Agents criticise home plan

19:50, Aug 25 2014

The National Party's proposed housing policy has been criticised by some in the real estate sector who say it will not go far enough to deal with the housing crisis, and could even push house prices higher.

The package, unveiled yesterday, involves doubling the size of taxpayer grants to help first-home buyers into newly-built homes.

Under the scheme, the KiwiSaver first-home deposit subsidy would be replaced with a KiwiSaver HomeStart grant, doubling the support for buying a new home from $3000 to $6000 if in KiwiSaver for three years, $8000 after four years and $10,000 after five years.

Eligibility for Welcome Home loans would be expanded, setting house price caps at $550,000 in Auckland, $450,000 in Wellington and Christchurch, and $350,000 elsewhere.

The income caps for both schemes would be $80,000 for an individual, or $120,000 for a couple.

But Harcourts CEO Hayden Duncan described the proposals as a "bandaid", saying it was not dealing with the root of the challenge of home ownership.


"We've got a very unusual situation where even our biggest and best developers are reluctant to do things... because of the red tape and challenges they face," he said.

"Until they get rid of that... then we're going to be having this conversation again in another four years."

The Government needed to consider removing penalties to first home buyers such as the 20 per cent deposits, he said.

"There's no point putting up barriers and taking them away somewhere else."

Economic think-tank New Zealand Initiative said the policy would fuel higher house prices and make it harder for Kiwis to enter the housing market.

"National’s announcement does nothing to remove the constraints and roadblocks to building more houses, such as tight land supply and limited infrastructure," executive director Dr Oliver Hartwich said.

"All it will do is subsidise demand, which is likely to push prices even higher.

“It may well be a vote catcher, but it in the long term the policy will exacerbate New Zealand’s housing affordability crisis."

Martin Dunn, the managing director of Auckland real estate agency City Sales, said the initiative should apply equally to the apartment market.

Apartments were an increasingly affordable option and had been selling "like hotcakes", he said.

"If the National Government could help facilitate apartment living I think it would be a more practical gesture than saying, 'find a brand new house for $550,000'. I don't know how you're going to do that, to be honest."

But the policy was welcomed by mortgage broker Mike Pero, who said getting the deposit together was the main challenge for new home buyers.

Repayments on a $550,000 home with a 10 per cent deposit could be as low as $700 per week, which was close to what many Aucklanders would be paying on rent, he said.

"My philosophy has always been buy now, pay later and you should always aim to get into a home as soon as you can. The earlier the better."


First home buyers Rochelle and Aidan Elliot are realistic about what they can afford - and they say it's nowhere near $450,000, even with National's cash sweeteners.

The couple, who have two children under 10, are currently renting in Normandale, Lower Hutt. 

With a combined income of just under $100,000, that makes them eligible for National's KiwiSaver HomeStart grant and Welcome Home loan schemes, should they be re-elected.

But Rochelle, 36, says they don't need a "new" house, and doesn't like that the policy appears to be an incentive to go out and spend more on a house, with the cap set at $450,000 for a house in Wellington.

"I just thought, 'that does nothing for us'," she said.

"It really doesn't help us in any way. We don't have the income to buy a house for $400,000, we don't need a new house, we don't want a new house. We need a house we can afford."

She said she and her husband agreed they did not want to be slaves to a large mortgage.

"I don't want to enter the housing market and spend the next 25 years in a cold sweat every time interest rates go up or the car breaks down. I want to be able to afford my kids' school uniforms, and take them on holiday. I want to be able to afford the house we buy. And if we can't afford the repayments, then I guess we keep renting and wait." 

The policy announcement had reinforced the need for them to stay within their means, she said.

"I have no problem with starting at the bottom. All we want is a basic three-bedroom house with a bit of grass out the back for the kids to play on. It doesn't need to be flash."