HomeStart changes meant to open up market

Steep increases in house prices around the country have led the government to boost the income and house price caps in the KiwiSaver HomeStart scheme.

Monday, August 1st 2016, 9:46AM

by Miriam Bell

Starting from today, more New Zealanders will be able to access the KiwiSaver HomeStart scheme to buy their first property.

Building and housing minister Nick Smith has announced the government is increasing the scheme’s income and house price caps

“We are adjusting the income and house price caps to take into account increases in both since the scheme was announced, so as to ensure it achieves its objective of helping middle income earners into a modest home.”

The income caps will increase from $80,000 to $85,000 for a single person and from $120,000 to $130,000 for a couple.

Increases in the house price caps depend on the region.

In Auckland, they are being increased to $600,000 for an existing property and to $650,000 for a new property.

In Wellington, Christchurch, Hamilton, Tauranga, Queenstown and Nelson-Tasman, they are being increased to $500,000 for an existing property and to $550,000 for a new property.

Around the rest of New Zealand, they are being increased to $400,000 for an existing property and to $450,000 for a new property.

The cap for new homes has been increased by an additional $50,000 to help drive growth in residential construction.

Smith said the increases will also be applied to the Welcome Home loans, which enable first home buyers to buy with a 10% deposit and are exempt from LVR ratio limits.

“These changes are about deliberately screwing the scrum in the housing market in favour of first home buyers.

“These HomeStart and Welcome Home loan changes help first home buyers by giving them a cash grant for a deposit, while the Reserve Bank’s capital LVR changes, effective from 1 September, make it harder for low equity housing investors.”

Smith said the changes are one just part of the government’s plan to meet New Zealand’s housing challenge and, over the long term, will help improve home ownership.

However, Labour Party leader Andrew Little said the HomeStart changes were just more tinkering from a government that has lost its grip on the housing crisis.

“It is good news for many would-be first homebuyers outside our biggest city that the Housing Minister is raising the thresholds but, for those in Auckland, the government’s failure to address the housing crisis means houses are simply not being built for $650,000.”

Little said it was hard to find a house for sale for under $600,000 in Auckland.

“The government needs to build affordable homes and crack down on speculators – the two things that would actually make a difference in Auckland.”

Tags: banks KiwiSaver Lending