House prices too steep for government’s First Home Grant

Report expects scheme to fail

House prices too steep for government’s First Home Grant

The government’s initiative to support first-home buyers into homeownership by providing grants towards house deposits is most likely to fail, according to Quotable Value’s (QV) data.

The government increased the price caps for properties based on the average house price at the lower end of the market. Eligible first-home buyers can receive $5,000 from the government to buy a home if they earn under $95,000 annually. Meanwhile, a couple can receive $5,000 each if they collectively earn under $150,000. The grants are also higher if the buyer is building a new house.

However, QV’s data revealed that the lower quartile price is still higher than many regional caps. For example, Auckland’s prices are higher than the cap everywhere but way south in Franklin District.

“What we’ve seen over the last two or three years is that rapid growth at the entry-level because we’ve had the competition between the investors and the first-home buyers,” said QV general manager David Nagel, as reported by Newshub.

First-home owner Janine Swail shared that she had difficulty finding a home where her daughter Carla can grow up. As a result, she and her family moved to the outskirts in Manly, Whangaparaoa, to afford a home with a back garden.

“You want to give them security. You want to give them a back garden,” Swail told Newshub. “The problem is they lived in Auckland – a housing nightmare.

“We knew very early on that we weren’t going to be able to buy in those neighbourhoods in and around Auckland city.”

Despite buying her first home, Swail clarified that she did not qualify for any government assistance as she earns too much and the house’s price was above the First Home Grant price cap.

“In and around the Auckland area, those caps are not really worth looking at,” she added.

The only cities with lower quartile prices below the scheme’s cap are Gisborne, Hastings, Christchurch, and Invercargill, according to Newshub.

Meanwhile, Wellington’s caps are too low for the average starter house anywhere. The same goes for the main centres, such as Whangārei, Tauranga, Taupo, Rotorua, Nelson, and Dunedin.

“Wellington’s a good example where the price caps are $100,000 below where that quartile data is,” Nagel said.