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It was criticised at the time as adding more fuel to an overheated housing market. And it was of limited value in Auckland because there were too few houses below HomeStart's $600,000 price cap in the city.
Housing and Building Minister Phil Twyford said there were initially too few modest, starter homes for the scheme to work.
"Under the last Government, only 9 per cent of HomeStart grant recipients were in Auckland, grossly disproportionate to the number of first-home buyers," he told the Herald.
The latest figures show Aucklanders were getting slightly more of the grants now - around 11 per cent of the national total.
The number of grants being given out is still well short of the initial goal of 3000 a year in Auckland, which was set by the National Party minister at the time, Nick Smith.
Twyford - who had some initial reservations about the grant scheme - said HomeStart was an important companion to the Government's Kiwibuild programme and could provide as much as 25 per cent of the deposit on one of the homes in Kiwibuild's top price bracket.
Loan Market mortgage adviser Bruce Patten said a flattening Auckland market meant more first-time buyers were prepared to get into the market in the past year.
"We've seen a lift in first home-buyer activity in terms of the number of purchases. And there are some properties that are under the $600,000 threshold in and around Auckland, albeit most of them are one or two-bedroom properties."
The Herald found 1800 Auckland properties listed on Trade Me with an asking price of less than $600,000 - under a fifth of the total listings.
Most of them were central city apartments, or two-bedrooms units and townhouses in South or West Auckland.
Patten said banks relaxed their lending criteria for apartments a year ago, which had opened them up to first-home buyers. Kiwibank lent up to 90 per cent of the cost of an apartment, and Westpac lent up to 85 per cent.
"That could be a driver as to why more people are getting access to the grant," Patten said.
The HomeStart house-price caps have previously been lifted in Auckland and Queenstown because high median house prices were making it difficult for buyers to find homes below the threshold.
Asked whether the price caps could be lifted in increasingly expensive cities such as Wellington and Tauranga, Twyford said he was "open to looking at it".
The Homestart grants can be used for new houses worth up to $650,000 in Auckland, or old houses worth up to $600,000. In Wellington and Tauranga, the limit is $550,000 for a new build and $500,000 for an old house.
The income cap is set at $85,000, or $130,000 for a couple.
What does $600,000 get you in Auckland?
• Three-bedroom house in Weymouth. 90sq m property, 837sq m of land. Asking price $569,000
• Two-bedroom house in Pukekohe. Asking price $423,000.
• Two-bedroom unit in Albany, 50sq m. Asking price $460,000
