First-home help welcomed

If it is the Government after the election, National will replace the KiwiSaver first-home deposit subsidy with a KiwiSaver HomeStart Grant, doubling the amount that is available to new buyers who purchase a newly-built house, up to a maximum $10,000.

KiwiSaver withdrawals will also be able to include the member tax credit of $512 a year and Welcome Home Loan price caps have increased to $550,000 in Auckland.

NZPIF executive officer Andrew King said the policy was correctly focusing on helping first-home buyers.

He said a survey by the federation showed owning a home in 2014 cost about the same percentage of income as it did in 1985, because of the lower interest rates.

King said affordability would have improved if house sizes had not increased.

"The affordability debate has focused on income and house prices, but the cost of mortgages and the size of our homes have a huge influence on housing affordability,” he said. “While housing affordability is about the same now as it was in 1985, it has become harder for first-home buyers to save the deposit.”

He said the price cap, and the fact the extra deposit assistance was only available to new homes, would encourage people to build smaller, cheaper properties.

"New Zealanders have more or less maintained their spending on home ownership over the last three decades and to some extent have sacrificed potential cost savings from interest rate reductions to buy bigger homes. It has always been hard to buy your first home, but initiatives that make it easier to obtain the deposit and encourage the building of smaller homes will be of greatest assistance."

But PAA board member and mortgage adviser Karen Tatterson said it would have been beneficial for the increase to the deposit subsidy to have been made available to all purchasers, not just those buying newly-built homes.

"But what I am pleased to see is the increase in the price cap. We have been able to get people in under the first-home buyer grant but it hasn't always been easy. It is really difficult to find a quality home in Auckland under [the previous price cap of] $485,000."

She said it was likely that people who were in the market for a home might now decide to wait until April to buy, to take advantage of the extra subsidy.