Whanganui real estate experts are hoping for more help for first home buyers following changes to Kāinga Ora loans and grants. Photo / Bevan Conley
House price caps for grants helping first home buyers buy a house need to be lifted further to be closer to Whanganui's median prices, a local real estate manager says.
But others say the Government changes to price caps around first home grants and loans will be the catalyst for some people to get into a home of their own.
As part of the Budget announced earlier this month, the Government increased price caps for buyers wanting to access the Kāinga Ora first home grant, which can be up to $10,000 for a couple buying an existing house.
For Whanganui buyers wanting to use the first home grant they would now need to buy a house for less than $425,000, rather than the previous figure of $400,000.
Property Brokers Whanganui branch manager Ritesh Verma said while the $25,000 increase would help some people, it wasn't as much as it could have been.
"The [$25,000] to me is a bit of a nothing. Certainly it will help some people but it's a bit of a nothing."
According to the Real Estate Institute of New Zealand the median house price in Whanganui in April was $500,000, a big drop from March's figure of $555,555.
But Verma said the cap for first home buyers would still need to be at $450,000 or over for first home buyers to be able to afford something decent.
"The $25,000 doesn't make a great difference. To be fair, it probably needed to be $100,000 in my opinion," Verma said.
In other regions, the price cap was increased by as much as $475,000 for existing homes, and Palmerston North had its price cap raised from $400,000 to $575,000 for existing homes.
Across the region, Whanganui was the only area that saw a price cap increase, with price caps remaining at $400,000 for existing homes and $500,000 for new homes in Rangitīkei, Ruapehu, and South Taranaki.
Mortgage Link Bulls mortgage broker Bernie van der Merwe said the price cap for first home grants should be increased not only in the Rangitīkei area but across the rest of the region.
The price caps had been flawed from the start, he said.
"I think it never should have ever been implemented because it's put a lot of first home buyers out of the market. The caps were far too low for what the market was doing," he said.
The Government also totally removed caps for its Kāinga Ora first home loan programme where participants can buy an existing house with a deposit as low as five per cent, or 10 per cent for a new house.
Mortgage Science Whanganui broker Martin Cloete said the removal of price caps for first home loans will make a huge difference for Whanganui buyers.
He said as the median price of homes for Whanganui has risen past the old price cap for loans of $400,000, many potential buyers who had eligible income were made ineligible by the price cap.
Those people who were cut out of the market have been let back in, he said.
"We've had a few people we've had to show away because they had enough deposit for a $500,000 house but didn't qualify because of that cap of $400,000. Now they can actually qualify with the same deposit and affordability wise," he said.
Cloete expected to see an increase in first home buyers across the Whanganui region.
Cloete also said the increase in the price cap for the first home grant would help some buyers too.
"It will definitely make a difference because at the moment we've got a few first home buyers that don't qualify for that magical figure," he said.
Cloete said with the increase in the price cap he could get those people into a three-bedroom home rather than settling for a two-bedroom home, which would stop them from needing to upgrade in the future.
Cloete also said the caps should have been raised across the rest of the region as those areas had also seen an increase in house prices.
He said banks were less interested in smaller areas like Ruapehu because of its remote location, but Cloete said the market for first home buyers had also grown there.
"The first home buyer market has definitely grown, with a lot of people knowing they'd rather buy than rent. It would definitely make a difference for them as well."
Cloete also said while the increase to the cap was a start, there is more that could be done to help Whanganui buyers.
"They probably need more grants for first home buyers... an ideal situation would be to match their deposit dollar for dollar up to a certain amount, which just means helping them get over that rental gap and start their first homeownership," he said.
First home grants and first home loans are available for single buyers who earn up to $95,000 a year or joint-buyers and single buyers with one or more dependents earning up to $150,000 a year.