RAW DATA - John Key's housing affordability announcement

RAW DATA:  Package to aid first home buyers announced - Beehive statement

Prime Minister John Key has today announced changes to KiwiSaver and the Welcome Home Loans scheme to beef up the assistance the Government gives to first home buyers.

In his speech to the National Party annual conference in Nelson, Mr Key outlined the National-led Government’s comprehensive approach to housing affordability issues.

“National values home ownership because we know it provides stability for families, strength for communities and security for retirement,” says Mr Key.

“But we also share the concern of many New Zealanders about some young people being locked out of the housing market or having to commit far too much of their incomes to housing.

“When there is a shortage of housing, the answer is to build more houses, and building more houses at reasonable prices comes down to ensuring there’s more land available to build on, there’s better consenting processes, and that costs are lower.

“Addressing these issues is far and away the most important thing the Government can do for housing affordability, and we have already done much in this area including agreeing on a housing accord with the Auckland Council’s leadership, and yesterday announcing a number of significant changes to the RMA including making councils plan for a minimum of 10 years urban land supply.

“But we can also do some things in the shorter term to help people get into their first home.

“So the National-led Government will be significantly beefing up and amending KiwiSaver and Welcome Home Loans, at a cost of $64 million over four years.

“We will relax the restrictions around KiwiSaver members accessing the extra deposit assistance of up to $5,000 that is currently available.

“We will do this by increasing the maximum joint earnings of a couple to qualify from $100,000 to $120,000.

“We will also be raising the house price cap under which the extra assistance will be available. In Auckland the cap will rise from $400,000 to $485,000. The cap will also be raised in some other parts of the country with housing affordability problems.

“The Government will also amend the Welcome Home Loans scheme, where the Government underwrites loans for qualifying people, to relax restrictions and make them the same as the new criteria in KiwiSaver.

“We will also expand the scheme to treble the number of loans from about 850 loans a year to 2,500 a year.

“Lastly, to get a first home buyers’ subsidy from KiwiSaver or to get a Welcome Home Loan, people will have to be able to put a 10 per cent deposit together, including what they can access through KiwiSaver.

“At the moment, for example, you can get a Welcome Home Loan having saved a very small deposit, or no deposit, if the house is valued at $200,000 or less.

“International experience shows it’s risky to lend 100 per cent of the value of a first home. So in expanding these schemes, we are assisting these people to put together a deposit, but we are also requiring them to have an initial stake in their asset as well.”

Mr Key says the package of changes announced today, which will take effect from 1 October, complement the Government’s broader programme aimed at working on the housing affordability issue.