The Government will look at KiwiSaver rules that are limiting Cantabrians' options in the white-hot housing market.
Cantabrians using their Kiwisaver money must buy a first home for less than $300,000 to qualify for a government grant, but rocketing Christchurch house prices are limiting their options. In Auckland, the figure is $400,000.
Canterbury house-hunters using the savings scheme are being forced to trade down to units instead of buying houses.
Real estate commentators say the Canterbury cap is outdated, and the Government has vowed to review the system in a bid to reverse the downward trend of house ownership.
First-home buyers can still draw down their KiwiSaver contributions, but the house must be under the cap to receive an additional government grant of $1000 a year, up to a maximum of $5000 a person or $10,000 a couple.
Real Estate Institute of New Zealand spokesman Tony McPherson said the $300,000 cap for Canterbury was outdated, and $350,000 would be a better fit.
The region's 12 per cent annual house-price increase was more than double the national average and 4 per cent higher than in Auckland.
"There are houses still under $300,000, but they are harder and harder to find," McPherson said.
Those wanting to use their KiwiSaver funds for their first home now would be "talking a unit rather than a house".
"It's not an ideal situation. It is a disincentive. There's got to be some realism around it," McPherson said.
Housing Minister Nick Smith acknowledged industry concerns that the caps were no longer relevant.
The caps were to prevent the government grant being used to buy "luxurious" homes, he said.
"I am reviewing the level of that price cap, not just in Christchurch, but in a number of areas where there are legitimate questions over whether they are realistic."
Realestate.co.nz data shows the mean asking price in Canterbury last month was $402,742, up 8 per cent from January 2012.
In Christchurch, 26 per cent of the 1515 dwellings sold in the past three months went for less than $300,000.
This included units and homes in cheaper suburbs.
However, 45 per cent sold for $350,000 or less, the figures show.
Christchurch real estate agent Lynette McFadden said the city's property market was getting more competitive and harder for first-home buyers to enter. Properties in traditionally affordable suburbs like Hornby were now going to auction and selling at "quite significant prices", she said.
Another agent, Rae Manson, said first-home buyers were not only competing with investors, but with people displaced by the earthquakes.
An increase in the cap would help put first-home buyers on a level playing field.
Elizabeth Ambler joined KiwiSaver with her first home purchase in mind.
But four years later, she and husband Keryn were forced to put their dream of a modest three-bedroom house on hold.
The $300,000 cap to receive an additional government grant meant the Christchurch couple had to buy a unit instead.
While they still hope to buy a house one day, they say a higher cap would have at least given them more choice.
Elizabeth Ambler, 27, a government employee, and Keryn Ambler, 26, a sports co-ordinator, bought their unit in St Albans in January last year after four months of searching.
KiwiSaver added $12,000 to their deposit.
"The only houses that fitted our criteria in Christchurch were in such a bad state that you would then need to spend tens of thousands renovating before you could even move in," Elizabeth Ambler said.
She said the Government should raise the KiwiSaver home-purchase cap for Christchurch.
"It was too low a year ago when we were buying and it will be even worse now," she said.
"Any three-bedroom house that falls under $300,000 will most probably be in an undesirable suburb or need major work done to it.
- © Fairfax NZ News