The so-called Bank of Mum and Dad is a major lender in the housing market, ranking fifth after ANZ, ASB, Westpac, and BNZ in terms of loans to owner-occupiers, Consumer NZ says.
The consumer lobby group estimates the Bank of Mum and Dad (BOMD) has lent $22.6 billion worth of home loans.
*Note: Results may add up to more than 100 as some parents offered multiple forms of assistance.
According to Consumer NZ research, 14% of New Zealand families have supported children financially to buy a property, with the average contribution $108,000. This equates to roughly 208,638 parents. The most popular form of assistance is contributing towards a deposit, with 61% of parents assisting this way. Consumer NZ says three out of five parents don’t expect to be repaid.
In 2002 when the average NZ house price was $186,000, this was equivalent to six times the average income of $29,432 per year. Twenty years later in 2022, the median house price is $890,000, which is more than 15 times the median income of $56,836.
“We’ve reached a point in New Zealand where it’s no longer enough to do all ‘the right things’ to buy your first home – to get a job with a good income, save furiously and cut back on the ‘nice to haves’,” says Gemma Rasmussen, head of campaigns and communications at Consumer NZ.
“The role of the Bank of Mum and Dad is more pivotal in the first home buying process, but it also means that we’re seeing a greater social divide of who gets to buy a first home and who does not."
“The overwhelming majority of parents (87%) either offered to or were happy to help get their children on the property ladder. There is recognition that a first home purchase isn’t as straightforward as it was 20 years ago, which is why many parents are so willing to help," Rasmussen says.
Consumer NZ goes on to say the majority of parents, 62%, dipped into their own savings to help with a home deposit, but nearly one in four reduced expenses to make their contribution possible.
"With home ownership becoming a more remote dream for many New Zealanders, some parents are pinching finances in an effort to get their children on the ladder. That said, 61% of parents said it was ‘no financial strain’ to help their children."
"The most popular form of parental assistance was contributing towards a deposit, with more than half (61%) of BOMD parents helping in this way, but many parents helped in multiple ways. This isn’t to say that some parents’ offer of assistance didn’t come without strain. For one in 10 parents, their financial contribution put them under moderate to serious financial strain," Consumer NZ says.
“Our research found that more than half of New Zealanders who don't own property consider themselves to be ‘locked out’. The most common issue cited is that the deposit goalpost keeps shifting. You’re saving, and then overnight the property price jumps up tens of thousands of dollars,” Consumer NZ says.
Survey of the NZ general population
Fieldwork dates: Consumer Sentiment (n=92) (1-9 February 2022), General Population Booster (n=302) (25 March to 6 April)
Total number of eligible respondents (i.e. those who have financially supported their children aged 18+ to buy a property): n=394 out of n=2810.
Maximum margin of error: +- 4.94%