3 creative ways to save for your first home
Once a sign of adulthood, owning a home is fast becoming an out-of-reach fantasy for young people in New Zealand.
According to a recent housing affordability survey, all of New Zealand’s major metropolitan areas rate as “severely unaffordable”. In fact, the 2014 Demographia International Housing Affordability Survey rated Auckland the ninth least affordable city out of the 86 major cities it surveyed.
But it doesn’t stop there.
Auckland’s median house price jumped from $506,800 in 2013 to $561,700 in 2014. At the same time median household income actually declined to $70,500.
The rise in unaffordability has been driven by rising house prices, falling income and rising interest rates. At the same time, household savings are going down in New Zealand. So with all this pitted against them, how will first homebuyers ever reach the first rung of the property ladder?
It can be a little depressing, especially when other debt, like credit cards or personal loans will slow you down on the way to your goal. The answer for the more savvy young person is to build savings, and with low-interest rates, they’ll need to think beyond the banks to grow their house deposit.
Here’s three money-smart ways a first home buyer can walk in their front door faster.
1. Get creative.
Starting a side business can seem daunting, but it doesn’t need to be. The internet age means it’s easier to access clients or customers. Think about your skills and how you can turn them into profit. If you need inspiration, just think of Alicia Shaffer. Based in San Francisco, Shaffer started an Etsy account after being forced to close her business. Now, she’s making $80,000 a month selling her own brand of clothing - and that’s more than enough for a house deposit.
Not everyone’s side-business becomes a full time, high paying job, but a few extra hours could result in another hundred or so in your savings account each week.
2. Look in the driveway.
See your car? That’s a pile of cash that could be going towards your home. It’s worth investigating whether you can sell your wheels and, for the moment, drive something a little more economical. If you are looking to buy a home with a partner, why not switch one of your cars for a bike? You’ll save even more annually by ditching insurance and registration - and if you really need to you’ll have extra cash to catch an Uber.
3. Peer-to-peer lending.
We’ve all heard the adage don’t lend money to friends or family. But what about a stranger? Backed by Trade Me, a new type of lending is making waves in New Zealand. Harmoney is New Zealand first fully licensed peer-to-peer marketplace, which, like Uber and Airbnb, is disrupting the traditional finance model by directly connecting borrowers and investors through a simple online platform. The benefit for investors, and first home buyers trying to grow their deposit faster, is that the return on your investment is considerably better than the return offered by high-interest bank accounts, meaning you can save up for that deposit faster.
So why not get creative and check out Harmoney today?