Govt housing announcement 'too little, too late'

19:15, Oct 01 2013

A new housing policy, which would see some first-home buyers gifted as much as $20,000 to help them buy state homes, is a "desperate sideshow" Labour says.

Yesterday, the Government unveiled its FirstHome policy aimed at helping buyers earning equal to or less than the national average - $53,000 for one person or $80,600 for two or more people - into their first home.

But the homes are generally outside the main centres.

Labour leader David Cunliffe said this morning, it was "too little, too late".

"This is a desperate sideshow to take people's attention away from what's really going on," he said.

The Government missed the boat in terms of protecting first home buyers.

Cunliffe attacked the policy on Firstline, saying certain clauses in the Reserve Bank Act and a memorandum of understanding between the bank and the Government, should have been used to require the bank to have regard to government housing policy.

"They [the Government] didn't do that," he said.

"I think they were asleep at the wheel, I don't think they predicted the reaction to this daft housing policy and now New Zealanders are picking up the tab once again."

Under the policy - also attacked by the Greens said as "poorly thought out" - first-home buyers will be gifted the 10 per cent deposit, up to a maximum of $20,000, and given first crack at state houses to be sold by the Government at market rates.

Those buyers will still be entitled to other assistance such as KiwiSaver and Welcome Home Loan subsidies if they are eligible.

The policy was announced the same day new Reserve Bank lending restrictions kicked in, which are forecast to lock thousands of first-home buyers out of the market by requiring them to have bigger deposits.

Housing Minister Nick Smith said the policy would get people into homes and free up capital to invest in new state houses in high-demand areas such as Christchurch, Wellington and Auckland.

However, none of those cities were included in the policy.

The first 41 homes, located between Otorohanga and Invercargill, will be ready for sale on Monday. Their average market value is $120,000.

"Housing New Zealand advises that with the high holding costs of these properties with council rates, vandalism and upkeep, the cost of the FirstHome grants will largely be offset," Smith said.