Busiest house constructor says National Party policy will enable more first-time buyers to enter the market.

The country's busiest house builder, which expects to put up a third more homes this year and could complete more than 1000, has welcomed the Government's KiwiSaver boost announced on Sunday.

Grant Porteous of national builder G.J. Gardner, which has its headquarters at Albany, said he was confident more first-home buyers would be able to enter the market thanks to the proposed change.

"Anything that helps new home buyers in the market helps New Zealanders. This has got to be good."

Registered Master Builders has raised questions about the new policy's effectiveness, aimed at 90,000 lower- and middle-income first-home buyers.


The price of land might limit the benefits of the National Party's promise to first-home buyers, the association told Radio New Zealand.

Labour's housing spokesman, Phil Twyford, said the Treasury had advised against boosting home-buyer subsidies because in Australia that had pushed up house prices.

Housing Minister Nick Smith said price limits for KiwiSaver HomeStart and Welcome Home loans would 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.

At present, 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.

Porteous said new Auckland house and land packages could be bought under the Auckland $550,000 threshold.

The G.J. Gardner-franchised businesses were selling new three-bedroom, two-bathroom, single-level 120sq m house-and-land packages on 260sq m sites in the Takanini area for $499,000. For $509,000, buyers could get a new 136sq m to 142sq m two-level house on a 206sq m to 235sq m site in that area, he said.

First-home buyers were not the majority of G.J. Gardner customers, he acknowledged, because most clients were buying their second or third house.

With Christchurch and Auckland suffering severe housing shortages, the company's franchisees built 694 houses last year but Porteous expects at least 920 this year.

Todd Property, New Zealand's biggest subdivision and land developer creating sections for more than 5000 residences, refused to comment, a spokesperson saying that was because the KiwiSaver move was a political issue.

Dominic Stevens, Westpac's chief economist, raised doubts about whether housing was even in critically short supply: "The little I've looked at it, I don't think it will have a big effect on the market."

"Interest rates are really the key driver. I'm not completely convinced that the shortage of housing is causing housing prices to rise because I have not seen rents going up."

Stevens said sales volumes and prices were rising "so there's a period of modest resurgence", after a slightly flatter period lately.

ASB economist Christina Leung said other factors would dominate the sector. "Auckland demand and the Canterbury rebuild will remain the key drivers for the housing market."

HomeStart first-home buyers changes

*KiwiSaver HomeStart Grant doubles the support for buying a new home and increases house price limits.
*First-home buyers will now be able to withdraw all of their KiwiSaver savings except the $1000 kick-start.
*Expanded eligibility for Welcome Home Loans by aligning house price caps with the new KiwiSaver HomeStart Grant.
*$218m estimated additional cost over the next five years.