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The Opposition’s Finance Spokeswoman has slammed the combined income limit of would-be KiwiBuild homeowners, but Grant Robertson says it’s the fault of the previous Government

Property
The Opposition’s Finance Spokeswoman has slammed the combined income limit of would-be KiwiBuild homeowners, but Grant Robertson says it’s the fault of the previous Government

Opposition Finance Spokeswoman Amy Adams says the $180,000 income cap for would-be KiwiBuild homeowners is far too high and says the upper limit should be closer to $130,000.

But Finance Minister Grant Robertson says the cap just reflects the state of the housing market left by the previous Government.

On Wednesday, Housing Minister Phil Twyford outlined the eligibility requirements for KiwiBuild homes.

These include an annual income cap of $120,000 for an individual and $180,000 for a couple.

So far, the interest has been strong and with 6000 people had registered their interests in a KiwiBuild home by Wednesday evening - that number was 2800 at 12:30 earlier that day.

Adams says the income limits are “a bit of a joke.”

“They have come up with an income cap that is more than twice the average household income.”

She says this means middle-income families will have to compete with wealthy income earners and people with substantial assets, locking many out of the market.

“Twyford knows these houses are not affordable to low and middle-income earners and he has had to widen the catchment pool for buyers right up to almost the top of income earners to make sure it’s not a complete flop.”

So, what should be the upper-income limit? Adams says National’s First Home Buyers policy before the election had a couple’s or family’s cap of $130,000 and $80,000 for an individual.

She says that would have bought 80,000 new buyers to the market.

“That’s where we put the cap, we thought it was the right balance between helping middle-income New Zealanders that meant the average household income sat comfortably within that.”

She is also critical of the requirements around how long people must live in the home.

The KiwiBuild eligibility document states would-be owners must sign a statutory declaration that they intend to own and live in the home for at least three years.

“It’s Goldilocks,” Twyford said when speaking to media on Wednesday, “it’s not too hot and it’s not too cold – three years is just about right in terms of an obligation to live in the house.”

But Adams says it looks like New Zealand now has “policy by nursery rhymes.”

“It’s indicative of the dismissive attitude this Government is taking to the spending of billions of dollars of taxpayers' money.”

Robertson says the $180,000 income cap is recognition that the housing crisis is deep and that large swaths of first home buyers are locked out of the housing market.

“The housing crisis has reached such a point where there is a very large percentage of first home buyers locked out.”

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81 Comments

Sorry , but agree with Amy on this one , basically at $180k , almost everyone qualifies .

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Agree with you. Absolute joke. With that level of income people can buy $1.2m houses. There is lots of nice surburbs with prices under that. Once again the real needy will miss out. I don't think $650k is cheap. They need to reduce the income threshold and also offer lower interest rates to the those who really deserve getting a kickstart in life. If people on that level of income ($180k) haven't bought already, they don't deserve to be helped out by the state. The teachers, nurses, etc that Auckland needs will miss out now.

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So someone on $80k can buy a house for $650k but someone on $81k has to pay $1million? You want people to be asking for pay cuts?

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So your saying someone on $200k can get a S&%t-box for when someone on $201k has to buy a decent house? You want everyone to take pay cuts?

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I think the thing everyone forgets, is that the person buying the Kiwibuild still has to pay the mortgage.

So the eligibility had to be high.

How on earth is someone earning $20 or even $40 an hour ever going to pay back a $600k mortgage.

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well.. lets look at the numbers.

$40/hour, x 40hr week x 52 weeks. = $83k per year.
$600k mortgage is probably a bit high, i'd think there would be at least a 10% minimum deposit requirement, but lets roll with that and assume its the 3 bedroom kiwibuild place at $650k with a really low deposit.

Take home pay is $1176 per week after PAYE and kiwisaver @ 3%.
Mortgage is $700 per week if not loaded up with low equity fees etc.

$476/week to cover rates, insurance, power, food, transport etc. Not luxurious, but doable, and a new kiwibuild house should need no maintenance for the first couple of years. And if it's a 3 bdrm kiwibuild place there are two spare rooms to rent out, if you can be bothered putting up with others people for financial relief.

a single person on $20/hour.. yeah, that is never going to work.

2 earners at $20/hour with no kids would have about $120 more take home pay per week than a single $40/hour earner, and also higher costs, probably works out about the same at the end.

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"And if it's a 3 bdrm kiwibuild place there are two spare rooms to rent out,"
I think the rules state you can only rent "one" room. But yes, it would be manageable. Not pleasant, but manageable. [edit - Should have added, providing interest rates don't rise]

General point is, the house prices are too high/the incomes are too low. Kiwibuild doesn't fix any of them.

