First-home buyers promised more help

John Key.
John Key.
First-time home buyers in the regions seem more likely to benefit from a policy announced by Prime Minister John Key, still leaving some in high price areas to struggle on finding their mortgage deposit.

Mr Key announced several changes to the ways first-time buyers could get into the market at the party's campaign launch yesterday.

But figures from QV and realestate.co.nz showed those wanting to buy in Auckland, Christchurch, Queenstown and other hot spots could still struggle to come up with a deposit.

In places such as Dunedin, Invercargill, the West Coast and Marlborough, under the new policy - due to come into force on April 1 if National is re-elected on September 20 - first-home buyers would be substantially better off in meeting criteria for securing a mortgage.

Mr Key said the changes were projected to help about 90,000 lower and middle income first-home buyers over the next five years, 40,000 more than would be helped under current policies.

The policy would help tens of thousands more first-home buyers achieve their dream of home ownership.

''It will get young families started building what for most will be their biggest asset.

''National backs young Kiwis who are disciplined, save up and want to put a deposit down on a house.

"National values home ownership because it provides stability for families, strength for communities and security in retirement.''

First-home buyers had always found it hard and often the first step was quite a stretch, he said.

That was why Mr Key believed the changes would be welcomed by potential first-home buyers.

There were three major changes.

The KiwiSaver first home deposit subsidy would be replaced with a KiwiSaver HomeStart grant.

This was a similar scheme but had higher house price limits and doubled the support for people buying or building a new home.

People would be allowed to withdraw more money from their KiwiSaver account to use as a deposit on their first home.

First-home buyers would be allowed to withdraw the Government's annual contribution to their account - the member's tax credit of up to $521 a year - as well as their own, and their employer's contributions.

More people would be eligible for Welcome Home loans which meant they required only a 10% deposit to get a government-guaranteed loan.

The new policy would cost $218 million over the next five years.

''The existing limits simply don't reflect the prices first-home buyers face when they're trying to get into the market,'' Mr Key said.

In Auckland, the house price limit would be raised from $485,000 to $550,000.

QV figures had the average Auckland house price at about $750,000 and realestate.co.nz figures had an average asking price in Auckland of $708,809 in July.

Other areas with relatively high house prices - such as Hamilton, Tauranga, the Wellington region, Nelson, Christchurch and Queenstown - would have a new threshold of $450,000.

Nelson's average house price last month was $401,579, Christchurch's price was $461,176 and Queenstown-Lakes district's average price was $676,230.

The threshold for the rest of the country would rise to $350,000.

Dunedin's average price last month was $290,658 and Invercargill's price was $207,492.

The Central Otago district's average price was $321,721.

Labour leader David Cunliffe said the announcement was a Band-Aid approach that would push up prices rather than solve the housing crisis.

''The fundamental problems are lack of supply of housing, planning rules that constrict development, and unrestricted speculation.

''Unmet demand is driving house prices through the roof, and, instead of addressing the fundamental problem, now National wants to spend $218 million of taxpayers' money to fuel demand even more. It will drive prices even higher.''

Green Party co-leader Russel Norman said National chucking a few dollars at deposits did almost nothing to offset the massive increase in the average house price.

''While first-home buyers will no doubt welcome any additional support, it is a drop in the bucket.

"First-home buyers will still be over $220,000 behind where they were in 2008 due to average price increases.''

 


At a glance

• National Party policy aims to help 90,000 people get a HomeStart grant over the next five years, 40,000 more than forecast.

• House price limits for KiwiSaver HomeStart and Welcome Home loans will be increased.

• Larger KiwiSaver first home withdrawals will be enabled.

• Eligibility for Welcome Home loans will be expanded.


 

 

Can't leave it to the market

The end result of this initiative is that house prices will rise further - it's simply a direct subsidy for the seller and not the buyer. 

It's been well documented in Britain, Australia and New Zealand that in the past governments have got on top of runaway house prices by the state getting involved in building houses.  In the 50s we had low interest state advance loans for people wanting to build new homes of a modest size.  That system worked a treat but I guess it doesn't fit with the right wing mantra that the "market will fix it."

You can't leave it to the market - it hasn't worked in the past and it wont work in the future. 

National's party trick

Sunny 365: I'm afraid I cannot see how stripping one asset to pay for another is actually progress. National is just emptying one lolly jar for another. So what happens for people on a staedily eroding, basic pension with no extra buffer to make their lives more comfortable?

This is another dirty trick by National 

Invest this

Wasn't Kiwisaver foisted on us because we "invest to heavily in real estate"? These words brought to you by the people who see your abode as an investment rather than a home which the great majority of us can no longer afford. Ah I see ....they meant that block of flats we all own secretly.

Yet again

National is providing people with a scheme to overcome the very same obstacles that National put in front of them when they basically locked first-home buyers out of the market.  It's the same as when after the last election they raised ACC levies by large amounts and ACC made billions of dollars in profits but just before this election the drop them again. I have no problem with the idea itself - funnily enough it's like most of the Labour/Greens plans - just with National yet again coming up with a solution just before an election for a problem they largely caused after the last election. I hope voters have long memories and don't fall for this.

Really Digger?

They are hardly robbing from their retirement funds if they are transferring those funds into an asset that will at least hold its value if not increase in value over their lifetime.

Its not like the government are saying...take a holiday, buy a mustang,..do whatever you want with it!

It's never been easy to buy property...but at least this may go some way to helping some people.

Robbing the future

Kiwisaver was designed to help people save for their retirement. Now the government wants them to rob their savings account for the future. Madness.