Family funds help 47% of Auckland's first home buyers

A growing number of Auckland's first home buyers are funding their start on the property ladder thanks to gifts and loans from family.

Our 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.

"The research supports what our salespeople have been reporting, with a greater number of first home buyers visiting open homes with their family and having financial assistance, usually from their parents, to complete the purchase," says Barfoot & Thompson Managing Director Peter Thompson.

"We were eager to find out more about this emerging trend and how it might be impacting the buyers and sellers we work with every day. For instance, for sellers, this means their property may need to appeal to the preferences of more than one generation of buyer."

Gifted money and loans most common

Those getting a helping hand from family over recent years were primarily being gifted money (44 percent) or given loans (34 percent). The remainder was spread across a wide range including having family act as guarantors, sharing in the purchase, or using an inheritance.

"The data clearly shows family assistance is fast becoming a normal part of the process for today’s first home buyer,” says Mr Thompson.

House price increases relative to earnings and stricter loan criteria among other market factors were likely driving the financial need for some buyers, while for others the added money meant they could buy a larger or more centrally located home than they would have been able to afford on their own.

"Whatever the reason, it is heartening to see this level of generosity among families and the lengths people will go to support the next generation."

First home buyers moving on from tradition

While purchasing a standalone house with a partner remains the statistical norm, the research also found some first home buyers are moving away from tradition to other ways of buying.

"Lone buyers, investors and apartment dwellers have become more prominent in the first home buyer statistics over recent years," says Mr Thompson.

The number of first home buyers purchasing with a partner represented just 63 percent of those who purchased their first home in the last five years, while the number of people purchasing alone sat at 23 percent and those purchasing with family rose to 13 percent. Prior to 1970, 94 percent of first home purchases were with partners or spouses.

"Over time we've also seen more people buy their first property as an investment, rather than a home to live in themselves." One in 10 first home buyers since 2010 (11 percent) purchased their first property as an investment, something that has increased noticeably since 2000. "For many this can be a means of getting on the ladder while they live elsewhere for lifestyle or work reasons."

Another small group are turning to apartments rather than houses, representing 8 percent of purchases since 2010. "This is partly down to availability of stock but equally for financial and lifestyle reasons - apartments are generally more affordable and centrally located."

Key findings at a glance:

  • More Auckland first home buyers are getting financial help from family -  47% of those who purchased between 2010-2015, versus 31% of those who purchased prior to 2010
  • They are most likely to receive a gift (44%) or a loan (34%)
  • Fewer people are purchasing their first home with a partner/spouse (63%), while the number buying on their own or with a family member has increased (23% and 13% respectively for purchases 2010-2015)
  • There are more first home buyers investing in rather than living in their property, with 9% of purchases between 2000 and 2015 being for investment, compared with just 3% before 2000. One-in-10 (11%) of first home purchases since 2010 were investment properties
  • Apartments are beginning to feature more within Aucklander’s first home purchases, at 8% of those purchased since 2010, up from 4% the previous decade and just 1% in the 90s.

About the Survey

The Barfoot & Thompson First Home Survey, conducted by TRA, questioned more than 1000 Aucklanders about their first home purchase, including when, what and how they purchased. Respondents ranged from very recent purchasers, to those who bought their first house prior to 1970. The margin of error on the sample of 1019 respondents is +/- 3.1%, at the 95% confidence level.

Our First Home

We are partners of TV One’s new multi-night format Our First Home. The series follows three families as they put everything on the line to help their children onto the property ladder.

Top tips for buyers

Want to know more about buying a home? Our salespeople share their top tips - watch the videos