Shamubeel Eaqub says he tells his friends not to waste their money buying houses. "But they don't listen to me."

The 31-year-old economist at the New Zealand Institute of Economic Research is a dedicated renter and has never wanted to buy his own house.

"Houses are very expensive compared to renting."

His thinking challenges the norm. In the areas that appealed to him, house prices were about $1 million. Rent would be about $600 a week and a mortgage significantly more.


He said he and his wife invested the money they saved by renting so that they could provide for their retirement.

"New Zealanders' obsession with property is madness."

It seems growing numbers agree with him - in the year to June 2011, 35 per cent of households were renting, according to Statistics New Zealand. In 1991, the number was 26.2 per cent.

But David Kneebone, executive director at the Commission for Financial Literacy and Retirement Income, said most Kiwis were not as disciplined or financially savvy as Eaqub.

He said that could leave them vulnerable if they reached retirement age without owning a home."If you're paying rent in retirement, and are reliant just on New Zealand super, your standard of living is going to be considerably different to if you were living in a mortgage-free home."

He said a freehold home at retirement age was an important goal for most Kiwis.

If they did not have that, they would have to have saved hundreds of thousands of dollars - at the very least.

Kneebone gave the example of a property that would rent for $800 a fortnight, with a mortgage of $1500.


"The challenge is, can you save the $700 difference and invest it?"

People saving and renting would need to be sure they would never dip into the pot, Kneebone said.

He said it was hard to predict what would happen in the real estate market. It was possible that in a few years rents would have increased markedly, while a mortgage payment taken out in 2012 might not.

He said homeowners also had an asset that could appreciate in value more than other assets and having the mortgage payment to meet reined in the part of human nature that liked to satisfy short-term needs.

"The mortgage payment is good for us, it happens automatically, reducing debt. Can you maintain the discipline over a lifetime of being a renter to build up that sum? If you can, go for it."

Bankers association chief executive Kirk Hope said banks could advise on different investment vehicles to people pondering the question.

Hope said people could sometimes be swept along in the emotion of purchasing property. "Treat it like a financial decision because of the level of commitment involved. Get appropriate advice to consider what's right for you."

Eaqub conceded that for many people buying a home was not a purely financial decision. Some were worried about security of tenure or wanted to be able to make renovations, or change the garden.

"If it's a financial decision, don't do it. If it's a lifestyle one, do."