First-home buyers have snapped up a quarter of the vacant state houses put up for sale by the Government, some for under $100,000.
A person earning less than the average wage, who does not own property, can now buy unused state houses in provincial areas with the help of a Government subsidy, which covers up to $20,000 of the cost.
Under the FirstHome scheme, Housing New Zealand has put 73 properties on the block since October and 25 have sold.
The average price for the properties was $125,800.
Housing Minister Nick Smith said the scheme was meeting its target of 100 sales a year. A further 90 people had applied for the subsidy.
The largest number of sales had taken place in Invercargill, Dunedin, Levin and Foxton.
Four state houses had not sold after being offered to first-home buyers for three months, and would now be placed on the open market.
Dr Smith said it would not be considered a failure if the properties were not bought by lower-income house-hunters. He noted that Housing New Zealand sold between 100 and 200 state houses on the open market every year.
In all, 400 houses would be offered to first-home buyers over four years.
The sales had earned $3.1 million so far. The scheme was expected to nearly break even because it would reduce the cost of rates and maintenance paid by Housing New Zealand on the empty homes.
Other parties, including National's coalition partner Act, have criticised FirstHome because it was small in scale and focused on the wrong parts of the country - Auckland, Wellington and Christchurch were excluded.
Dr Smith stressed that it was a small part of a larger housing affordability programme.
"This was always a niche scheme to help first-home buyers in provincial New Zealand by giving them preferential treatment in the sale of surplus state houses.
"It's a very small part of the Government's overall housing affordability programme but it's a matter of usefully using surplus stock," Dr Smith said.
The Government had also amended the Resource Management Act to free up land and increased the eligibility for KiwiSaver first-home subsidies and Welcome Home Loans.
It was building 2000 state houses over two years in response to demand for one- and two-bedroom properties in urban areas.
To qualify for the FirstHome scheme, an individual buyer had to earn less than $53,000 or a couple less than $80,600.
• Sold: 25 (Balclutha, Blenheim, Cromwell, Napier, Marton, Picton, Timaru, Westport, Otorohanga, Havelock North, Foxton, Dunedin, Levin, Invercargill)
• Still for sale: 74
• Average price: $125,800
*Correction: Seventy-four unwanted state houses have been put up for sale to first-time buyers, not 99 as reported in the Herald yesterday. The Herald was provided with incorrect information by Housing New Zealand.