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So 650k for the house, you've a low equity borrower with your 10% deposit. Who is going to lend you 600k when the repayments take well over half your take home pay? And over 7 times debt to income ratio too...

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It's still adding to the supply of suitable housing. Anything could happen to the Global/NZ economy, even over the next year. The best thing would-bee FBH's can do is start saving.

I've lived in a lot of rental properties so I have my eyes wide open. I rent in Christchurch and I'm still amazed when I see an old, dated, sausage flat [a single flat in a block of 4] with questionable roofing and/or foundations selling for $340,000+.

Very backwards accommodation for us renters in NZ too. No converted factories, lofts, co-op housing, extra large 1 bedroom apartments - none of it. Not even a tv/projector wall-mount. Kiwi renters are also expected to haul round fridges, washing machines and dishwashers - It's 2018, geez!

NZ property isn't worth it IMO. For me to even consider buying here, prices would have to come down significantly and quality increase. Western Australia is where it's at.

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No converted factories, lofts, co-op housing, extra large 1 bedroom apartments - none of it. Not even a tv/projector wall-mount. Kiwi renters are also expected to haul round fridges, washing machines and dishwashers - It's 2018, geez!

Good observation and quite possibly an opportunity for development. Someone did try to setup pod type rentals in Auckland but was shut down by the authorities which I feel was a shame. I'm not being sarcastic, we need innovation in this area.

A big problem may be that really economical accommodation will just attract riffraff in NZ. We need some way of ensuring things stay classy.

(I let my tenants put up a TV wall mount and keep a dog)

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She has some good, albeit obvious points. However, she can't have it both ways. National like high house prices, but they don't like FHB's being able to afford them.

If KiwiBuild raises the number of houses built in NZ, we're heading in the right direction. Eligibility criteria can be more targeted later on ... it's wonderful that there are already over 6000 registrations.

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Dear Zack Brando you can always use “albeit” you know
As for Amy she’s a lightweight but that’s another story
Good Luck with your semi revitalized Nats on speed

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Its just all rubbish policy to fix structural issues no one wants to fix. Bandaid solutions which arent even going to touch the long term problems we face.
- Cut immigration to a managable, world wide comparable level.. say 0.5% of population per year max
- Sort out ridiculous land use regulation
- Tax all housing, not just investors or foreign owners. Start with a 0.1% land tax, using existing local council ratings and then raise it slowly and in well signalled moves.. maybe to 0.5%. Use the money to provide tax cuts to income.. meaning no more tax is collected in total.

EDIT.. chances of any government doing the above.. zero but man it would sort out this cronic issue out, one that is only going to get worse under national or labour

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its a brilliant move by labour to buy the center ground at the next election!!! its stated clearly that its middle class aspirational.... brilliant bride to middle classes. it really shows that instead of nationalising business like clement did they have learnt a better way is to buy the middle classes...there are more votes in it coupled with lower salary earners. Attack the voting base with as many tools as you can.

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120k, 80k or 30k - so as a rich overseas buyer, all I need to do is send my kid to study in NZ for a few years, buy a home showing no or low income and then flip it over in a few years. Also, speculators here in NZ can buy a number of houses under the name of non-earning family members e.g. children, old parents etc.

9 years in opposition, 8 months in power and these people still struggle to formulate a solid plan. Regulations around Kiwibuild have more holes than a block of Swiss cheese.
If these flawed arrangements wouldn't have come with the prospect of creating more business opportunities for accountants and financiers through complex deal structuring, I would be furious right now.

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I thought the Kiwibuild required a buyer to have PR? You can't just come and study in NZ for a few years and get PR.

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And in typical forward thinking by Robertson , he blames the previous Government .

This line of "the last nine years' has worn as thin as Nannas 9 year old underwear

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Nanna went commando ages ago

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lol, good one .....maybe even thinner TM2 ... let alone it is more like nannas underwear, utterly disgusting !! :)

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Clearly you were not listening to John Key at all during his tenure, and Bill English when he got a wee go. Sheesh.

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jokes aside, she is right ... will earners of 180K be now considered as low income or poor ??

Or it is a CoLs who would like to claim that it had improved housing affordability by KB ??

If it Barks like a Dog, smells like a Dog, wags its tail like a Dog, it must be a DOG

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Based on DTI, then yes, unfortunately. Welcome to the new world that you've helped to create, sorry if the memo that house prices are astronomically high compared to incomes has passed you by.

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Maybe Labour have begun to realize that 100,000 houses in 10 years is not achievable unless they set some very wide eligibility parameters, and even then it's debatable. Reason being is, while it's physically possible to build 100,000 homes in 10 years you actually need to sell them as well.

