Subsidies for first-home buyers are yet to have an impact where it is needed most - in Auckland - the Labour Party says.

The Government's HomeStart scheme is being amended, allowing first-home buyers to earn more and buy more expensive houses but still qualify for the subsidy, which itself remains unchanged.

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.

Building and Housing Minister Nick Smith yesterday said higher income and house price caps were needed because of a rise in wages and residential property prices since the scheme was first announced.


"These changes are about deliberately screwing the scrum in the housing market in favour of first-home buyers," he said.

It is the second time in three years that the limits for the grants have been raised.

Labour leader Andrew Little said the latest changes showed the key problem in the housing market was affordability, not finance.

"It's tinkering at the edges," he said. "Especially if you see that up until now, only 9 per cent of the applications under the scheme have gone to Auckland, where you've got roughly a third of the population."

In the year to March, 1139 out of 11,943 grants were paid to first-home buyers in Auckland. That is well short of Smith's prediction in 2013 that 3000 grants would be given out in Auckland a year.

From August 1, income caps for the HomeStart grants will rise from $80,000 to $85,000 for a single person and from $120,000 to $130,000 for a couple.

Homebuyers earning less than the income threshold will qualify for the subsidy if they buy an existing house worth up to $600,000 in Auckland - up from $550,000.

The Herald found there were 1342 property listings in the broader Auckland region with an asking price of less than $600,000 on Trade Me yesterday - around a quarter of the total listings for the region.


The majority of the listed properties were going to auction, meaning they could be pushed above the $600,000 threshold.

A large number were central city apartments, and some were leasehold properties. Most were being sold in Manukau, Manurewa, Papakura or Franklin.

They included a three-bedroom house in Clendon Park, Manukau, which was advertised as "perfect for a first-home buyer or a hungry investor", and had an asking price of $570,000.

While Little was critical of the impact of the HomeStart grants, he did not go as far as saying Labour would scrap them if in power.

HomeStart changes

(from August 1)

Income cap: Raised from $80,000 to $85,000 for individual and $120,000 to $130,000 for a couple.


Price cap for existing house: Raised from $550,000 to $600,000 in Auckland, $450,000 to $500,000 in Special Housing Areas, and $350,000 to $400,000 in other areas.

Price cap for new house: Raised from $600,000 to $650,000 in Auckland, $500,000 to $550,000 in Special Housing Areas, and $400,000 to $450,000 in other areas.

Examples of houses first-home buyers can purchase using the HomeStart scheme


(HomeStart cap $600,000 for existing property, $650,000 for new)

• Manurewa, 3 bedroom house, asking price $559,000

Description: "First Home Buyer's Heaven"


• Henderson, 2-bedroom, 2-storey unit, asking price $510,000

Description: "An affordable entry level property or rewarding investment."

• Clendon Park, 3 bedroom house, asking price $570,000

Description: "Perfect for the first-home buyer or hungry investor."


(Homestart cap $500,000 for existing property, $550,000 for new)


• Parkvale, 2 bedroom house, asking price $350,000

Description: "Perfect for a first home or retiree, some one down-sizing."


(Homestart cap $500,000 for existing property, $550,000 for new)

• Hamilton East, 2 bedroom unit, asking price $359,000

Description: "What's not to love about this low maintenance two bedroom brick home?"