Are young Kiwis worried about homeownership?

Those with existing wealth are growing it exponentially

Are young Kiwis worried about homeownership?

The Financial Services Council (FSC) has released its latest Financial Resilience Index, and the data reveals that the overwhelming majority of young people are worrying about money on a regular basis, and are concerned about their prospects of getting on to the property ladder.

While job security saw a small increase from 78.1% in April 2020 to 78.7% in April 2021, financial confidence and literacy has dropped, and fewer respondents had household investments compared to the previous survey.

Seventy-seven per cent (77%) of respondents aged 37 and under worried about money on a daily, weekly or monthly basis, and FSC CEO Richard Klipin said the uncertainty of the COVID-19 pandemic hit this demographic particularly hard, while those with existing properties and investments have benefited from a rapidly recovering economy.

Read more: Almost half of Kiwis rate their financial strength as ‘fair’ or ‘poor’

“This is the fourth time we’ve gone into the field to find out how Kiwis are managing through COVID, and we started this process just before we went into lockdown - so the start was almost ‘ground zero’ before everything hit,” Klipin commented.

“New Zealanders have been amazingly resilient as we’ve moved through the COVID crisis, and though we’re not out of the woods yet, we’re in good shape. But in some ways, there has been a disproportionate price paid by some parts of the community, and that mostly relates to people under the age of 37.”

“The key statistic that stands out is that 77% of New Zealanders under 37 are worrying about money daily, weekly or monthly, and when we look behind that data, it makes sense,” he explained.

“These are the people who are very dependent on their jobs, are perhaps starting families and might be more financially exposed, and the uncertainty that a global pandemic brings is playing right through the data.”

Klipin said that those with existing wealth have come out of the pandemic better off, but the younger generation is feeling increasingly cut off from the property market, with higher prices inevitably meaning higher deposit requirements. Judging by the latest Financial Resilience Index results, he said the government’s March announcements also haven’t done much to increase optimism.

Read more: Westpac economists expect house prices to continue rising

“Some Kiwis have never been richer - if you have property or stocks and shares, that’s never been more valuable,” Klipin said.

“Those who are not in are getting further away from it because of the price rises, but those who are in have seen their wealth significantly grow due to the cheap interest rates and high savings rates.”

“It’s harder to see yourself getting on the ladder, those prices aren’t dropping any time soon, and it’s difficult to save for a deposit,” he added.

“There is a very strong link between people’s sense of financial confidence, security and assets - and particularly property assets - and financial wellbeing and stability. That’ll definitely be an area to watch.”

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