I was a fan of the Kiwibuild idea at first but as time has passed I can see it being a massive flop. They haven't done anything to address the issues with the costs associated with building a house that have been mentioned plenty of times on this website.

They need to focus on making houses more affordable for builders to BUILD, not for people buy. Horse leads the cart, not the other way round.

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Yes, right there with you on that. So far we have only seen ideas e.g. prefab. But nothing real and its July. You'd think they would have at least started to address some of the building cost issues by now.

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There won’t be 100,000 houses built unless NZ imports more trades people from China like the 140 odd ones they imported to build in Auckland CBD I believe in Wyndham
Street ?
Nothing done about the building materials duopoly in NZ yet ?
These are untouchables apparently

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The last line so perfectly reflects you.. I like your honesty

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What you've helped do to younger generations here, is happening elsewhere, and now options being looked at to reduce the people who were born earlier/think they're clever by buying houses for speculative gain, also called making young people pay the mortgage for your retirement, coming to a country near you- this from the Conservative party in the UK = https://www.moneyobserver.com/news/call-further-tax-crackdown-buy-to-le…

Wonderful how the legislation you've created can be undone by the legislation that will win someone else the election eh? You've voted yourselves tax cuts, special status on assets and now the pendulum is swinging, I hope you and your ilk are around when the pound of flesh to be paid is exacted upon you.

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Every election you have more younger people becoming eligible to vote and less people who haven’t had to deal with housing affordability issues (i.e. dying of old age).

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Indeed, hence the pendulum. This is a real and genuine issue across the Western world, foreign and domestic speculators taking what they had for granted and impacting on the young. There is no way we should have 60%(ish) of under 40s renting here or anywhere in the Western world.

To try and placate that group with "it was just as hard in our day" is a complete and utter lie - boomers didn't have to compete with asset rich older generations, foreign buyers - sure interest rates were higher, but competition was nowhere near.

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Higher interest rates also meant house prices were fairly well suppressed. Mortgages were at lower multiples of income so the deposit requirement (in dollar terms) was much easier to achieve.

These days it’s harder to get a mortgage, not service one.

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Yeah, sure,..whatever !! :)

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Well that's my argument busted, massive retort, you've just wiped the floor with me on that discussion piece.

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Who says Kiwibuild is for low income or poor people? I would say it is for the middle class, and I would say the middle class tops out at about the figures Twyford has chosen.

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Well that's rich of National. Refuse to admit there's a problem and set up any sort of system to address it, then lay on the criticism at the first chance they get.

The problem I have with their stance on this one is that they're suggesting FHB households earning over $130k, who already do not qualify for govt. assistance for earning too much, should be able to afford to build houses in the current market. My experience of this has been dodgy building companies, developers clipping the ticket several times, crazily high building costs and banks who will only allow you to pay interest, and not pay off the loan, during the 12-18 months it takes for the build. I would have more fun lighting my money on fire.

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Since when did the fricken national party worry about fhb?

Look at her, anyway she can practice her attacks as she would be doing it for at least the next 6 years

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Wrong side of the issue, they should have been advocating for no cap.

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Agree that 180 is high and they made an error.

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Agree that 180 is high and they made an error.

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The government should just decree that all houses cost 650k and you can only have one you greedy buggers. Problem solved we can all afford one each now....

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Dp.

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$180 k a year and cannot afford a home?your kidding arnt you!!!just over three grand a week and they still can't save???what the hell are they spending all that money on!!!

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Sorry i did my maths wrong its $3461 a week!!!!what a bloody joke.if they cant do it themselves on those wages they can rent for the rest of there lives!!! How much does it cost to rent a three bedder in Auckland these days?

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To be fair around 800 of that would be tax. It is an extreme example.

I'm renting out a beautiful two double bedroom brick and tile standalone house with double internal access garage and its own driveway in Te Atatu South for $470 a week. This would still leave about 2200 a week to live off and invest.

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Or borrow $1.2 million at $1600 per week and have $1k per week to live off.

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My place is probably worth 690k so with a 20% deposit the weekly interest bill would be roughly $445.

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Yeah but they are only earning $180 k how could you possibly expect them to afford that!!!

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Sounds like you're spot on the target market for investors with spare cash to splash in Te Atutu South fella - According to the last census - https://www.aucklandcouncil.govt.nz/environment/state-of-auckland-resea… Median income of $66,950, you're only taking 36% of their pre-tax income, well played! You need to raise your rents champ, put it up to $600 per week, then you can take more, they can always get another job and stuff..

