First-home buyers will be able to cobble together a larger deposit if National is re-elected to government.
The changes announced today mean a couple will be eligible for an extra $10,000 of Government HomeStart Grants, taking the grants to $20,000 for an existing home or $30,000 for a new build.
The additional grants mean there is funding to help a further 80,000 people into their first home over the next four years, on top of the 31,000 people the scheme has already helped.
Building and Construction spokesperson Dr Nick Smith says HomeStart Grants complement other government measures to support first home buyers, including Welcome Home Loans, which allow first home buyers to access government-backed mortgages with a 10 per cent deposit, and KiwiSaver FirstHome Withdrawals, which allow New Zealanders to access all of their KiwiSaver funds to put towards a deposit.
“Take a couple on the average wage in Auckland who have been in KiwiSaver for five years and are looking to buy their first home,” says Nick.
“Between the $20,000 HomeStart Grant and their KiwiSaver withdrawal, they will have around $60,000 for a deposit for an existing home.
“Add in a government-backed Welcome Home Loan, which means they only need a 10 per cent deposit, and they have enough for a house worth up to $600,000 – the Auckland HomeStart cap for existing homes - without needing other savings.
“That’s significant support for those New Zealanders, particularly given 18 per cent of home sales in Auckland in the past year were below $600,000.
“If that couple lived in Palmerston North, they would have enough for a 20 per cent deposit on a $300,000 house, without the need for a Welcome Home Loan.”
Housing New Zealand spokesperson Amy Adams says National will also combine HomeStart Grants and Welcome Home Loans into one HomeStart product, so first home buyers can get all the support available to them from one place.
“We will simplify the application process for Welcome Home Loans to allow accredited banks to approve these 10 per cent deposit, government-backed loans on the spot – rather than going through an often time-consuming process with Housing New Zealand.”
Nick says National’s policies are helping 200,000 new houses be built over the next six years – the equivalent of four extra Dunedins.
“We are increasing our support for first home buyers, and making it easier to access, to further help young New Zealanders achieve their dream of owning their first home.”
The changes will come into force on January 1, 2018. They are expected to cost $74 million per year, to be met from the 2018 Budget allowance. Costs in 2017/18 will be met from the between budget contingency.