Prime Minister John Key has announced changes to KiwiSaver and the Welcome Home Loans scheme to beef up the assistance the government gives to people trying to get on the housing ladder.
'We share the concern of many New Zealanders about some young people being locked out of the housing market or having to commit far too much of their incomes to housing. We also value home ownership because we know it provides stability for families, strength for communities and security for retirement,’ he said.
‘When there is a shortage of housing, the answer is to build more houses, and building more houses at reasonable prices comes down to ensuring there’s more land available to build on, there’s better consenting processes, and that costs are lower,’ he explained.
The government has pledged $64 million over four year and the changes include relaxing the restrictions around KiwiSaver members accessing the extra deposit assistance of up to $5,000 that is currently available. The maximum joint earnings of a couple to qualify will be increased from $100,000 to $120,000.
The house price cap under which the extra assistance will be available is also being increased. In Auckland, for example, the cap will rise from $400,000 to $485,000. The cap will also be increased in some other parts of the country with housing affordability problems.
The government will also amend the Welcome Home Loans scheme, where it underwrites loans for qualifying people, to relax restrictions and make them the same as the new criteria in KiwiSaver.
Overall the scheme will be expanded to treble the number of loans from about 850 loans a year to 2,500 a year. To get a first home buyers’ subsidy from KiwiSaver or to get a Welcome Home Loan, people will have to be able to put a 10% deposit together, including what they can access through KiwiSaver.
‘At the moment, for example, you can get a Welcome Home Loan having saved a very small deposit, or no deposit, if the house is valued at $200,000 or less. International experience shows it’s risky to lend 100% of the value of a first home. So in expanding these schemes, we are assisting these people to put together a deposit, but we are also requiring them to have an initial stake in their asset as well,’ said Key.
He added that the package of changes, which will take effect from 01 October, complement the government’s broader programme aimed at working on the housing affordability issue.
