Ers raid $500m
Although the scheme was set up to help people save for their retirement, it increasingly appears to be a tool for desperate home buyers to secure a deposit. from Perpetual Guardian the age of 65.
Housing campaigner Hugh Pavletich said: ‘‘All it (the KiwiSaver first home withdrawal) is doing is enticing young people to even more severely excessive debt. That’s what really saddens me. It is conning them into excessive mortgage slavery.’’
‘‘We should not be spending any more than three times our household incomes on a house with a debt loading of no more than two and a half times our household incomes,’’ he said. ‘‘Anything about that is essentially wasted money.’’
Eric Crampton from the New Zealand Initiative economics think-tank, said giving taxpayer money to people to compete to buy too few homes is bad policy.
When KiwiSavers withdraw money for deposits, they are allowed to take out not only their own contributions, but those made by their employers, and the tax credits gifted them by the government.
‘‘We are still in a market with many years of pent-up demand, and it will take a long time to bring that down,’’ he said.
If the property market were responding to demand, with enough land being freed to meet demand, then the KiwiSaver first home withdrawal scheme would not be a problem.
‘‘Prices could only rise until it made sense to turn a paddock into a subdivision,’’ he said.
With so many young people saving for homes through KiwiSaver, it would be unfair to stop withdrawals, he said.
Charlotte Lockhart