Reduced minimum deposits and increased First Home Loan and Grant housing price caps will be welcome news to many first home buyers. Photo / Warren Buckland
Reduced minimum deposits and increased First Home Loan and Grant housing price caps will be welcome news to many first home buyers. Photo / Warren Buckland
A Hawke's Bay property investor says the Government needs to butt out of his business. One Napier real estate agent is warning of a "tsunami of homeless".
But as Napier-based first-home buyer Johan Nel watched Prime Minister Jacinda Ardern announce what she described as one of the biggest housing shake-upsinitiated by the Government since the 1970s, he could finally afford a smile.
The Government on Tuesday announced plans to invest close to $4 billion into schemes to accelerate the pace of new home builds.
It has offered first home buyers a fighting chance, increasing First Home Grant caps and house value caps by up to $100,000 in some parts of the country.
In Hawke's Bay that means the price cap for existing houses has increased from $400,000 to $525,000 in Napier and Hastings, and from $500,000 to $600,000 for new houses.
It has also turned its focus on property investors, doubling the capital gains tax-esque brightline test from five to 10 years - meaning any gains on a residential property that is not a family home will be taxed if the property is sold within 10 years of purchase.
The announcement was welcome news to Nel and wife Leesa - parents to two children - who have put in offers on four houses in the region and missed out.
The electrician and his wife have been looking for a three-bedroom home for them and their two children under the age of 10.
He said the hardest part had been getting a deposit while having to pay enormous rent.
"We'd been trying to get a deposit together for over a year, saving hard-as," he said.
The couple applied for the First Home grant in November last year but only heard back in January that it had been granted.
The price cap for existing houses has increased from $400,000 to $525,000 in Napier and Hastings, and from $500,000 to $600,000 for new houses. Photo / Warren Buckland
They'd had to "guard their heart" while looking at other properties in the meantime, some as far out as Waipukurau and Waipawa, he said.
"We've been keeping our eyes on houses but haven't been able to put offers in on anything.
"If you start fixating on what's out there and what you're missing it's emotional."
Nel said the property market was a runaway train that was getting faster and faster.
"You're going as hard as you can but you watch the gap get bigger and bigger and wonder how long you can go on for."
He said the Government's proposals would "absolutely" make a difference for first home buyers, the only problem being the availability.
"We've got the same amount of candy in a bigger bowl."
Chris Gollins, commercial principal of Ahuriri-based Gollins Commercial, said his company was bracing for a flood of residential property investors switching to commercial properties, with dire consequences for renters.
The brightline test extension would accelerate tenants being kicked out by investors wanting to sell to first home buyers, leading to a "tsunami of homeless" in Hawke's Bay, he said.
"The pool of private rental properties available will shrink."
He said suburbs like Westshore in Napier had been transformed by an increase of people living in motels there and that trend would continue.
Hawke's Bay property investor Graeme Fowler said Government policies attempting to penalise landlords and fix the housing crisis were having the opposite impact. Photo / File
Landlord Graeme Fowler, who owns about 50 houses and seven commercial properties across Hastings and Napier, agreed, adding that those hit the hardest were not the landlords but often those renting.
"[The Government is] making it worse.
"Pretty much everything they've brought in over the last four years has made it worse for tenants."
While landlords may look at selling some properties if interest rates increased, he said families of 10 or more could be pushed out in favour of first home buyers.
"If they had houses for them to go into that would be good. They've got to go somewhere.
"The motels are pretty full as well."
Recent changes to the Residential Tenancies Act 1986 and increased living standards would lead to rent rises, he said.
"If people want to live in a substandard house because the rent is half the price, they don't have that option anymore.
"We need landlords to house people."
While Fowler wasn't too worried about the impacts on his own property portfolio, he said it would impact property investors in cities like Wellington and Auckland.
He said Government intervention policies were what had created the housing crisis and further intervention would make it worse.
"If they keep right out of it, things will balance out again I think."
