver

You can change what KiwiSaver fund you’re in, depending on how long you think it will take you to save up for a house.

If it’s less than five years, then consider a conservative fund. That will keep your money safe from the wild swings of the market, as covid-19 continues to shake the economy.

If you live in an expensive area, and think it will take more than five years to save, don’t panic. In some ways, it’s a good thing.

You can consider putting your KiwiSaver into growth. It will go up and down with the market, but if you’re ready for that and leave it there, it should earn more over time.

That way you don’t have to save all of the deposit by yourself. Your savings can go to work as well, and earn some money alongside you.

Talk to your KiwiSaver provider about these options. You pay them to look after your money, so they should help you figure out what the best course of action is.

3. Don’t feel you have to rush

FOMO, and emotions in general, are your enemy when it comes to managing your money.

It’s totally understandable to watch prices climbing ever higher, and feel like it’s now or never.

But the only thing worse than missing out on a house is buying one at the wrong time, not being able to afford it, and losing it to the bank.

If you set up your KiwiSaver right, keep an eye on the housing market, and save what you can, you’ll get there. It’s just a matter of time.

- Frances Cook is the host of the personal finance podcast Cooking the Books. She is not a financial adviser, and all information is general in nature. For individual advice, see a financial adviser.

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