Hike funding

Budget 2022: Change in limits for first-time home buyers, affordable housing funding

Comprehensive coverage of the 2022 budget with analysis from NZ Herald journalists and experts and what it means for Kiwis. Video / NZ Herald

KEY POINTS:
• Subsidized home price caps for the first home jumped to $275,000.
• The Covid Industry Support Program has been modified to fund affordable housing.

For aspiring first-time home buyers, price and income caps will now be reviewed every six months.

House price caps will be removed entirely from the first mortgage application process.

Housing Minister Megan Woods said the changes could help thousands more first-time home buyers, with enough funding for around 7,000 additional first-time home grants and 2,500 additional first-time home loans available each year.

First-time home grants are available for single buyers earning up to $95,000 per year, or co-purchasers or sole buyers with one or more dependents earning up to $150,000.

Kāinga Whenua’s loan limit will be increased from $200,000 to $500,000 to provide more options for people buying a home on Maori land, Woods added.

Green Party co-leader Marama Davidson welcomed some housing announcements in the 2022 budget but said much more needed to be done, including for renters.  Photo/Mark Mitchell
Green Party co-leader Marama Davidson welcomed some housing announcements in the 2022 budget but said much more needed to be done, including for renters. Photo/Mark Mitchell

The government will also support some non-profit groups with funds to provide affordable housing.

Woods said the grants worth $50 million would provide affordable rental housing in Auckland, Tauranga, Rotorua, Napier-Hastings, Wellington and Nelson-Tasman.

Last weekend Deputy National Party Leader Nicola Willis called on the government to work more with community providers to provide housing.

Willis has said for too long that the government has allocated funds to a monolithic Kāinga Ora.

In today’s budget, the government said $1 billion is needed to help existing and planned public and transitional housing through rent subsidies and rising operating costs.

The price cap for first home grants in Auckland will increase from $700,000 to $875,000. In Wellington and Queenstown-Lakes, the new cap will be even higher at $925,000.

Hamilton’s urban cap increases from $600,000 to $725,000. In Tauranga, the old cap was also $600,000, but now it will be $875,000.

In Christchurch, the cap will increase from $550,000 to $750,000.

Singles with dependents can now earn up to $150,000 and still qualify for a first home grant.

Relocatable homes with a compliance code issued within the past year will be considered properties under the new model.

A construction sector support fund announced in response to Covid-19 and worth $350 million will now be reallocated, of which $200 million will be redirected to grants for more affordable housing.

The Affordable Housing Fund will also set aside funds for low-interest loans.

Green Party co-leader Marama Davidson welcomed the changes but said there was still much to be done.

“The Greens at the moment would also have reversed some support for people who rent, who make up more than half of the population.

“We wanted to see rent controls to really stop the rent increases that we’re seeing right now,” she added.

“Landlords are increasing rents between rentals without any further improvements to this property, but simply because someone moved out and the housing market is pretty sick right now.”

Te Pāti Māori co-leader Rawiri Waititi welcomed Kāinga Whenua’s loan cap increase.

“Any house being built on Maori land is a good start for us. In this particular space houses have been built, in Tairāwhiti, we know there are programs going on in Taranaki, in the north and also in Hauraki,” he said. .

“It’s fine, but like I said, we’ve waited 182 years. Like Moana Jackson said, our problem isn’t homelessness, it’s homelessness.

“It has to be a complete package. If we make up 50% of the total social housing waiting list, we should get 50% of the stock.”

The Act party said budget initiatives on first home grants and loans meant the government was pumping an additional $148 million into an already inflated housing market.

“Financial support is likely to increase prices when supply is limited,” said Deputy Chief Law Officer and Housing Spokesperson Brooke van Velden.

She said Labor had a heritage of underachievement on housing, and today’s announcement was more flawed policy from the party that created KiwiBuild.

“The increase in the first home grants and loans budget is an admission that this government has driven up house prices and is now pouring more fuel on the fire.”