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National's housing announcements

OPINION

National's housing policy and social housing policies are linked.

In his campaign launch speech this afternoon, John Key gave an example of how it might work:

Let’s imagine a couple are both earning $40,000 a year – they might, for example, be living here in South Auckland.

They’ve been in KiwiSaver for five years, and are looking to buy a first home that’s under the price limit.

Under our changes, they could together withdraw up to $29,000 from their KiwiSaver accounts, and get 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.

That would be enough on its own to get a Welcome Home Loan for a house costing up to $400,000 or up to $500,000 if new – depending, of course, on their ability to service the mortgage.

Our changes will give a lot more people the confidence that if they join KiwiSaver, and keep saving, they can put together a deposit on their first house.

It’s important to note that most of that deposit will be their own savings.

We want to help people into their first home, but they have to help themselves first.

I much prefer that to the government borrowing $3 billion more per year to try and become NZ’s biggest property company!

All these changes I’m announcing today will take effect from 1 April next year, if we are re-elected.

Not too long after that, the first people to benefit from these changes will be unlocking the front door of their own home for the first time.

The new policy will cost $218 million over the next five years.

That’s a fairly modest cost compared of around $35 million per year compared to borrowing $3 billion a year.

The details of the changes are:

The package comprises three changes:
Replacing the KiwiSaver First Home Deposit Subsidy with a KiwiSaver HomeStart Grant, doubling the support for buying a new home and increasing the house price limits;
Enabling larger KiwiSaver First Home Withdrawals by including the member’s tax credit (meaning first home buyers will now be able to withdraw all of their KiwiSaver savings except the $1000 kick-start);
Expanding eligibility for Welcome Home Loans by aligning the house price caps with the new KiwiSaver HomeStart Grant.

“We are roughly doubling the number of people receiving a Government grant to buy a first home from 10,000 per year to 20,000 per year, and doubling the Government grant they are eligible for if buying a newly-built home,” Dr Smith says.

“The focus of this package is to increase the supply of new housing and to encourage housing companies to build homes in a price range affordable for first home buyers.

 “The house price limits for KiwiSaver HomeStart and Welcome Home Loans will be $550,000 in Auckland, $450,000 in Wellington, Christchurch and other similarly-priced housing markets, and $350,000 for the rest of the country.”

Currently, first home buyers are eligible for a grant of $3000 after three years in KiwiSaver, $4000 after four years and $5000 after five years. Under KiwiSaver HomeStart, this grant will double to $6000 after three years, $8000 after four years and $10,000 after five years for the purchase of a newly-built home.

The changes to the KiwiSaver First Home Withdrawal in enabling access to the member’s tax credit will increase the maximum withdrawal amount by $512 per year for each year a member has contributed.

The KiwiSaver First Home Withdrawal is limited to members buying a first home, who have been contributing for a minimum of three years. The KiwiSaver HomeStart Grant and Welcome Home Loans have additional criteria of people having an income below $80,000 for an individual and $120,000 for a couple, and the house being purchased must be below the regional house price limits.

I wasn’t at the campaign launch, but I understand there were 2,000 to 2,500 people there making it the biggest political gathering in a few decades I’d say – and it was a National Party meeting in South Auckland!

Political commentator David Farrar posts at Kiwiblog.

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Comments and questions
10

The left will knock this policy even though it will help average young families get their first home. This is the kind of policy people want and need.

I've already seen one MP deride this initiative as a subsidy for Property Developers...

Encouraging more housing is exactly what we want!

It's laughable that Labour would knock this policy when it is a very Labour-esque policy

Okay, I believe in home ownership. And I want National to win this coming election. But how the hell can they say this will not raise house prices when their policy will bring more buyers into the same sized market?

Control immigration, foreign ownership of houses and make rental housing less attractive to investors thru some sort of tax/regulation is the only way to make housing more affordable.
When we have 40,0000 people moving into Auckland and we are building only 10,000 houses, one can see that the National Government 's housing policy will continue to be a disaster for future generations.

No no anon, Aus and NZ are now one labour market and that is good. I would rather the Gov. eliminate the unnecessary compliance costs and hassle for those wanting to build.

By offering the greatest benefits for newbuilds, the policy encourages new housing to be built rather than the new buys buying existing housing.

I agree with that Econ, but it must also include, "the unnecessary compliance costs and hassle for those wanting to build" getting ruthlessly raked out and destroyed. Cheers

That's unrealistic. There is a supply shortage (not enough building) today and prices at peak. If all time high prices aren't enough to get homebuilders building, how will this help? It just adds marginal demand and every economist, left or right, knows the marginal buyer sets the price.
This policy is inept. And worse, it wasn't necessary. National would have stormed in. Now I'm worried about whether Wheeler is forced to jack rates as this policy undermines the highly effective LVRs that were working to cool the market.

You seem to have a good handle on it WW!
What wheeler and the polis don't know is; the best solution to a shortage of anything is high prices.
But not when dumassed Councillors and Politicians decide to interfere. Then there is all sorts of distortions thrown up.
To those bemoaning house shortages and high prices (including Wheeler & his "directors") ;

"Why don't you just shut the f**** up and go build a house?.

Do the numbers.

New builds in Auckland probably start at $500,000, with $20,000 representing 4% of the value or 20% of the required equity contribution for a bank loan. First home buyers still have to find $80,000 to met the banks requirements for a loan.

Can't see this being taken up by many. Just another smile and wave policy.

I'm not the government should be encouraging first home buyers into new builds anyway. Developers tend to exploit first home buyers, and most know something secondhand isn't worth the same as new.