The Government has upped the price caps restricting first home buyer financial support from the state, resulting in the Opposition saying this regime's housing policies are a failure.

Housing Minister Phil Twyford said Housing New Zealand's HomeStart grant and Welcome Home Loan house price caps for new builds outside main centres would rise from $450,000 to $500,000.

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That will match the KiwiBuild price cap and means more people would be able to apply for a KiwiBuild home via the HomeStart and Welcome Home, Twyford said.


But Opposition housing spokesperson Judith Collins said although she welcomed the move, it was more a demonstration of failure than success.

"Raising the HomeStart cap isn't going to change the fact the Government's flagship housing policy is in jeopardy. No one's buying KiwiBuild, so the minister has had to make another change in order to entice people into the scheme," Collins said.

The house-buying financial assistance was National Party policy anyway, she said and had helped thousands of people into their first homes.

"The proportion of homes sold to first home buyers has been increasing since 2015 when the HomeStart scheme was introduced, and it has since helped 50,000 kiwis nationwide into their first home," Collins said.

"But it's more evidence KiwiBuild is a mess, the minister has claimed his KiwiBuild houses are affordable, but at a maximum cap of $500,000, he's had to raise the HomeStart cap to keep up," she said.

Twyford said aligning the price caps so they are the same as the KiwiBuild price caps across the country means first home buyers can take advantage of the grant and loan for KiwiBuild, if they meet the eligibility criteria.

The HomeStart Grant has already helped families get into KiwiBuild homes, said Twyford, citing Papakura's McLennan where families could get a mortgage with a deposit of just 10 per cent, or $58,000.

Up to $20,000 of that could come from the HomeStart Grant, meaning families only need $38,000 from their KiwiSaver or other savings, he said.

Around 60 per cent of KiwiBuild buyers so far earn below the HomeStart and Welcome Home Loan income caps, he said.