First Home Grant Axed: Property Market Update

Key Facts

  • Government is scrapping the first home grant scheme.
  • Kāinga Ora will no longer accept new applications for the grant.
  • First home loan scheme will remain, allowing purchases with a 5% deposit.
  • Government housing agency Kāinga Ora under review due to concerns about financial performance.
  • The review suggests increasing social housing provision by community providers.
  • House prices in New Zealand have dropped 14% recently but are still 36% higher than five years ago.
  • Several experts express concern over the move, highlighting the necessity for more coordinated housing strategies.

Article Summary

In a significant policy shift, the New Zealand Government has announced the termination of the first home grant scheme, which has been a source of financial support for first-home buyers. Housing Minister Chris Bishop reported that while applications already received will be processed, further submissions are halted. This grant typically provided a median benefit of $5,000 for eligible buyers. This decision comes amidst a review of the financial management of Kāinga Ora, the leading state housing agency, indicating a shift in the government’s housing strategy.

Despite the withdrawal of the grant, the first home loan scheme will persist, allowing eligible buyers to purchase homes with only a 5% deposit. Experts in the housing sector have voiced concerns, suggesting that the removal of the grant could negatively impact first-home buyers who rely heavily on such financial aid. The grant played a crucial role in helping these buyers achieve homeownership, particularly in the wake of New Zealand’s high property prices. Alan Leuluai from Leuluai Financial emphasized the importance of these schemes in fostering economic activity and stabilizing society.

Lesley Harris of the First Home Buyers Club criticized the inconsistent and uncoordinated government measures directed at aiding first-home buyers. She underscored the need for a strategic, well-structured plan and suggested appointing a dedicated First Home Buyer Minister. Furthermore, the broader challenge is New Zealand’s inadequate housing supply, a problem spanning multiple previous governments. Economists like Kelvin Davidson and Jarrod Kerr argue that boosting the overall housing stock must be a priority, irrespective of the public or private origins of the development initiatives.

While the housing market faces multiple challenges, the current government seems to be weighing its options amidst a rockier economic environment. The discourse indicates a pressing need for improved infrastructure investment and innovative housing solutions to overcome New Zealand’s enduring housing shortage.

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