The Government should review the thresholds for its home start grant to help first-time buyers get into the property market, the Real Estate Institute of New Zealand (REINZ) says, since house prices continue to rise and make it difficult for Kiwis to buy.
To be eligible for the home start grant, a person has to be a first home buyer, earn under certain income caps - a salary limit of $85,000 for singles and $130,000 for couples - and have a minimum 10 percent deposit. First-time buyers can receive $5000 or $10,000 as a couple, and the grant is in addition to any funds drawn from a KiwiSaver account.
There are also regional caps on the prices of properties that can be purchased. The limits are:
- $600,000 for existing properties and $650,000 for new builds in Auckland
- $500,000 for existing properties and $550,000 for new builds in Christchurch City, Hamilton City, Hutt City, Kapiti Coast, Nelson City, Porirua City, Queenstown Lakes, Selwyn District, Tasman, Tauranga City, Waimakariri, Wellington City, Western Bay of Plenty and Upper Hutt
- $400,000 for existing properties and $450,000 for new builds in the rest of New Zealand.
REINZ chief executive Bindi Norwell said while the grant is welcomed and helps people into their first homes, house prices have risen by 20 percent over the last year and the caps should be removed to help out buyers.
"The latest house price rises have meant that only 33 percent of properties sold are now below the threshold down from 40 percent just four months ago," she said.
"If you're in Queenstown-Lakes, Porirua City or Wellington City, less than 10 percent of properties selling in the current market are below the local thresholds making it extremely difficult for first home buyers in these areas. It's not much better in Auckland, Kapiti or Hamilton with 12 percent, 13 percent and 16 percent of properties respectively being eligible for a home start grant.
"If you're in Christchurch City or Waimakariri District, then you're in luck - as more than 50 percent of properties sold in those areas are eligible for a home start grant."
It comes as median house prices in Auckland are now more than $1 million, according to data from Trade Me.
Trade Me's Property Price Index confirmed on Tuesday that average house prices in the city have climbed 9.4 percent to $1,003,300 - an $86,000 jump.
Prime Minister Jacinda Ardern said the Government is looking at adjusting the thresholds for home start grants to help buyers into the property market, but she wouldn't say which requirements would be changed.
"Those are a good place for us to look at and say, 'are there ways that we can enable more first-home buyers to use those products,' and that's one of the areas I have asked for advice around," she told reporters on Tuesday.
She also said she was worried about the increasing number of first-home buyers entering the property market and those who were locked out because there wasn't any financial support from parents.
"That's not the kind of divide we want in New Zealand - it's not who we are. We want it to be an accessible market."