Housing Minister Phil Twyford announced the eligibility criteria for KiwiBuild homes on Wednesday. The question everyone wants to know: Who can afford one?
A source confirmed to Newshub on Tuesday the Government would introduce income caps, despite the Labour Party originally promising there would be none. Mr Twyford confirmed this on Wednesday.
Housing Strategist Leonie Freeman told The AM Show on Wednesday the Government "originally hadn't had any income caps but it looks like they're going to introduce it. They're going to probably be something like $120,000 for a single person and $180,000 cap limit income for a couple."
KiwiBuild income caps have been confirmed at $120,000 for singles and $180,000 for couples.
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But $180,000 is a high salary and only a small amount of the population earns that much. That means many people won't be able to afford the 100,000 'affordable' homes. However, Ms Freeman says you'd need that sort of income to be able to sustain buying one of the homes.
"If you bought a $650,000 house and had a 10 percent deposit, you'd need a $580,000 mortgage, so that's roughly $3500 a month on a 30-year loan. You'd need that sort of income to be able to sustain it."
She said the question becomes how the Government can get more people to be able to buy these houses by looking at things like shared ownership and rent-to-buy schemes. Coaching and mentoring schemes could help people understand what they need to do to be able to buy a home, Ms Freeman says.
For example, the Housing Foundation offers an 'affordable equity' programme whereby a person/couple purchases a share of the property at a price point they can afford and the remainder is owned by the foundation and both parties will be represented on the property title.
According to the Housing Foundation website, the household arranges their own mortgage with support from the foundation, the advantage being that under this arrangement, they will have a smaller mortgage than they will ordinarily require purchasing the property at market value.
"I know there are a lot of people - including teachers and nurses - that would want to get on the housing ladder. What we now have to do is be smart to help them get there," says Ms Freeman.
"Some of them might just need coaching and mentoring, or we could look at things like the Housing Foundation with their shared ownership schemes - they are really successful on a small scale but they get people into housing that perhaps never thought they could."
Ms Freeman says there is no question New Zealand has a housing supply problem. Mr Twyford has so far been focused on the supply of KiwiBuild, she said, but now needs to apply the same level of focus on making sure people can actually afford the houses.
Because if there's no demand for the houses, what's the point in building them?