First Home Buyers: Your deposit will come back

Unfortunately, community transmission of Covid-19 has been widespread amongst KiwiSaver funds.

Balanced and growth funds have taken the biggest beating, but even the really conservative funds have had a few grazes.

Unless you’ve been off the grid for all of lockdown, none of that is news to you.

But if you’re an eager first home buyer, it’s probably one of the biggest bummers of this whole situation. Interest rates were really starting to go in your favour and the growth in your KiwiSaver balance that you were going to use for a deposit was looking pretty sweet, so home ownership, well it was right there on the horizon!

It may seem like that bubble has now burst, with the financial realities this pandemic has spread. Your window of opportunity has been wiped. Your shot at home ownership… well, shot.

Unless you’ve had a dramatic change of income, lost your job and you’re unlikely to get another anytime soon, then there is a chance to pull through. More than a chance actually. 

Even if your deposit has taken a pasting over the last month, the opportunity to buy is still there. The reality: You just might have to wait a little longer for it.

Here’s some good news.

Most of the companies your KiwiSaver invests in are faring well, with decent prospects – it means they’ll come back, and so will your KiwiSaver deposit. Some will vanish, for sure. But your KiwiSaver managers invest in a wide range of businesses, and that diversification means you probably haven’t got a basket full of duds. Most people should just carry on.

With everything shut down apart from supermarkets, petrol stations and the chemist, you’ve probably seen your bank balance increasing in the last few weeks. That might be true, even if your income has been temporarily cut back. That’s true in my case, for sure! There’s less crap to spend money on and who knows, by the time lockdown is over, you might have created a ‘spend less’ habit. All up it means any savings you do manage outside of KiwiSaver will probably rebuild quite nicely, thank you.

Fear of missing out? It’s real (and deep, when it comes to property). But don’t worry about FOMO. Realising your property dream won’t go away, the market will still be there, interest rates will still be low. You might decide to wait and see for the next 4-5 months, but that’s all good. The people looking to sell their houses are probably going to do the same thing. You’ve got time.

If you’re a prospective first home buyer, I’d say the next few months are an ideal time to get your ducks in a row:

• Time to have the ‘how much can I borrow’ conversation.
• Do a budget.
• Watch your savings grow.
• Keep an eye on the market.

And maybe just maybe, hit the open circuit in Summer 2020. If you want to chat about where you’re at in the process, give us a call.