The Government will launch a shared equity scheme in July as one of its measures to assist home buyers into their first home, Prime Minister Helen Clark said in her statement to Parliament this afternoon.
It has long been talked about as an option under consideration by the Government but will finally be reality.
The speech did not go into detail on the scheme but it will allow people on modest incomes to buy a home that would normally be out of their reach.
A share of the property is secured by the state or a state approved agency as a second mortgage but which attracts no interest. It has to be repaid on the resale of the home.
Helen Clark said the Government wanted to expand the housing supply by supporting the development of a large not-for-profit housing sector. That could involve working more closely with community-based organisations already active in providing housing.
The former Manukau City mayor Sir Barry Curtis has campaigned in the past for satellite cities, located near Auckland, to be established as a way of making housing more affordable.
Sir Barry said he supported the Prime Minister's announcement on low cost affordable housing and said that Auckland was a city short of housing for people in need.
"But it needs to be a big picture approach, it needs to be a strategic approach and the coming together of public agencies including the Crown, local authorities and the regional council," Sir Barry said.
He said government agencies needed to acquire land on a scale that would allow them to design, build and then link the new satellite towns into Auckland, much like what happened in London in the 1960s. Sir Barry said there was not enough Crown land available.
Among other steps she announced that the Government was planning to take immediately to address the housing affordability issue are to:
* review public land holdings, starting in Auckland, to identify areas available to contribute to new urban housing projects.
* measure how much land at present zoned residential is actually available for housing development.
* tackle issues in the building consent process which were adding unreasonably to the costs of building a house, beginning with simplifying the design and building consent processes for first homes.
Wellington Chamber of Commerce chief executive Charles Finny said Ms Clark's speech contains positives but more is needed if New Zealand is to climb the OECD's GDP per capita rankings.
"The PM focuses on broadband which is very important, as is roading, but New Zealand's infrastructure deficit is enormous. Much more investment in transport infrastructure is still required, for example, in Auckland and Wellington," Mr Finny said.
He said the Chamber is pleased with the focus on research and development which is central to increasing our productivity growth.
"The Prime Minister talked about the impact of the proposed tax cuts per-household. We believe that cuts at the right level will also be a significant driver of productivity growth as they will provide an incentive for increased investment. Many businesses would not have benefited directly from the company tax reduction announced in last years budget as around 40 per cent of businesses are unincorporated," Mr Finny said.
The speech announced that the Ministry of Social Development would change the way it dealt with non-government organisations, to give them greater certainty of funding.
Helen Clark said that would also make them more sustainable.
The new model will cost an extra $37.5 million in 2008-09 and rise to $192.8 million in 2011-12.
"Our funding model will see essential services with which we have multi-year programmes, such as parenting programmes, support for youth at risk, women's refuge services, family violence programmes, and services for victims of crime, funded for the full costs of delivering the agreed service," she said.
The new model would make automatic annual cost adjustments to funding.
The speech announced a new name, School Plus, for the education and training policy she announced in her state of the nation speech two weeks ago. That policy means that all students must remain or some structured form of learning or training until the age of 18.
The present school leaving age is 16.
The branding name has been created after it became clear that the policy was not going down as well as the Government hoped.