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Extend KiwiSaver HomeStart grants for first-home buyers

Media release

Century 21 New Zealand

Friday, 2 August 2019

“The Government needs to lift the cap on its KiwiSaver HomeStart grants to enable more first-home buyers into the housing market. It’s long overdue and now is the perfect time given crippling rents and record-low interest rates,” says Derryn Mayne, Century 21 New Zealand owner.

The real estate boss’s comments come as the Government continues to work on its much anticipated KiwiBuild reset.

Currently, the KiwiSaver HomeStart grant provides eligible first-home buyers with a grant of up to $5,000 maximum for individuals or $10,000 for couples to put towards the purchase of an existing home. The grant is doubled if it’s for a new home.

“It’s over 12 years since KiwiSaver came into effect. Many Kiwis have been contributing to the scheme for a long time, and so I believe the HomeStart grant now needs to recognise and reflect that reality.

“Instead of a capping the grant at $1,000 every year for just their first five years of contribution, why not extend that out to 10 years? That would effectively double the maximum grants to $20,000 per couple for an existing home and $40,000 for a new home. That would really help first-home buyers to come up with a deposit.”

Ms Mayne notes the Government has made some tweaks to the eligibility of its Welcome Home Loan scheme and KiwiSaver HomeStart Grants.

However, she says given the rapid rise in house prices across New Zealand this decade, first-home buyers who have been in KiwiSaver for many years should be able access their earnings saved over a longer period than just their first five years.

“The Reserve Bank doesn’t look like it’s going to change its 2013 loan-to-value ratio (LVR) policy in a hurry, meaning most first-home buyers still have to stump up the required 20% deposit. Even for so-called affordable homes in many of our main centres now, that remains a big barrier to entry.”

Ms Mayne says the cruel thing for prospective first-home buyers is that the Official Cash Rate is at record low levels as are bank interest rates, making serving a mortgage in many cases cheaper than renting.

“We know that rents in the likes of Wellington are growing twice as fast as wages, and that rents in less-affluent districts like Kaipara have gone up 45% in the past five years. What’s more, TradeMe reported last month that every region in New Zealand had higher rental asking prices in May than they did a year ago, with many experts warning it's only getting worse for renters.

“Instead of people’s retirement savings just sitting in KiwiSaver accounts helping to fund external private and public sector initiatives, we should be empowering and enabling more renters with a KiwiSaver accounts to get into homeownership – a factor which has historically proven to be a huge advantage come retirement,” she says.

Derryn Mayne says the HomeStart price caps need to also be reviewed ongoingly, particularly given the solid rise in house prices across much of provincial New Zealand in recent years.


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