Kiwisaver is giving New Zealand's provincial property market a boost. For the past nine months, first-home buyers have been able to withdraw their savings to help them buy a property.
Regional centres in particular have noticed an influx of people at entry level.
Kiwibank spokesman Bruce Thompson said he had been surprised at the number of people wanting to use their KiwiSaver funds to buy property.
"A very high number of Kiwibank KiwiSaver participants have not only inquired about using their savings for a first home, but have activated it," Thompson said.
"As soon as the three-year mark ticked over, we began to get inquiries."
He said that for many young people being able to withdraw the funds was the reason they joined the scheme in the first place.
Thompson said that regional centres such as Palmerston North and Rotorua were feeling the impact of a new generation of home-buying KiwiSavers and that in smaller centres three years of savings was enough for a deposit.
Martin Dear, manager of the Whangarei branch of Barfoot and Thompson, said he was beginning to notice it too.
"People are just starting to get to the stage where they can withdraw funds and we are seeing more and more of it."
Maree Mortimer, head of the Rotorua Property Investors Association, said she had noticed a big increase in the number of first-home buyers. "Investors don't have the market all for ourselves any more."
Thompson said he expected to see the benefits flow through to larger centres such as Auckland in about five years, when people had had a chance to save more as deposits in those areas were higher.
KiwiSaver allowed people to show a savings history, something that a lot of young people found difficult.
One Path, which operates four KiwiSaver funds, including those of the ANZ and National banks, has had 715 people withdraw funds to buy a home since it became possible and ASB has had 500 people withdraw funds since July.
Steve Wiggins, the general manager of Gareth Morgan Investments, said the system was a good way to show young people the value of saving. Rather than having to wait 40 years to be able to access the money they had been putting aside for their retirement, young people were able to get their hands on it for something much more immediate.
The 116 completed applications that had gone through his organisation were slightly more than expected.
The average amount withdrawn was about $10,000.
He said people who knew they were signing up to KiwiSaver intending to pull funds out three to five years later would need to talk to their provider about investing in a different way from someone aiming to save purely for retirement.
Whereas most savers in their 20s could take the highest-risk options to save because they had 40 years in which to do it, people who knew they would want funds available in the short term needed to take a more conservative approach.
Fisher Funds spokesman Michael Raynes said that in the nine months to March this year, 29 people had withdrawn an average of $14,000 to go towards a first home.
"That's nearly 5 per cent of a $300,000 house."
* KiwiSavers must have been in the scheme for three years before they can use their savings to buy a property.
* The scheme had its third birthday last July.
* Savers can withdraw their own contributions, those of their employers, and any gains from the investments.
* They cannot touch the $1000 kickstart or the government tax credits.
* They can only withdraw the money to buy their own home and it is not allowed to be used for a rental property.
* If they have owned a home before but are in financial circumstances that are deemed to be the same as a first-home buyer, they may also qualify.
* An extra subsidy is also available for borrowers on lower incomes. To qualify for up to $5000, depending on how long they have been in the KiwiSaver scheme, one or two buyers must have a combined annual income of $100,000 or less, or $140,000 or less for three or more buyers.