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So half earn even more than that. What are you, some sort of Bolshevik?

I'll have you know that I worked thousands of hours overtime to become the Feudal Overlord I am today.

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Good for you, I'll wager that the equity you borrowed against was more than the overtime you worked....

I'm going to put this in very simple terms for you -

If you had to pay actual money, you know the stuff that you earn through your job and overtime and stuff, not through equity in an asset you bought 20-30 years ago, you could not afford to buy an additional house, let alone multiple houses.

So why should your debt be favoured over someone's credit? You know that money and stuff they actually have.

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Dp

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Insane!!!!our family lived off far less than that and still saved enough for a house.we should've just spent it all on God knows what and got a hand out from you the tax payer!!!

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I don't really follow the angst being shown for the parameters set for kiwibuild. So long as the participants are genuine FHB then surely their income is pretty irrelevant. It's a ballot not an auction so they have the same chance. Just don't see a problem.

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I just thought the houses should go to the people that are trying there guts out to save a deposit and are on low incomes.ie $100 odd k combined or less.now it seems like it's a hand out to anyone!I've tried to be ok with this new government but I give up now.

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Why is it a handout, where's the subsidy?

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I think the problem is that people who earn slightly more than any threshold could end up significantly worse off than if they took a pay cut. Surely no one wants people to take pay cuts to be eligible for a lottery house?

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Adams should shut her trap. Her party did close to zilch to address this issue

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No they did a lot, they had unlimited immigration, they enabled an environment where banks could lend at greater then 9 times income.

But instead of adding water to the fire they added gasoline. Now they are trying to stop FHB from buying.

650K is not that cheap, its cheaper then current market but less than 10 years ago it would have been an average price. I wonder how much the people who are bleeting paid for their first home, and what was the DTI.

Incomes have not gone up by much, but housing has.

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180 level is so high that it does not have any meaning.

Why have any limit at all if the intent is missing.

ALL LABOUR SUPPORTERS be aware same dirty trick will be played by labour while implimenting overseas buyer ban.

SAVE THIS COMMENT AS CAN NOW SAY WITH CONFIDENCE THAT LABOUR IS BOUND TO MA IPULATE, DILUTE AND DELAY OVERSEAS BUYER BAN

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... well ... they've broken a zillion promises already .... no more taxes ... a slash of 30 000 PA on the immigration numbers into NZ .... 100 000 affordable homes .... 1 billion trees planted ....

What's one more broken promise after that little lot !

... let's face it , Taxicinda and Little Andy told us a big bunch of porkies before the 2017 election ... over promised ....and failed utterly to deliver on the promises ...

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I think you must have misunderstood their promises! Did you really think they promised to build 100,000 houses in 9 months or plant a billion trees in 9 months?
Labour's election promises quite obviously included an Auckland fuel tax: "Allow Auckland Council to collect a regional fuel tax to fund the acceleration of these investments, along with infrastructure bonds and targeted rates to capture value uplift." What are the other new taxes?

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Don’t understand this maximum limits that have been spurted out today of up to $180k?

Surely it should,have been the minimum income that should’ve been quoted so to enable these FHB’s to know whether they can service a mortgage!!!!

Reality is that there are going to be bugger all of the registered people today that have saved a deposit, got a clean credit history and can afford a $700 approx mortgage payment for 30 years.

The COL needs to come clean with the eligibility to be able to buy one of these shoe boxes, but they won’t because they will become even less popular with everyone including the diehard supporters who have still got their blinkers on.

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I don't get it, I thought Labour-Greens wanted to look after the low income earners, help them out. There's no way that $120k pa or $180k pa combined is low income?

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How do you help them out though, genuine question.

The cost to build the houses are so high now, that lower paid people cannot afford the cheapest you can build a house for in Auckland. The last 5 years have ruined housing in Auckland for average FHB's.

The only way I can see for Labour/Green to help low income earners out is by subsidising the houses, which isn't going to happen.

I think if Labour reduce immigration, add supply to the housing market, by any which way, then this should have an impact. Add a foreign buyers ban, then the eventual interest rate rise that will come because banks borrowing costs will increase, chuck in a trade war and a recession we may have the ingredients for house prices that are affordable.

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It's about how fast you want the uptake to be on these houses, limited to $130k to purchase a $500-600k it's going to take those people much longer to save as they have far less disposable income.

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This is just BS from Twyford!
Eligibility for Kiwibuild only criteria is earning under 120k single or 180k double income.
14000 plus registered for KiwiBuild!!!
Are people that thick that they think that they will go into a ballot for a 650k home as they earn under the amounts set out.
It is Twyford way of pointing out the interest in these boxes!
95% of these people registered will have no show of getting a KiwiBuild home or they would’ve bought a house already.

