Renters not positive about life as tenants

That’s despite nearly two-thirds aspiring to own their own home.

The study, which surveyed nearly 800 Westpac customers aged between 18 and 45, found 58% were already homeowners and nearly 37% were renters. Of the renters, two-thirds were not looking to buy a home

A large majority of renters identified saving a deposit as the biggest hurdle to home ownership, with more than 80% rating “insufficient deposit” as an important to very important factor in their decision for not purchasing a house. Some 63% also rated “insufficient income to cover mortgage payments” as an important to very important factor.

Westpac’s head of retail Ian Blair said while many believed it was tough to save a deposit, most respondents were in fact optimistic.

”It’s encouraging that nearly two-thirds of those surveyed aspire to own their own home one day. While saving a deposit has historically been difficult, this clearly shows that the prosepct of the Kiwi dream of owning a home is still alive and well in the current market.”

But, for 22%, renting for life remains a possibility and, of this group, 6.1% said they had a high expectation they would never buy a home.

The report’s co-author, Dr Jeff Stangl from Massey University’s School of Economics and Finance, said
when asked about the experience of renting, fewer than 20% of respondents said it was a positive experience. They cited the lack of stability and security renting can bring, as well as interfering landlords and they were particularly aware they were missing the opportunity to build personal equity in a home.

“What struck me at a very personal level is that many people feel stuck renting. They can’t afford to buy but they are also at the mercy of the landlords. They have no stability and don’t feel like they can call the place they’re living in ‘home’,” Stangl said.

Respondents are also aware of the risks of long-term renting.

“Renters are very concerned about getting on the property ladder – 90% of the people we surveyed believed it would only become more difficult to purchase a home in the future,” Dr Stangl says. “A similar number recognised the disadvantages of arriving at retirement age with no equity in a home.”

Despite the significant concerns expressed by potential homebuyers in the study, Dr Stangl believes that many of those surveyed were relatively optimistic and, at times, unrealistic in their responses.

“I was surprised that 63% of people believed they could save their deposit in one to five years. In Auckland, particularly, that seems optimistic if you’re saving a 20% deposit on a $700,000 house.”