National has new rules for housing

MATHEW GROCOTT MATHEW.GROCOTT@MSL.CO.NZ
Last updated 09:12 25/08/2014

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National's plan for first-home buyers helps people help themselves into a new home, says the party's candidate in Palmerston North.

Jono Naylor was on hand in Auckland yesterday to hear Prime Minister John Key announce National's housing policy at the party's election campaign launch.

Key said the plan would help an estimated 40,000 people on low to middle incomes get into their first home sooner.

"What I like about this policy is it's not just handing things to people, it's saying if people are working hard and attempting to save and they're showing a commitment to saving through KiwiSaver they can access that money for a home."

Under the policy the HomeStart grant replaces the KiwiSaver first home deposit subsidy scheme and doubles the support for buying a new home. It also increases the cap on the price of eligible houses.

Some house buyers would also be eligible for a Welcome Home deposit worth $20,000.

Naylor said the policy meant Palmerston North people who have been contributing to KiwiSaver would be able to access more of their savings, including government and employer contributions, to pay the deposit on their first home.

"The beauty about this kind of policy, from my perspective, is it will encourage people who are building houses to build in that market," Naylor said. Naylor said the policy would also address the types of homes on the market.

At present developers weren't building as many homes for first-home buyers, he said, but the policy would increase demand for them.

Labour candidate for Palmerston North, two-term MP Iain Lees-Galloway, said it was that growth in demand that was the problem.

By giving people more money towards their first home National was boosting demand, which in turn would increase house prices, Lees-Galloway said.

The winners under that scenario would be property developers, he said. "I would call it a well-intentioned policy but poorly thought-through. Applying this policy without addressing the issue of supply is simply going to drive prices up even further."

Labour's plan tackled the supply part of the equation, not demand, by funding the building of 10,000 affordable houses a year for 10 years and on-selling them.

Lees-Galloway said the main barrier to home ownership in Palmerston North today was the increase in the required deposit caused by the Reserve Bank's new loan-to-value (LVR) ratio rules introduced last year.

This put the minimum deposit for most buyers up from 10 per cent to 20 per cent.

Lees-Galloway said National's policy could put more pressure on house prices and, in turn, more pressure on the Reserve Bank to restrict inflation through measures such as the LVR rates.

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Lees-Galloway said National's policy was not what he would traditionally associate with a centre-Right party. "It's as if they're struggling to find solutions that fit with centre-Right philosophies."

- Manawatu Standard

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