Why on earth did Twyford not mention in the eligibility of these KiwiBuilds that they need a DEPOSIT, they need to have a faultless CREDIT HISTORY and they need to be able to afford at least $700 each week for the next 30YEARS and have surplus for their living expenses or they WONT GET A KIWIBUILD HOME even if they wanted one of these shoe boxes!!!!
What part of it that not everyone will one their own home do people not understand???..

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Anger management classes might help.

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Any household earning anywhere near 180k and still needs assistance into a home purchase desperately needs to see a budget advisor whether they live in Auckland or not.

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To play devils advocate, mortgage payments on a $520,000 mortgage (assuming 20% deposit) at 4.5% over 20 years are just under $3,300 per month. Assuming the couple are both earning $90k, they will both be taking in just over $10k per month after tax. This means debt servicing on their mortgage is just over 30% of their income, which is pretty widely regarded as the upper bounds of "affordable" housing expenditure.

Furthermore, a house costing $650,000 with a household income of $180,000 is a house price to income multiple of 3.6, which is another metric commonly used (though not a flow-flow measure). 3.6 is traditionally on the upper bounds of "affordability".

In my opinion, the houses are simply too expensive when what we can all generally agree is a well earning household can only just buy these houses on the upper bounds of affordability. Everyone not earning $180k is still buying an unaffordable house.

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You are implying that they couldn't live comfortably on $6700 a month? You are also working it on a 20 year mortgage. Many will be 25 or 30 years. When it comes to affordability you should really use a longer term. Yes they can pay it off much quicker but from an affordability point of view they can comfortably afford it.
My mortgage is far more than that at the income is about the same. We have daycare costs etc too.

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That wasn't my implication at all. I imagine you could live fairly comfortably on that much, and you should be able to. People shouldn't have to hand over 50% - 60% of their salary to the bank (or landlord) each month just because our housing is astronomically unaffordable.

And no, I think it's perfectly fair to use a 20 year term. A sensible borrower should always use the shortest term available to them when interest rates are low, it gives you breathing room when interest rates rise - which are guaranteed to do over the next 20 years. If you are starting off on a 30 year mortgage at today's interest rates, you are really pushing it.

What I'm driving at is that politicians of all stripes have redefined the term affordable to the point of absurdity, much like Nick Smith redefining "swimmable".

Good luck with your mortgage.

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Also the question is why do people want to buy a house - the simple answer is captial gain. Kiwi build is nothing but chicken coups for kiwis - is there going to be the capital gain ? , or do we enslave the next generation after the current one.

The real question is why do houses cost 650K when built on mass ?

I watched that primitive tech guy on youtube and he builds a mud house in an afternoon - with underfloor heating. Thats just one afternoon one guy........ (it dosnt leaky at least - and easy to fix)

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The people earning $180k would be far better off if they bought a normal house no restrictions and no waiting for builds to complete, and no ballot nonsense. Maybe the Welcome home loan scheme could be extended to allow them to get a mortgage sooner. Plenty of houses for around $750k in Auckland. We bought a house for considerably more on an income that wasn't much over $180k.

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Maybe you could find a tiny 2 bed 1 bath in the wop wops for under 750k. The average house price is around 1mil in Auckland.

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The average is not what the first home buyer buys at. Plenty of houses being sold on the north shore between $650k and $800k. You can get a reasonable 3 bedroom for $750k. The average is inflated by some very expensive houses.

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I like how that rolls off your tongue as if 750K is affordable and reasonable.

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The thing that is blatantly stupid from Mr Twyford, is that he is also suggesting people invest in these by having a shared equity scheme with the house buyers to assist them!!!!

Who in their right mind would invest a cent into these KiwiBuild boxes when Mr Twyford said yesterday that he didn’t think there would be much CAPITAL GAIN?????

What is In it for the equity partner, as there won’t be any interest paid by the home owner, won’t be any capital gain either SO WHY WOULD ANYONE PUT MONEY IN?????

KIWIBUILD IS A FARCE, and why the media is not hitting Mr Twyford with these points defies logic, but many are getting carried away with the feelgood factor of more people owning their own home.

Sorry but it isn’t going to happen like they say it is, is it Mr Twyford?????

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They're going to introduce a landlords tax, 45% p.a. of CV. This money will then be put towards paying out returns to those who contribute to the shared equity scheme.

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..if you hurry you might catch the afternoon anger management class.

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No one can dispute my points except to try and have the Man on!
You will need to be up a lot earlier than that though!

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