All our political parties are trying to win over first-home buyers this election to resolve New Zealand’s housing ‘crisis’. From 100,000 new homes over the next 10 years to more money for first-home buyers—nothing has been left off the table.
Experts and economists are wary of what’s being promised—mainly proposed doubling of the HomeStart Grants and the additional pressure it could put on on an already squeezed market.
A National Government has promised an extra $10,000 through their HomeStart Grant Scheme, increasing the deposit for an existing home to $20,000, or $30,000 for a new build. While this gives buyers more power, it doesn’t fix the underlying problem across the country of housing supply. The idea is that if this grant is teamed up with a Welcome Home Loan (which only requires a 10 per cent deposit), more people can get on the property ladder.
Here in Kapiti we face another problem, and that is the median house price. In August 2017 it was $518,382, up from $439,682 a year ago. The cap to access a Welcome Home Loan in Kapiti is $500,000 for an existing home, so even with additional government support eligibility remains an issue. A better way forward would be to exclusively target the funding at new builds to encourage more supply.
Banks could also soon have the power to approve Welcome Home Loans on the spot. The current process is slow, with loans essentially needing to be approved twice, once by the bank and then again by Housing New Zealand—who can be strict when it comes to assessing the condition of the property and take longer to tick things off during the due diligence period.
If you’re trying to work out what’s best for you, the first thing is to assess your budget and what is an affordable loan size, factoring in a higher loan interest rate of 7.5% to future proof your finances.
Once you’ve done that, talk to a trusted mortgage adviser to double check your borrowing power and assess what lending option is best for you—a standard bank loan or a Welcome Home Loan, and how to navigate a construction loan if you choose to build.
It’s great to see housing at the forefront this election, with a range of options that put first-home buyers first, but we’ve still got a long way to go before we solve the range of issues that are
affecting the property market.
Contact us to discuss your options.