First-home buyer loan scheme shaken up in budget

House price growth in both Otago and Southland is expected to slow over the coming months. PHOTO:...

  • First home grant house price caps jump, by as much as $275,000
  • Covid industry support package modified to fund affordable housing

For aspiring first-home buyers, price and income caps will now be reviewed every six months.

House price caps will be removed entirely from the first home loan application process.

Housing Minister Megan Woods said Budget 2022 would help more people get first home grants and loans.

Woods suggested the changes could help thousands more first-home buyers, with enough funding for about 7000 extra first home grants and 2500 more first home loans available every year.

The Kāinga Whenua loan cap will jump from $200,000 to $500,000 to provide more options for people buying a home on Maori land, Woods added.

The Government will also support some not-for-profit groups with funds to deliver affordable homes.

Woods said the grants worth $50 million would deliver affordable rental housing in Auckland, Tauranga, Rotorua, Napier-Hastings, Wellington and Nelson-Tasman.

Last weekend, National Party deputy leader Nicola Willis called on the Government to work more with community providers to deliver housing.

Willis said for too long, the Government had allocated funds to a monolithic Kāinga Ora.

In today's Budget, the Government said $1 billion was needed to help existing and planned public and transitional housing through rent subsidies and rising operational costs.

The first home grant price cap in Auckland will rise from $700,000 to $875,000. In Wellington and Queenstown-Lakes, the new cap will be even higher at $925,000.

The Hamilton urban cap rises from $600,000 to $725,000. In Tauranga, the old cap was also $600,000 but now it will be $875,000.

And in Christchurch, the cap will rise from $550,000 to $750,000.

Single people with dependents can now earn up to $150,000 and still be eligible for a first-home grant.

Relocatable homes with a code of compliance issued in the past year will qualify as properties under the new model.

A construction sector support fund announced in response to Covid-19 and worth $350 million will now be repurposed, with $200 million of that fund redirected to grants for more affordable housing.

The Affordable Housing Fund will also set aside money for low-interest loans.

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