Photo: RNZ
Billions of dollars have flowed from KiwiSaver funds into the housing market - but how much of an impact has that had on property prices?
ANZ said on Wednesday that more than 115,000 people had made a withdrawal from its three KiwiSaver schemes to buy a first home, totalling more than $3 billion.
"KiwiSaver is helping thousands of New Zealanders take that first big step into home ownership," says Fiona Mackenzie, managing director of ANZ Investments.
"Over the past 12 months, just over 9200 of our members made a first home withdrawal from their KiwiSaver account."
She said the average amount withdrawn was $43,000. Most withdrawals were by people under 45, with the average age of buyers being 34.
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Inland Revenue data for the scheme as a whole shows there was $234.1 million withdrawn for a first home in September, up from $176.8m the year before.
Cotality chief property economist Kelvin Davidson said it was likely the ability to withdraw money from KiwiSaver meant house prices were higher than they otherwise would be.
"It's either going to have resulted in earlier purchases by first-home buyers or more purchases than otherwise have been the case … it is more money than they otherwise would have had access to. In a binary world, you would say there probably has been an impact."
But he said people would have still saved deposits without KiwiSaver, and first-home buyers did not want to pay more for a property than they had to.
"It's different than the government handing out a first-time grant or subsidy or something like that because that is something that if sellers are aware is going on they build it into the price. That does tend to push up house prices. This is different - it isn't freebies from the government."
Kernel Wealth founder Dean Anderson said KiwiSaver's first-home withdrawal option reinforced a "property first" mindset among New Zealanders but the impact on hours prices was negligible.
"First-home buyers now make up 27 percent of all purchases - well above the long-term average of 21 percent to 22 percent - yet prices have remained flat since their post 2023 decline.
"There's often speculation about what drives housing prices - from foreign buyers and investors to deposit rules and LVR settings. Each of these plays a small role, but ultimately, it really comes down to economics 101 of supply and demand. Currently, despite easing interest rates and even seeing home loan rates below 4 percent again, the completion of many new housing and townhouse developments combined with a complete slowdown in migration have led to excess supply, keeping prices stable."
He said that was positive for New Zealand and encouraged investment to go into more productive areas.
Infometrics principal economist Nick Brunsdon said there had been a risk the now discontinued First Home Grant scheme had pushed up prices. That gave qualifying buyers up to $20,000 for their purchases.
"KiwiSaver is different, as it's an investment vehicle with a relatively small grant component - the annual tax credit which will soon be worth just $260. In a sense, KiwiSaver is just like a bank account in that it's just another vessel for first-home buyers to save with. "
He said the fact money was locked in probably meant better results than a standard savings account or term deposits.
"In theory the investment returns are no different to any other managed fund, but I think KiwiSaver has 'mainstreamed' investing in managed funds, and without KiwiSaver we would expect to see many more first-home buyers using bank savings accounts and term deposits instead. All in all, KiwiSaver probably has boosted first-home buyer budgets, but with a marginal effect. It would have made the biggest difference for those with less financial education and/or discipline."
Kōura founder Rupert Carlyon said he did not think there was an impact.
"Many would use alternative savings mechanics for their first home if KiwiSaver was not an option."
Which fund is right for a first-home buyer?
ANZ said 60 percent of the first-home buyers who made a withdrawal were in a growth fund and only 14 percent were in cash.
Generally, people are advised to dial down their KiwiSaver risk as they get closer to withdrawing the money, to reduce the chance of their balance dropping when they need it.
Brunsdon said that seemed to suggest that first-home buyers were taking a chance and hoping the sharemarket would be on their side and boost their budget.
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