Gen Y might be destined to be renters for life

Gen Ys are rapidly becoming property orphans as they give up on buying their own homes and load themselves up with debt to take holidays and fund other lifestyle purchases, according to credit analytics company Veda.

Shopping renter
  • 1 October, 2014
  • Rental, Generation Y

Veda describes the trend among Gen Ys (those aged below 28), which is drawn from credit inquiry information, as very concerning.

The credit inquiry statistics show that younger New Zealanders are no longer applying for mortgages at the rates seen in previous years, but are increasing their borrowing through personal loans and credit cards, indicating a shift in their credit habits.

"They are property orphans because their behaviour suggests they may be unable to save the 20% deposit required under the Reserve Bank's LVR restrictions and not helped by spiralling property prices," Veda NZ managing director John Roberts said.

Veda figures show that mortgage-related credit inquiries have declined for the last 11 months and across all age groups were down 30% in the three months to August compared with the same period last year.

However the GenYers mortgage inquiries were down the most at 32%, while their personal loan inquiries were up 12% in the same period and their credit card inquiries were up a whopping 20%.

"Potentially this could indicate a major structural change to the NZ economy as has played out in other jurisdictions such as Europe," Roberts said.

"It looks like Gen Y is seeking to borrow for purchase on consumer items or travel, and has given up, at least for the meantime, a desire for home ownership which may appear unattainable."

LJ Hooker NZ

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