Key: Treasury & RBNZ support housing package
Rob Hosking | Sunday August 24, 2014 | 19 comments
"The real question is how many will be new builds, and how many will be existing purchases"Featured comment
The National Party is adamant the housing package announced at its campaign launch today will not merely push prices up further.
The package is the centre piece of the launch by Prime Minister John Key, right slap bang in Labour heartland of Manukau this afternoon.
It will cost the government $218 million over five years - or a little more than $43 million a year. However the scheme is not capped and the government will spend more if the demand is there, Housing Minister Nick Smith told a press conference just after the announcement.
The package replaces the existing KiwiSaver first home deposit subsidy, with a KiwiSaver a "home start grant" with higher price limits on the houses people can buy, and it also doubles the support for those people using the scheme. People will also be allowed to withdraw more money from KiwiSaver as a deposit - they will, in effect, be able to take out all the government contribution, minus the $1000 kick start. The maximum government contribution to KiwiSaver is $521 a year.
The final part is extending the existing Welcome Home Loan scheme, to bring it in line with the new package announced today.
Mr Key outlined this with an example of a couple who, having been in KiwiSaver for five years, and earning $40,000 a year each, couple withdraw up to $29,000 from their KiwiSaver accounts, and add that to either a $10,000 or $20,000 HomeStart Grant, depending on whether they’re buying an existing or a new home.
"In total, that means a deposit after five years of almost $40,000 – or almost $50,000 if they are buying new," he told the gathering of National Party faithful.
This will not, though, push up demand for houses and therefor house prices, he says.
"We certainly made sure the Treasury and the Reserve Bank were comfortable with what we were doing. I can't speak for the Reserve Bank, but I think I can paraphrase them by saying that given we are adding to the supply of housing they are comfortable with what we are doing."
People who are buying a new house will be eligible for a Home Start grant of $10,000, or $20,000 if they are a couple. The goal is also to encourage developers in special housing areas to build new houses in the $450,000, $500,000, $520,000 range in places like Auckland," Mr Key told the same press conference."