The Government has unveiled its plan to try to fix New Zealand's housing crisis with specific assistance for first-home buyers.
The package, revealed by Prime Minister Jacinda Ardern, also includes $3.8 billion to boost the number of houses being built and other measures to make life harder for property speculators.
It comes as New Zealand property prices continue to hit record highs, outstripping pre-Covid levels by $130,000, OneRoof figures show.
The nationwide median property value was at January 30 was $750,000 - surging 13.8 per cent in the nine months since the Covid pandemic hit our shores.
First home buyers
The new moves are designed to let more New Zealanders access the First Home Grant and First Home Loan.
The First Home Grant is assistance of up to $5000 to buy an existing property or up to $10,000 for a new property.
The First Home Loan allows you to apply for a mortgage with only a 5 per cent deposit. Most other home buyers need at least a 20 per cent deposit to get a mortgage.
But these grants and loans are subject to income caps.
Today the Government announced that these income caps will be lifted from $85,000 to $95,000 for single buyers, and from $130,000 to $150,000 for two or more buyers. The changes to the house price and income caps will take effect on 1 April 2021
There are also caps on the value of properties that people could use the grants and loans to buy.
These are also being lifted by the Government today.
In Auckland, these caps will be lifted from $650,000 to $700,000 for new builds and from $600,000 to $625,000 for existing homes.
In Wellington, Hutt City, Upper Hutt City, Porirua they will be lifted from $550,000 to $650,000 for new builds and from $500,000 to $550,000 for existing homes.
In Nelson City, Tasman District, Tauranga City, Western Bay of Plenty District, Hamilton City they will be lifted from $550,000 $600,000 for new builds and from $500,000 to $525,000 for existing homes.
In Waikato District and Dunedin City, these caps will lift from $500,000 to $550,000 for new builds and from $400,000 to $425,000 for existing homes.
Changes to the bright-line test
The bright-line test is also being extended.
Deputy Prime Minister Grant Robertson said the bright-line test extension would help curb "rampant speculation" in the housing market.
The bright-line test is similar to a capital gains tax (CGT) on housing. It means people have to pay tax on any gains on the property if it's sold within five years.
There are, however, a number of exceptions – such as an exemption for a family home.
The Government has announced it intends to extend the bright-line period to 10 years for residential property except for newly-built houses, which will stay at five years.