First home buyers are being warned they may never be able to save a deposit for an average priced home.
A report shared exclusively with 1News predicts the average Auckland house price deposit will be $1 million by 2045.
For Auckland designer Raph Roake, home ownership is far out of reach – and he figures splashing out on coffee and renting forever is a valid alternative.
"The level of deposit you have to have at the moment is just quite a long way into my future. If I was to go down that track, I’ve just been looking at alternative investments," he said.
This includes shares or managed funds.
"We've tried to look at home ownership with a bunch of my friends as a group a few times – those of us who don't have backing of parents, kind of out of reach."
However new financial services platform Area says hopeful buyers need to think differently, and find alternative ways of saving.
Aera founder Derek Handley told 1News: "The idea that you can, through your own hard work, save up 20% for an average-priced house is mathematically almost impossible.
"We've gone past the point where that amount is so big that you'll be needing to use different ways to save, and also you ultimately will probably need to have some help from a third party that would step in if you don't have access to the 'Bank of Mum and Dad'."
Handley suggests deposits for some homes will need to increase exponentially.
For the average Auckland house, priced at $1.25 million, people would have to save $250,000 for the deposit, he said.
"But by the time you've saved it in 10 years, you'd need to have saved $500,000, and that's really the conversation that isn't really happening, and it's really about the first home savers."
His conclusions were drawn from the Aera Time-To-Deposit Index, developed using data from a number of agencies – including Statistics New Zealand – and verified by economists Infometrics.
And with net migration skyrocketing to 110,000, demand for homes continues to outstrip supply.
To help with the supply issue, Simplicity Living has launched an investment fund to develop and operate housing and offer low-cost mortgages.
With house prices starting to creep back up again, innovative ideas may well be needed to solve an age-old problem, and incomes and savings would need to go up.
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