New Zealand's high rate of home ownership compared to other countries is falling. More properties are now owned by fewer people and property investors are more influential in the market.
Owning property can be a good way to create wealth because the value of property increases over the long term,however, in the short term, property prices can fluctuate.
Getting on to the property ladder can be a risky process. First homes are usually bought with a small deposit and a large mortgage at a time of life when income is low and uncertain.
Right now, there are significant medium-term risks for first-home buyers. Interest rates are low and may fall, property prices are high, investors are active in the market, and in some areas there is a shortage of properties.
First-home buyers now face the risk interest rates will rise. Buyers who borrow cheaply now but do not factor in higher interest costs in the medium term may be forced to sell in a falling market.
-Liz Koh is an authorised financial adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free by calling 0800 273 847. For free e-books see moneymax.co.nz and moneymaxcoach.com
