Which one will leave you financially better off? OneRoof.co.nz finds out.
People who live in a major city for their job but can't afford to buy a home there could be allowed to use their KiwiSaver money to buy a property elsewhere, under a proposed change to the retirement savings scheme.
At the moment people who use their KiwiSaver money to buy their first home have to live in the property.
That has presented challenges for people working in Auckland, Wellington and Tauranga where rising house prices have made it tough to get on the property ladder.
Interim Retirement Commissioner Peter Cordtz says relaxing the rules around KiwiSaver first-home withdrawals could be one way to help more people buy a property and get better prepared for retirement.
"If they could buy a property in a more affordable part of the country, they could use it as an investment to progress on the property ladder or simply to retire to one day," Cordtz said.
The proposal came from a Māori mortgage broker who was trying to help clients buy property near whānau in areas other than where they worked.
It is being put up for discussion as part of the three-year review of retirement policy which will see the Retirement Commissioner make final recommendations to the Government in December.
Cordtz said relaxing the KiwiSaver rules could be a way of reversing the declining rates of home ownership in New Zealand which have fallen from a high of 78 per cent in the 1980s to 55 per cent today.
Māori and Pasifika have the lowest levels of home ownership with only 35 per cent of Māori and 20 per cent of Pasifika owning their own homes.
At the same time there is a growing number of Kiwis heading into retirement with a mortgage.
In 2007 around 78 per cent of over 65s had no mortgage but that fell to 72 per cent in 2017.
About 12 per cent of over 65s were now renting and that has seen a 92 per cent increase in the amount of accommodation supplement paid out by the Government in the past six years.
It has risen from $88 million in 2013 to $170 million in the year to March 2019.
The accommodation supplement is paid on top of New Zealand Superannuation which currently costs $39 million a day and is expected to rise to $120m a day as a result of the ageing population.
Interim Retirement Commissioner Peter Cordtz. Photo / Supplied
Cordtz said NZ super was not designed to cover rent.
"It currently pays $411 for a single person; $632 for a couple. At that rate, it assumes you have housing sorted," he said.
"The cost of declining home ownership is a problem that affects all of us, and we need a circuit breaker."
Cordtz said if more people were able to get on the property ladder earlier, there may be less liability to taxpayers later.
KiwiSaver first withdrawals have risen quickly in recent years. In the year to June nearly $1 billion was withdrawn by first-home buyers - up from $870m million in 2018.
Some experts have previously questioned the wisdom of allowing people to take all of their money out of KiwiSaver to buy a home, leaving people starting from scratch to save for retirement in their 30s or 40s.
Cordtz said while some may say there is already too much in retirement savings being withdrawn for property, without making it easier to do so.
"But since the prospect of a capital gains tax was scrapped, property is still one of the best long-term investments people can make to help fund their retirement, as well as giving security of tenure."
But Loan Market mortgage adviser Bruce Patten said flexible rules in Australia allowing Aussies to use superannuation to buy property had left many in financial dire straits.
Aussies had been happy to heavily borrow against their super with the plan of paying it down when they retire, he said.
"But what's eventually happening is they don't have enough money to pay out the level of debt they have borrowed up against," he said.
He said part of the benefit of buying and living in your own property was that you cared for it and hopefully added value.
But allowing people to withdraw KiwiSaver and "buy any old property anywhere" opened the door to speculation and people losing money rather than building savings.
James Wilson, director of valuation at OneRoof data partner Valocity, said the move could increase the number of first-home buyers getting into the market.
First-home buyers were already the largest buyer group nationally as they secured just over one-quarter of all home loans approved by banks in August.
And real estate agents were reporting a surge of new interest from first-home buyers, who were increasingly looking to take advantage of record low interest rates by getting help from their parents to stump up deposits, Wilson said.
Public submissions on the review are open until October 31 and can be made through the website cffc.org.nz.
