‘Cruel’ not to help first-home buyers
Areset of KiwiBuild should include more generous subsidies for first-home buyers, commentators
say.
The Government is expected to deliver a new framework for the troubled construction scheme in the coming months.
It had originally been intended to deliver 100,000 affordable houses over 10 years but came in for criticism over the slow pace of building and some of the areas chosen for development.
It is understood that all aspects of the scheme are potentially up for review, including the HomeStart subsidy.
Under this scheme, people who withdraw their KiwiSaver savings for a first-home deposit can qualify for a subsidy of up to $10,000 if they meet house price and income caps.
In Auckland and Queenstown, the house price cap is $600,000. In other main centres it’s $500,000 and elsewhere, $400,000.
Bindi Norwell, chief executive at the Real Estate Institute, said that was too low.
‘‘With median house prices at record highs in many parts of the country, first-home buyers are still finding it extremely difficult to get a foot on the property ladder,’’ she said.
‘‘In Auckland, the cap is $250,000 off the median price, whereas in Queenstown the cap is $345,000 below the median price, showing how difficult it is in those parts of the country for first-time buyers.
‘‘It’s important we get the balance right between how much people can borrow and allowing people to get on to the property market, but if there was some flexibility in the cap that would be beneficial, particularly as we expect median house prices to continue to rise in a number of regions in the short to medium term.’’
Reserve Bank data shows that first-home buyers are an increasing part of the market.
There was $926 million in lending to first-timers in June this year, up from $713m two years ago.
Derryn Mayne, owner of real estate chain Century 21 New Zealand, said the grant should also be increased.
‘‘Instead of capping the grant at $1000 every year for just their first five years of contribution, why not extend that out to 10 years? That would effectively double the maximum grants to $20,000 per couple for an existing home and $40,000 for a new home. That would really help first-home buyers to come up with a deposit.’’
Mayne said it was the right time, given rising rents and record low interest rates.
It was cruel for first-home buyers to struggle to pull together deposits when the official cash rate was at record low rates and paying a mortgage was sometimes cheaper than renting.
‘‘We know that rents in the likes of Wellington are growing twice as fast as wages, and that rents in lessaffluent districts like Kaipara have gone up 45 per cent in the past five years. What’s more, Trade Me reported last month that every region in New Zealand had higher rental asking prices in May than they did a year ago, with many experts warning it’s only getting worse for renters.
‘‘Instead of people’s retirement savings just sitting in KiwiSaver accounts helping to fund external private and public sector initiatives, we should be empowering and enabling more renters with KiwiSaver accounts to get into home-ownership – a factor which has historically proven to be a huge advantage come retirement.’’
ASB chief economist Nick Tuffley said that as part of the reset, the caps should be indexed to house price inflation so that they kept up in boom times. ‘‘Still the biggest problem we’ve got for people accessing the housing market is the cost of the house to start with.’’