New Zealand's ruling National Party is trying to woo the vast swathe of middle class looking for a home for the first time. The party has declared that it wants to see people with modest incomes becoming house owners.
Under the new scheme, existing KiwiSaver grants of $10,000 per couple will remain. But the cap on the value of the properties purchasable will be increased across the country. The maximum purchase price in cities will be $550,000 in Auckland. The cap of $450,000 will be valid in Hamilton, Wellington and Christchurch, reported NZ Herald.
Family Well Being
Prime Minister John Key said National Party has always valued home ownership because that provides big stability for families and brings prosperity to communities and peace during retirement. The policy KiwiSaver Homestart Grant allows market forces to supply affordable housing units.
Making the announcement at a National's election campaign in South Auckland on Sunday, Mr Key declared the step will augment the stock of housing.
Mr Key claimed that both the Treasury and Reserve Bank are aware of the promises that National was making. The Reserve Bank had imposed strictures on banks to increase the deposit on loans to tackle the soaring house prices.
The National Party described the policy as powerful and very useful for first-home buyers.
The policy involves government providing a bigger deposit for the newly built homes to make incumbents deserving for a Crown-guaranteed loan under the Welcome Home scheme.
If a couple in Auckland has been earning $50,000 and had been a beneficiary of KiwiSaver for five years, they can withdraw $35,000 and receive a $20,000 Homestart grant to a new-build home with a combined corpus of $55,000 deposit.
Welcome Home Loan
Under the Welcome Home Loan, only 10 per cent deposit is required for a purchase. So they can buy a home priced at $550,000. The Welcome Home scheme is exempt from the loan-to-value rules enunciated by the Reserve Bank.
According to Housing Minister Nick Smith, in the next five years, 90,000 grants would be disbursed under Homestart. Of that number, 40,000 would be borne by the new policy and 22,500 will be for built houses. The allocation for Homestart for five years will be $435 million.