KiwiBuild: Lotto odds lower
Housing Minister crunches numbers for Govt scheme after criticism
The odds of claiming a KiwiBuild home are far better than walking away with a winning Lotto ticket, Housing Minister Phil Twyford says.
Twyford made the comment after a week of attacks on the home building scheme, including claims it was a form of Government-sponsored Lotto that would bring wealth to a select group of first-home buyers.
But Twyford said 1 in 5 of those who applied for the first 18 KiwiBuild homes released in Papakura in South Auckland last month were successful.
About 1 in 20 applicants were then successful in the release of 25 KiwiBuild apartments in Onehunga.
The odds of winning Lotto’s First Division are 1 in 3.8 million. For Powerball it is 1 in 38 million.
“Winning a KiwiBuild ballot may feel like winning Lotto, but the chances are so much higher,” Twyford said. “People who enter a ballot for a KiwiBuild have a good chance of being successful.”
Criticism of KiwiBuild and its plans to build 100,000 affordable houses for first-home buyers has included the question of just who would end up with the properties.
The first batch of three-bedroom KiwiBuild homes in Papakura sold for $649,0000 each last month. Data from property analysts CoreLogic estimated these prices were up to $100,000 cheaper than similar homes in the area, meaning buyers appeared to be set for a bargain.
To be eligible to purchase a KiwiBuild property, first-home buyers had to meet pre-qualification conditions. These included having an income less than $120,000 for one person and $180,000 for joint applicants, an intention to live in the home for at least three years and preapproval for a bank loan. Those successfully meeting these conditions then went into a ballot where buyers’ names were drawn at random.
Eighty-eight entries made the ballot for the 18 Papakura homes and 427 “pre-qualified” entries went into the ballot for the Onehunga apartments.
But when graduate doctor Derryn Jayne and partner Fletcher Ross, a marketer, were named as successful buyers in Papakura, critics questioned whether they were too wealthy to be helped into a discounted home.
National’s housing spokeswoman Judith Collins took aim at the eligibility criteria, saying it wasn’t targeting New Zealanders who needed it the most.
“With billions of taxpayer dollars involved and significant personal benefit to lottery winners at the expense of taxpayers, there should be stringent eligibility criteria,” she said last month.
ACT leader David Seymour criticised the fact those who buy a KiwiBuild home are now able to sell it off after three years and keep 70 per cent of any gain.
Prior to becoming Government, Labour stated that KiwiBuild owners who sold within five years would have to pay all property gains to the Government.
Twyford said the recent Papakura and Onehunga ballots showed the scheme was not a lottery and that applicants had a good chance of getting a home.
Although not everyone would be able to afford a KiwiBuild home, Twyford said the programme was aimed at helping those “who have traditionally expected to be able to buy their first home, but have been locked out of the market”.
“A couple each on a salary of $50,000 can afford a KiwiBuild home in Auckland even at the top price cap of $650,000 for a three-bedroom home. The price of affordable KiwiBuild homes across the country will often be much lower than that.”
For buyers not able to afford the cost of an up to $600,000 mortgage for a KiwiBuild home, the Government has also flagged it is working on a new shared-ownership programme.
This is likely to involve the Government or banks buying homes in partnership with lower income Kiwis by paying a share of the upfront cost of the houses. At a later date, the buyer could purchase the home outright.
Winning a KiwiBuild ballot may feel like winning Lotto . . . Housing Minister Phil Twyford