First-home buyers can buy a stake in Auckland for $500
Would-be homeowners who cannot yet afford a house of their own are being given a way to get as slice of the action anyway.
A new company, The Ownery, is offering a stake in Auckland houses for people with $500 or more to invest.
Chief executive Paul Jacobs said Aucklanders had an uphill battle to save for a deposit because house values were rising faster than people could save.
"This is making it more and more difficult for younger Kiwis to keep their dream of home ownership alive, as the median price for a house in Auckland edges towards $1 million and banks require minimum deposits."
Investment companies will publish offers for shares in Auckland houses on The Ownery's website. The companies will own and manage the property.
Over time, savers will have the opportunity to build up their stake in the housing market across many different companies which own properties in a variety of suburbs, bought over a variety of stages in the property cycle.
Each company's offer will be regulated by the Financial Markets Authority.
Jacobs said the houses bought would be below the median house price so that they related to the types of houses that first-home buyers would eventually want to buy. "It makes sense to look at the homes that would be of interest to first-home buyers because it helps them with the transition from us to the actual housing market."
Jacobs said the idea appealed to a range of people, including people who were overseas but wanted to have a stake in the Auckland housing market and long-term renters who were happy as tenants but wanted to know they had money tied into the fortunes of the housing market if they changed their minds.
An upfront fee will be charged when shares are bought, as well as fees for property management services. Any rental surplus will be returned to shareholders as a dividend.
Shareholders will receive an updated share valuation every month based on QV data and twice a year based on a full registered valuation. Shareholders have the right to request the company running the house share buys their shares at their latest valuation at any time. There will be no exit fee.
Bank loans will not be used to purchase their houses but there will be provision for low level borrowing as needed.
"It is not a magic bullet," Jacobs said. "You have to be really disciplined about your savings programme over time to build a deposit. But if home ownership is the goal, it surely makes sense to have your savings affected by the same forces that are affecting the value of the home you are saving for. We believe the Ownery's offering makes that possible in a planned way for the first time. It enables savers to save in houses "
Investors also need to be aware that once they buy a stake in a property, its value could go down.
Real estate boss Martin Dunn had earlier tried to launch a property investment fund that would invest in Auckland property. He eventually shelved the idea in favour of offering a service to help buyers find and manage investment properties.