Government boost for first-home buyers

Prime Minister John Key speaks at the Vodafone Events Centre in Manukau before the launch of National election campaign. Photo / Greg Bowker

Prime Minister John Key has kicked off National's election campaign in South Auckland with a boost to Government assistance for low and middle income first-time buyers.

Grants under the Kiwisaver First home deposit Subsidy will be doubled for newly-built homes, the house-price limits increased and scheme renamed as the Kiwisaver Homestart Grant.

At present eligible first-home buyers can get a grant of $3000 after three years in Kiwisaver, $4000 after four years and $5000 after five years.

Under the Homestart changes, those grants will be increased to $6000, $8000 and $10,000 respectively for new builds.

Mr Key said that was expected to double the number receiving a grant from 10,000 to 20,000.

House price limits for Homestart and Welcome Home Loans will be $550,000 in Auckland (currently $485,000) , $450,000 in Wellington, Christchurch, and similar markets ($425,000 at present) and $350,000 for the rest of the country ($300,000 at present).
Mr Key told reporters afterwards he had informed the Treasury and the Reserve Bank what National was promising.

While he could not speak for the Reserve Bank, he believed it was "comfortable" with it because it designed to increase the supply of new houses.

"What we know by simple economics is that if we go out there and ensure that the demand for these homes at affordable homes can be filled, actually the building companies around New Zealand will actually meet that demand by building a product, most likely building them in the special housing areas."

What do you think of the HomeStart policy? Send your thoughts to newsdesk@nzherald.co.nz

Mr Key said the new policy was a powerful message for a first home buyer, enabling them to get a much bigger deposit to qualify for a Welcome Home Loan which is guaranteed by the Government and which is exempt from the LVR ratios imposed by the Reserve Bank to slow the rate of house inflation.

Two other measures are part of the package: enabling Kiwisaver first-home withdrawals to include the member's tax credit, meaning they can withdraw all of their savings except the $1000 kick-start; and expanding eligibility for Welcome Home Loans by aligning the house price caps with the Kiwisaver Homestart grant.

Mr Key said the changes were expected to help 40,000 more people over five years than under current policy, and 90,000 altogether.

Housing Minister Nick Smith said a couple in Auckland each earning $50,000 who had contributed to Kiwisaver for five years would be able to withdraw $35,000 and receive a $20,000 Kiwisaver Homestart Grant, making a $55,000 deposit.

And because the Welcome Home Loan Scheme allowed a 10 per cent deposit, the would be able to buy a home up to $550,000 in value.

The income caps for eligibility for HomeStart and Welcome Home Loans will remain at $80,000 for a single buyer and $120,000 for a couple.

Read a summary of the HomeStart changes

Mr Key got a rapturous welcome from the 2500-strong crowd, taking five minutes to make his way to the stage and 10 minutes to leave.

The entire caucus joined him on stage, including Justice Minister Judith Collins who made just her second public appearance since the publication of Nicky Hager's book Dirty Politics in which she has a starring role.

At a press conference after his speech, Mr Key refused to entertain any more questions about the book.

Asked if he thought she should apologise to the public servant who faced death threats after she passed on details to Cameron Slater who accused him of leaking information damaging to the Government.

"To be honest I think those issues are pretty well traversed. We had a good chew on them over the last 10 days and we are here to talk about housing... you should feel free to talk about them but I am not going to."