Around 230 more first home buyers expected to qualify for Housing New Zealand grants a year, and 10 for Welcome Home Loans under scheme tweaks

Eligible first home buyers in the regions will now be able to buy slightly more expensive new builds using Housing New Zealand grants and loans.

The Government’s upping its house price caps for new builds under its HomeStart grant and Welcome Home Loan schemes from $450,000 to $500,000.

The changes are applicable to homes outside of Auckland, Queenstown, Wellington, Christchurch, Hamilton, Tauranga, and Nelson-Tasman.

Housing and Urban Development Minister Phil Twyford says the caps are being tweaked so they align with KiwiBuild price caps. In other words, so that someone who buys a KiwiBuild home for $500,000 may also be eligible for a Housing New Zealand grant and/or loan.

First home buyers buying a new home, a property bought off the plans or land to build a new home may be eligible for a $6,000 HomeStart Grant if they’ve been contributing to KiwiSaver for three years, $8,000 if they’ve been contributing for four years and $10,000 if they’ve been contributing for five or more years.

Under the Welcome Home Loan scheme, Housing New Zealand underwrites portions of loans issued be selected lenders, so that first home buyers can get mortgages with a 10%, rather than 20%, deposit.

Under both schemes, a single person needs to have an income of less than $85,000 a year (before tax), while a couple needs to have a combined income of less than $130,000, to qualify.

Around 60% of people who have bought KiwiBuild houses to date have incomes below these thresholds.

Twyford says increasing the house price caps is expected to result in HomeStart grants being paid for an additional 230 homes per year and an additional 10 Welcome Home Loans being drawn per year.

“The cost of this increase is estimated to be around $3 million per year, which will be funded within the existing KiwiSaver Deposit subsidy and Housing New Zealand budgets,” Twyford says.

“This increase is part of a Government review of home‑ownership products to better align with KiwiBuild, support more house building and help families own their own homes.”

The HomeStart and Welcome Home Loan house price caps in New Zealand’s main centres are already at or above the KiwiBuild caps.

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8 Comments

So yet another Universal Pricing signal, issued by a Gubmint clueless about the housing market effects caused by a Guaranteed Minimum Build Price.

Ask yerself a simple question:
Imagine you're a developer, in one of the areas to which the $500K refers. Why, oh why, would ya sell anything ya built for less than $500K? After all, the qualification for WH etc is 'can ya fog a mirror'?

Watch as the quality of the materials drops as the developer is effectively guaranteed $500k for a house.

R1.8 Batts in the ceiling, $10 locksets from Bunnings, 30mm benchtops instead of 38mm.

It's probably already happening anyway!

Isn't it just as much of a price bracket cap? Entry level houses targeted at FHB types are now capped at that price maximum, otherwise the buyers can't access these grants, and will probably look for something under the cap unless your property has something pretty special for them to turn down $10k of free money.

And buyers still have to be able to convince the bank they can service the loan.. so the higher the price pushes the smaller the buyer pool gets.

Desperate measures to prop it all up. 71% of lending to households and the construction sector is a pretty precarious place for an economy to be when the farmers are also heavilly indebted. More debt to keep the boat afloat?? or are we running out of room on deck??

A product that sends a price floor signal while capping the income you can earn to repay the debt.

Goodness gracious me.

You would think there would be plenty of homes outside of Auckland, Queenstown, Wellington, Christchurch, Hamilton, Tauranga, and Nelson-Tasman that were under 450k.

Not now there aren't, ZS. I fondly recall the WH start in 2002/3 - the sell-price reaction was instantaneous......Ms Market is an opportunistic wench....

The trouble with this is they do nothing to resolve the largest issue with being able to build with the kiwisaver grant, the kiwisaver grant only supports those able to get a house and land package with a building franchise, which often have covenants included and high build cost restrictions, not those who are looking to build on a property without the house plans known and signed off before the property is purchased. Yet they would not be able to sign off the house plans without confirming they have the sale & ownership of the property. They would have to build the home & set the design first without even knowing where the property is, what the land slope is, what the costs for foundations would be etc. Essentially a flawed restriction to require for the kiwisaver grant in the first place. How can a design be set and a mortgage obtained without even knowing where they will be building is confirmed. Hence the limitation to high cost land and house packages by franchises, no allowances to more affordable designs, or even smaller sqm than covenants will allow. Useless to those facing a need for affordable housing and useless for those needing builds that are say accessible.