Government considers help for first home buyers

The Government is considering offering help to first-time home buyers shut out of the market by soaring prices, Acting Housing Minister Steve Maharey said today.

"In general terms... we are keen to see if we can do things to help people buy a house," he said.

He said he would discuss with Finance Minister Michael Cullen home ownership options that could be included in the next budget.

Private home ownership rates have fallen over the last decade from 74 per cent to 68 per cent .

Mr Maharey said the Government had been in talks with community groups and iwi about "sharing the burden" of helping first-time buyers into homes.

Options on the table included guaranteeing mortgages for those with no collateral, and offering suspensory loans.

"I think one of the last things we will be doing is returning to the days of the old housing corporation when the state was a major lender of mortgage finance at very low rates of interest," Mr Maharey told National Radio.

But the Government would look at supporting people to get loans from the private sector and other areas, such as iwi and the Salvation Army.

"We're really looking for more of a facilitating role here than getting back into massive lending by the state."

National Party housing spokesman Wayne Mapp said New Zealand home ownership rates had dropped below Britain, Australia and the United States.

A traditional path to home ownership had been for state tenants to buy their homes, but the Government had consistently ruled that out, he told National Radio.

"Give people the opportunity, not just to be long-term state rental units, but actually buy those state units, because everyone ... recognises home ownership is a better bet for family formation than renting."

National sold state units between 1990 and 1999 .

But Mr Maharey said National's state housing sell-off had led to a shortage of rental stock on offer to low-income earners.

Many more people wanted to rent rather than buy, especially those who moved about the country with work, which had also contributed to the current rental shortage, he said.

The last AMP Home Affordability Index fell 3.3 per cent in the December quarter, following falls in the previous four quarters of between 0.1 per cent and 15 per cent.

In the past 12 months, national home affordability declined 24.4 per cent, meaning homes were nearly 25 per cent less affordable than a year ago. That was despite stable interest rates, and a 2 per cent rise in wage rates.

House sales for the past year were reported at 99,658, with the average price rising 5.4 per cent to $195,000 over the December quarter.

However, ANZ chief economist David Drage said affordability had stayed relatively constant over the past five years, with average house prices 5-1/2 times average income.

- NZPA