The cap on the first home loan program removed

Budget 2022 sets up an Affordable Housing Fund, a new program the government says is designed to cover people’s rental costs if they can’t access public housing.

“The $350 million fund will leverage partnerships with investors, philanthropic organizations, developers and the affordable housing sector to expand the range of housing options for people whose needs are currently unmet. market,” said Housing Minister Megan Woods.

The first stage of the fund would offer $50 million in grants to non-profit organizations to provide affordable rental housing in Auckland, Tauranga, Rotorua, Napier/Hastings, Wellington and Nelson/Tasman.

The $350 million comes from the Residential Development Response Fund announced in 2020. It was intended to support the construction sector during the initial pandemic lockdown but ultimately went unused. Of the total, $294 million would be for grants and subscriptions, $6 million for administration, and the remaining $50 million for low-interest grants.

In April, the Green Party called on the government to freeze rents until tougher rent controls are in place.

Greens co-leaders James Shaw and Marama Davidson said it would help rebalance the rental market in favor of tenants.

According to Trade Me’s March Rental Price Index, the amount of rent paid by tenants has increased by about 7% over the past year to the end of March and now stands at around $575 per year. week.

A November 2021 report from the Department of Social Development found that more than 60% of low-income renters in New Zealand in 2018 were spending more than 40% of their income just to cover rent – the worst ratio in the OECD.

First-time home buyers

There will no longer be house price caps on first home loans, which are designed to help first-time home buyers with their deposits if they meet certain criteriafrom May 19 of this year.

Woods said it would give first-time home buyers more choice of homes.

Loans are issued by selected banks and other lenders, and underwritten by Kāinga Ora to enable the lender to make loans which otherwise would not meet their lending standards.

House price caps on first-home grants have also been increased in most major cities, including Auckland (from $700,000 to $875,000), Hamilton ($600,000 to $725,000), Tauranga (600 $000 to $875,000), Wellington ($650,000 to $925,000), Christchurch ($550,000 to $750,000) and Queenstown ($650,000 to $925,000).

These changes would come into effect from June 1, 2022.

Woods said that would mean caps would better align with bottom-quartile market values ​​for new and existing properties.

“We estimate that these changes, along with other changes to the eligibility criteria, will help thousands more first-time homebuyers, with financing available for approximately 7,000 additional first-time home grants and 2,500 additional loans. for the first house available each year,” she said.

People told 1News last year that the First Home grant scheme was becoming increasingly “useless” in their area because house prices were too high to qualify.

Housing prices have increased significantly during the pandemic. However, experts polled by the Reserve Bank predicted that house prices are expected to decline slightly in most major cities this year.

Woods said house prices and income caps will now be reviewed every six months to ensure they stay up to date.

The 12 experts polled in this month’s official RBNZ Finder Cash Rate Survey said Auckland, Hamilton, Tauranga, Wellington, Christchurch and Dunedin will see no increases in property prices, most places registering a reduction.

The Treasury’s updated forecast, released on Thursday, shows house prices are up almost 30% from 2021. That growth is expected to slow this year, drop slightly next year, then slowly increase again through the after.

The Kāinga Whenua loan cap would also be increased from $200,000 to $500,000 effective June 1, 2022.

Woods said it would give people building, moving or buying a house on whenua Māori more choice.

Another $1 billion of total operating funding would be allocated to support increased public and transitional housing stock.

An additional $75 million in total operating funding will go to the homelessness action plan and $355 million in total operating funding will fund changes to the emergency housing system to improve outcomes for homelessness. lodging.