What Gen Z Needs to Know About Buying a Home in 2025
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As in other countries, housing supply in New Zealand has yet to meet demand, keeping home prices in many places out of reach. Although mortgage rates are declining, many homebuyers struggle to save enough for a deposit.
While you may face more obstacles to homeownership than your parents and grandparents, you can enter the property market more easily than you think if you play your cards right. Here’s what to remember when buying a home in 2025.
Applying for a loan with desirable credentials allows you to borrow more cash, qualify for lower mortgage rates and afford more properties. Homeownership should motivate you to fatten your bank account and develop better spending habits than ever, especially since some loans incentivise you to grow your savings.
For example, an offset mortgage allows you to use the size of your cash savings to reduce your interest payments. The principal dictates the interest amount, so you save on interest when you owe less.
In an offset mortgage, the lender deducts your savings from your principal’s value to lower your interest payment. If your mortgage balance is $450,000 and you have $25,000 in savings, you’ll only pay interest on $425,000.
Most lenders want you to shoulder 20% of your purchase price to test your financial capability and absorb less risk. While paying that much cash up front is ideal, it’s unnecessary. You can take out loans designed for first-time buyers to get more favourable terms.
For instance, you can apply for a First Home Loan to lower your required deposit to 5%. If you’ve contributed to your KiwiSaver account for at least three years, you may withdraw funds to cover your deposit.
Taking out a loan under your name involves fewer legal complexities than co-owning a house with a relative or friend. When shared, mortgage payments and other house-related costs become more manageable, but co-ownership can backfire if you fall out with your co-owner. If the law considers you joint tenants, each has a right of survivorship and gets the whole house when the other passes away.
Owning a single-family home is the dream of many. However, only some get listed because older homeowners continue to live in houses too big for them. Nearly 550,000 units nationwide have one spare bedroom, while almost 687,000 have two or more spare bedrooms.
More older homeowners may eventually downsize and sell, but avoid pinning your hopes on it because it’s out of your control. Buying a housing unit in a high-density building is.
More cities have acknowledged the need for middle housing, easing zoning restrictions in nearby suburbs to permit high-density developments. This strategy can increase housing supply faster than urban sprawl.
Auckland is an excellent example. Council approvals for new homes have risen since the city enacted up-zoning reform in 2016. The number of building consents went from 5,256 to 16,583 between 2016 and 2022.
Duplexes, townhouses and terrace housing units may have less space and privacy than single-family homes. However, they can help you afford a house in a nice neighbourhood without moving too far away from the city.
Homeownership is challenging for Gen Zers, but it shouldn’t be more difficult than it already is. Move mountains to improve your cash flow, minimise your required deposit and consider middle housing units to be a homeowner before 2025 ends.
About the Author: Evelyn Long is the Editor-in-Chief of Renovated Magazine and a writer passionate about sharing real estate tips with aspiring homeowners around the world. She regularly contributes to sites like the National Association of Realtors and Allioo.
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