In a three-yearly review of retirement income policies, Interim Retirement Commissioner Peter Cordtz has proposed that KiwiSaver rules should be loosened so that those making withdrawals for a house deposit could buy an investment property.

Currently, those using KiwiSaver funds have to live in the property they buy with their deposit, but high house prices in cities like Auckland and Wellington mean it is difficult for many people to purchase in areas where they work.

Cordtz says that if people were able to 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.

“We see this as an idea that could help lots of New Zealanders get on the property ladder, create a long-term investment to aid retirement, and there may be less liability to taxpayers later.”

The proposal has garnered a mixed response. Some say there’s already too much in retirement savings being withdrawn for property, while others say it could distort regional housing markets.

But NZ Property Investors’ Federation executive officer Andrew King doesn’t think it would lead to a market-distorting increase in demand or a big increase in prices.

He says it’s hard to judge how people would react, but most people invest in areas they live in because they know the area, feel comfortable with it and can manage their property if they want to.

“It might lead to more investor activity in some markets but that would be good because the country needs more rental stock. Also, the market is definitely turning so it would offer some support.”

Most people who invest in property do so with an eye on their retirement and the proposal would help more people to do that, he adds.