KEY POINTS:
Welfare agencies and estate agents have welcomed a pilot shared equity home buying scheme announced by the Government yesterday.
The $35 million, two-year scheme, will give first-home buyers an interest-free second mortgage in exchange for the Government owning a portion of the property.
The loan means home buyers
will need to borrow less from the bank, and will help the taxpayer make a profit on the investment if the house is later sold at a profit.
Alan Johnson, a housing expert from the Salvation Army social policy unit, said the only disappointing aspect of the scheme was that it had not started years earlier.
"I think it will be over-subscribed," he said. "I think there is such a demand for this that it will prove a huge success."
"It's just a shame that after the New Zealand Housing Strategy came out in 2004, and this was talked about then, that it's taken us four years to get to a pilot project ... it should have been done three years ago and we should have had a fully-fledged project by now. But it's a good start."
The Auckland cap of $305,000 was fair, and good houses in desirable family areas would be available for people below that price, Mr Johnson said.
"This will put a little bit of money back into the bottom end of the market and potentially put some inflation into it, but I think the bigger impact on that score will be people trading down."
Real Estate Institute president Murray Cleland said his organisation supported anything that helped home ownership, but thought the 500 to 700 loans would not boost the market.
"We are obviously looking at the lower end of the market here, so we are going to have to look out into the outer suburbs to get these home values. It might be a bit ambitious setting the prices at those levels."
Housing Minister Maryan Street said the trial would test the public's appetite for the scheme.
"There are houses available in the market. These are first-home buyers, these are starter houses. They may not be, and inevitably in fact, will not be where people end up.
"What we are trying to do is facilitate more families getting onto the property ownership ladder."
A Herald check on real estate sites for houses available in various regions and under the scheme's price cap showed more than 200 such properties in Auckland and Christchurch, more than 100 in Wellington, around 60 in Nelson and a handful in Queenstown.
* HOW IT WORKS
The Government will lend eligible home-buyers between 5 and 30 per cent of the value of a house, depending on its location.
The loan will be an interest-free second mortgage, requiring no repayments until the house is sold or the loan period ends. Households can buy out some of the Government's equity, and will be given incentives to do so.
Buyers must make a minimum 5 per cent deposit, and have a household income of less than $85,000. They must live in the home.
House prices are capped: Auckland, $305,000. Wellington, $260,000. Nelson, $240,000. Christchurch, $255,000. Queenstown, $385,000.
The scheme begins on July 1, and is expected to make 500 to 700 loans through Housing New Zealand. Loans will be available on a population proportion basis, so the the majority should go to Auckland.
