Government urged to promote its first-home buyer schemes

"Opportunities for first-home buyers are more plentiful," real estate boss says

Government urged to promote its first-home buyer schemes

While recent changes to the government’s First Home Grants and First Home Loans are expected to help thousands more first-home buyers every year, more promotion must be done to inform Kiwis that these opportunities exist, according to Tim Kearins, owner of Century 21 New Zealand

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Kearins’ comments follow the government’s recent Budget 2022 announcement which raised the house price caps for the First Home Grant and removed house price caps from the First Home Loan.

“Coming up with a sufficient deposit is often the big problem so that’s what these two schemes help to address,” Kearins said. “They’re not the silver bullet to homeownership but they’ll certainly help many young Kiwis get over the line.”

First Home Grants offer eligible first-home buyers up to $20,000 for a deposit with property price caps having been now raised to better reflect market prices, while First Home Loans enable eligible buyers to purchase a home with a 5% deposit with no price caps.

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The Century 21 boss said that since late last year, buyers with less than a 20% deposit had fewer opportunities to secure funding due to the Reserve Bank’s LVR restrictions. Furthermore, banks have been conducting ultra-conservative assessments on borrowers, largely due to Credit Contract & Consumer Finance Act (CCCFA) requirements.

“Raising the price caps for the loan scheme opens the door to first-home buyers with a 5% deposit who can now purchase at any price if they can afford to service the lending,” Kearins said. “The old price caps, like $400,000 for Taupo, saw virtually no properties qualify. It’s great that many more people and properties now qualify.”

According to government estimates, these changes mean funding is now available for approximately 7,000 extra First Home Grants and 2,500 extra First Home Loans every year.

Since June 01, house price caps on First Home Grants have increased in most major cities, including Auckland (from $700,000 to $875,000), Hamilton ($600,00 to $725,000), Tauranga ($600,000 to $875,000), Wellington ($650,000 to $925,000), Christchurch ($550,000 to $750,000), and Queenstown ($650,000 to $925,000).

“Yes, interest rates are increasing, but so too are opportunities for first-home buyers this winter,” Kearins said. “Thousands more now have access to two key government schemes designed to get them on the property ladder. That’s a positive, but they should be better promoted otherwise that extra support in Budget 2022 will simply be not taken up. Hopefully securing a mortgage will soon not be as difficult with imminent changes to the CCCFA. House prices are also softening which will gives entry-level buyers more chances and choices.” 

Kearins said first-home buyers have increasingly been locked out of the property market in recent years, but while it remains difficult, it’s arguably more achievable this winter and that’s one silver lining in the current real estate market.

“Rents are at a record high but opportunities for first-home buyers are more plentiful. If a tenant can become a homeowner that will help their lives considerably over the longer term,” he said.