Prospective homeowners looking at alternative methods to get on the housing ladder like buying in groups are being urged to do their homework and put the appropriate legal agreements in place.

Conditions for first home buyers have improved over the past few years, but median house prices are still 8.2 times median income – at the upper end of the “severely unaffordable” category - according to the most recent Demographia Housing Affordability survey.

Amy Stevens is the founder of Slice, a platform that supports first home buyers through the process, including those who are opting to buy with friends or family members.

“It’s not about going ‘oh, we can afford to do this’,” she told Nadine Higgins on The Prosperity Project, the Herald’s personal finance podcast

“That’s not enough. Should you do it? Are you the right people to do it together?”

She warns people not to assume that if they’re only paying half the mortgage that’s where their liability ends.

“You’re all joint and severally liable on the loan, meaning that if you and I go in and purchase together and I take out a $500k loan... you take out $500k, actually, we’re both liable for the full $1 million”

She says that’s just one of the reasons why thrashing out a legal agreement is so important.

“Does one of you want to sell it in two years and the other wants to sell it in five or six or seven? Or is one of you planning to have a kid? How’s that going to be managed if you’re all living in the home?”

While it can be a difficult process, pulling together to buy a house is becoming increasingly popular in New Zealand.

Ali Ventura and her husband Josiah bought a property with their friends several years ago, with each couple first getting their own lawyer.

“We drafted up this legal document and essentially … we just asked each other all these questions," Ventura told The Prosperity Project.

“We were like, okay, well, what if one of us has a baby? What if one of us dies? What if we break up? What if we have a falling out?”

She says they love living with their best friends, and now their infant son.

“When people ask us now about how it is, owning a home with your friends, we always say it’s amazing, but we wish we hadn’t bought at the peak... it’s simply not worth what we paid for it at the time”.

Listen to the full episode of The Prosperity Project for more on the realities of buying a house with friends.

The podcast is hosted by Nadine Higgins, an experienced broadcaster and a financial adviser at Enable Me.

You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts. New episodes are released every Monday.