Budget 2014: Cold comfort for Bay's first-home hopefuls

Lana Smith, left, with daughter Raven, 5, and Lillian Blakie, does not think the Budget will help her housing aspirations.

Napier first-home buyer Lana Smith isn't satisfied with the Budget's scant attention to making the region's houses more affordable.

However, Finance Minister Bill English has defended yesterday's modest Budget measure to trim the cost of new homes as one step in a larger programme to improve home affordability.

The sole new home affordability policy announced in the Budget yesterday afternoon was the temporary suspension of tariffs and duties on building products which the Government said would reduce the cost of a standard new home by about $3500.

Mr English said the move was temporary due to technicalities of relevant legislation but the Government would ultimately like to make it permanent.

Solo mum Ms Smith, 29, who has been looking to buy her first home in Napier, said the policy wouldn't help in her struggle to get on the property ladder. "I don't see how it will help first-home buyers at all."

Ms Smith said the policy wouldn't help anyone who was looking to buy their first home with the Welcome Home Loan supported by Housing New Zealand, because the loan could only be received for houses below $300,000, and most new houses were above that price.

"We haven't looked at any new houses," Ms Smith said.

"You'd be very lucky to find a new house for under $300,000 and it would be a one or two bedroom, from what we've seen."

Despite the odds, Ms Smith's offer for a house in Maraenui had been accepted and she was hoping to get her loan approved by a mortgage broker today.

Mr English said yesterday the most significant Budget feature to help New Zealanders into their first home was the Government's focus on limiting spending to levels that would not drive up interest rates.

"The best thing that Government can do is limiting its own spending to take pressure off those rates."

Hawke's Bay branch of the Property Institute of New Zealand chairman Trevor Kitchin said any rise in interest rates would have a detrimental effect on Hawke's Bay's housing market, and could also trigger a respective rise in loan-to-value ratios.

My Valuer Ltd Hawke's Bay registered property valuer Andrew White said the region had been thrown into the pot by the Reserve Bank trying to ease price growth in the main centres, namely Auckland.

He said the temporary suspension of tariffs wouldn't stimulate the lower end of the market because first-home buyers weren't able to buy brand new homes.

The region's housing market was experiencing a "massive shortage of listings" and "a huge number of first-home buyers who are waiting to get into the market but can't".