First home buyers will be able to earn more and buy more expensive houses but still qualify for a government housing subsidy, following changes announced today.
Building and Housing minister Nick Smith said the government would increase income and house price caps on the KiwiSaver HomeStart scheme to ensure it was helping people into their first house.
The scheme offers a grant of up to $10,000 for an existing house, and $20,000 for a new house to add to a deposit for first home-buyers.
Due to a rise in both income levels and house prices since the scheme was first announced, increases in the limits were needed, Smith said.
Income caps would increase from $80,000 to $85,000 for a single person and from $120,000 to $130,000 for a couple.
House price caps would increase from the existing $350,000, $450,000 and $550,000 depending on region to $400,000, $500,000 and $600,000 for an existing home, and to $450,000, $550,000 and $650,000 for a new home.
"This reflects the $50,000 increase in the national median house price since the scheme began," Smith said.
"We are deliberately increasing the cap for new homes by an additional $50,000 to help drive growth in new residential construction."
Labour's housing spokesman Phil Twyford has slammed the changes as nothing but a "fresh round of tinkering" and says the government has lost control of the Auckland housing "crisis".
"The minister is raising the income and house price caps only a year after he announced this policy because Auckland house prices have been going up so fast under his policies."
Twyford said since the scheme came in less than 10 percent of the subsidies had gone to Auckland home buyers.
Documents show only 828 grants have been given for homes in Auckland under the scheme. A total of 11,943 received grants in total in the first full year of its operation.
Twyford said when house prices were increasing by more than $1000 a week subsidies weren't going to help people keep up.
"What the government should be doing is cracking down on speculators and building large numbers of affordable homes."
Smith also announced changes to the Welcome Home Loan scheme and said in combination with the Reserve Bank's capital LVR changes, effective from 1 September, it would make it harder for low equity housing investors to buy.
KiwiSaver HomeStart and the Welcome Home Loan Scheme were part of the Government's "comprehensive plan" to meet New Zealand's housing challenge, he said.
"We are reforming New Zealand's planning system and building laws, investing in record numbers of apprenticeships, supporting councils with infrastructure costs and directly building homes through the Crown land housing programme."
"It is the combination of these measures that over the long term will improve home ownership and ensure New Zealand has the quantity and quality of homes to meet the needs of a growing population."
What does it mean?
• The KiwiSaver HomeStart scheme offers a grant of up to $10,000 for an existing house, and $20,000 for a new house to add to a deposit for first home-buyers.
• Income caps would increase from $80,000 to $85,000 for a single person and from $120,000 to $130,000 for a couple.
• House price caps would increase in Auckland from the existing $550,000 to $600,000 for an existing home, and $650,000 for a new home.
• Caps in Wellington, Christchurch, Hamilton, Tauranga, Queenstown and Nelson-Tasman would increase from $450,000 to $500,000 for an existing home and $550,000 for a new home.
• Caps in the rest of the country would increase from $350,000 to $400,000 for an existing home and $450,000 for a new home.
• The changes will come in from August 1.
• The caps will also apply to Welcome Home loans. Those loans enable first home buyers to buy with a 10 per cent deposit and because they are government guaranteed are exempt from the loan-to-value (LVR) ratio limits from the Reserve Bank.