First home-buyers will be able to earn more and buy more expensive houses but still qualify for a government housing subsidy, following changes announced today.
Building and Housing Minister Nick Smith said the Government would increase income and house price caps on the KiwiSaver HomeStart scheme to ensure it was helping people into their first house.
The scheme offers a grant of up to $10,000 for an existing house, and $20,000 for a new house to add to a deposit for first home-buyers.
Due to a rise in both income levels and house prices since the scheme was first announced, increases in the limits were needed, Smith said.
Income caps would increase from $80,000 to $85,000 for a single person and from $120,000 to $130,000 for a couple.
House price caps would increase from the existing $350,000, $450,000 and $550,000 depending on region to $400,000, $500,000 and $600,000 for an existing home, and to $450,000, $550,000 and $650,000 for a new home.
"This reflects the $50,000 increase in the national median house price since the scheme began," Smith said. "We are deliberately increasing the cap for new homes by an additional $50,000 to help drive growth in new residential construction."
The highest price range applied only to Auckland.
The next range is for Wellington, Christchurch, Hamilton, Tauranga, Queenstown and Nelson-Tasman.
The lowest range is for the rest of the country.
The changes will come in from August 1.
The caps will also apply to Welcome Home loans. Those loans enable first home buyers to buy with a 10 per cent deposit and because they are government guaranteed are exempt from the loan-to-value (LVR) ratio limits from the Reserve Bank.
That means a couple who are each on the average income of $60,000 will, after five years in KiwiSaver, now be able to withdraw $45,000 from their KiwiSaver accounts and obtain a HomeStart grant of $20,000 if they're buying a new build.
With this $65,000 deposit, they may be eligible for a Welcome Home Loan, which requires only a 10 per cent deposit, enabling them to be in the market for a new home of up to $650,000.
Smith said the changes were about "deliberately screwing the scrum" in the housing market in favour of first home buyers.
He said in combination with the Reserve Bank's capital LVR changes, effective from September 1, it would make it harder for low equity housing investors to buy.
"KiwiSaver HomeStart and the Welcome Home Loan Scheme were part of the Government's "comprehensive plan" to meet New Zealand's housing challenge," he said.
" We are reforming New Zealand's planning system and building laws, investing in record numbers of apprenticeships, supporting councils with infrastructure costs and directly building homes through the Crown land housing programme."
"It is the combination of these measures that over the long term will improve home ownership and ensure New Zealand has the quantity and quality of homes to meet the needs of a growing population."
- NZ Herald
