More state help urged for first home buyers

Nearly two-thirds of people believe the Government is failing those hoping to invest in the Kiwi dream - owning a home.

In a Weekend Herald DigiPoll survey of 1000 people, 61 per cent said the Government was not doing enough to help first-home buyers, and more than two-thirds also believed it was harder for first-timers to get a house than it was when Labour became the Government six years ago.

Few property experts dispute that the housing boom over the past five years has made it harder for those on low to middle incomes to afford a house.

In Auckland, median house prices have risen from $236,250 in 2000 to $366,500 in June this year, according to Real Estate Institute sales figures.

But opinion is split over whether the Government should do more.

One of the authors of the AMP/Massey University Home Affordability Report, Graham Crews, said Government help was critical if traditional first-home buyers - low- to middle-income "Kiwi battlers" - were to be able to enter the market.

"They are faced with significant challenges, and as other countries have shown, it is necessary to put in place something to assist them.

"Previous generations have benefited from such measures as subsidised mortgages or suspensory loan schemes that Governments have implemented. It has only been over the last 15 years that we have had very little Government assistance."

But property investment adviser Andrew King said Government intervention could well backfire and push prices up even further.

"It is far too simplistic to think, 'House prices are up. Poor first-home buyers. Let's give them some money and everything will be sweet'.

"Well, I'm sorry, but it's not. Government intervention will not make it easier for people buying."

Mr King said that when Australia introduced its first-home owners' grants of up to $14,000, the new demand for houses immediately drove up prices.

"That is great for the people who already own homes, but not for first-home buyers. From a first-home buyers' point of view, the Government should not get in here. The Government has held back from doing large-scale measures, and I think that is wise."

The Government has introduced the KiwiSaver scheme, under which savers can get up to $5000 as a top-up to a deposit on a first home. The criteria have also been widened for the mortgage insurance scheme run by Kiwibank.

Minister of Housing Steve Maharey said the Government had no immediate plans for more direct help.

"We are aware New Zealanders, especially in Auckland, are finding it difficult to buy a home. That is why we are re-entering the home-buying market. But we are doing it cautiously because this is a different situation from the old days when the Government was the major lender.

"We have a hugely competitive mortgage market now and we don't want to spend taxpayers' money unnecessarily. So we will carry on down that track as we can afford to do it, because we know it's a priority for many, but we are also aware of very successful activity in the market itself."

National's finance spokesman, John Key, said he agreed with initiatives such as the mortgage insurance scheme, but his party had no specific policies for first-home buyers.

Lowering taxes would give people more money in their bank accounts to save for a deposit, and more to help pay the interest, he said.

The KiwiSaver scheme would not kick in soon enough for most people, said Mr Key, with the full entitlement not available until 2012.