Owning a home is a milestone many New Zealanders aspire to achieve, but the timing of this significant decision can vary greatly from generation to generation. According to the latest census data, a growing number of individuals are becoming homeowners, albeit later in life compared to their parents. This shift has sparked a crucial question among prospective homebuyers, especially those with children: when is the right time to stop pursuing homeownership?
One individual, starting from the ground up in their early 30s with no savings, no KiwiSaver, and four children, pondered whether they should resign themselves to a lifetime of renting. The thought of sacrificing every spare dollar for years, potentially depriving their children of a stable home environment, loomed large. Financial coach Liz Koh of Enrich Retirement aptly described this predicament as a “huge dilemma” faced by many.
Koh emphasized that the decision to buy a house or not is deeply personal, hinging on a careful evaluation of one’s goals, values, and lifestyle. It entails a trade-off between short-term sacrifices and long-term benefits, with some individuals unwilling to make the necessary financial commitments to save diligently. She advised exploring a range of options before making a definitive choice, such as investing in affordable rental properties or considering innovative financing models for future ownership.
Expert Insights on Homeownership
Kelvin Davidson, chief economist at Corelogic, emphasized that the financial benefits of homeownership typically outweigh the costs in the long run. While acknowledging the challenges of balancing work and family obligations, he underscored the enduring value of instilling financial literacy in children. Davidson encouraged parents to cultivate a mindset of financial responsibility and wise spending habits to secure their family’s future.
Dean Anderson, founder of Kernel Wealth, shared a poignant personal anecdote about his upbringing with a single mother who prioritized spending time with her children over pursuing a full-time career. He highlighted the importance of imparting financial education to children, emphasizing the significance of budgeting, investing, and saving for future goals. Anderson stressed that regardless of one’s homeownership aspirations, fostering financial literacy early on lays a solid foundation for financial security and resilience.
Gareth Kiernan, chief forecaster at Infometrics, echoed the sentiment that there is no one-size-fits-all approach to homeownership. He emphasized the importance of striking a balance between saving for the future and enjoying life in the present. Kiernan advised individuals and families to create a realistic budget that accounts for both essential expenses and leisure activities, ensuring a sustainable approach to financial planning.
Planning for Retirement
As the Retirement Commission projects a significant rise in the number of retirees who will be renters by 2048, questions arise about ensuring financial security in retirement without homeownership. Renters, as highlighted by the Commission’s analysis, face higher housing costs in retirement, necessitating proactive savings strategies. Anderson recommended increasing KiwiSaver contributions as a “pay yourself first” approach to building a retirement nest egg.
Davidson emphasized that renting does not necessarily equate to a suboptimal financial outcome, citing examples from countries like Germany and Switzerland where renting is the norm. By saving diligently and investing wisely, individuals can accumulate wealth over time, regardless of their homeownership status. Building wealth incrementally and leveraging investment opportunities can pave the way for a secure financial future, independent of homeownership.
In conclusion, the decision of when to stop buying a home is a deeply personal one, shaped by individual circumstances, priorities, and financial goals. Whether one chooses to pursue homeownership, invest in rental properties, or prioritize financial literacy for future generations, the key lies in striking a balance between short-term sacrifices and long-term gains. By fostering a culture of financial responsibility, prudent spending, and strategic investing, individuals and families can navigate the complexities of homeownership and retirement planning with confidence and resilience.