Government lifts support for first home buyers
Changes are being made to First Home Grants and Loans to help get more people into home ownership, says the Housing Minister, Dr Megan Woods.
The update to the First Home Grant house price caps recognises the change in house prices since the caps were last updated in May 2022. Those changes led to a strong increase in delivery of the grants*.
“This Government is turning around the housing crisis we inherited, and we are seeing the green shoots of change, with record house building and significant investment in infrastructure like pipes and roads to unlock more housing supply.
“We’re also helping first home buyers overcome the deposit barrier to become homeowners, and these changes will enable more eligible people to buy new homes,” Megan Woods said.
The minimum First Home Grant house price cap for new build properties has now been lifted from $500,000 to $650,000, with higher rises in some regions. This reflects the rising cost of construction and gives more eligible first home buyers a choice between buying an existing or new build home.
“Increasing the minimum new build house price cap means that more eligible first home buyers in smaller regions, such as Southland and Central Hawke’s Bay, will be able to choose between buying a new build or existing home with the support of a First Home Grant,” Megan Woods said.
“Overall, First Home Grant price caps for new build homes have increased in 37 areas. This will support the supply of new homes and means first home buyers in those regions who are looking to buy a newly built home will benefit the most,” says Megan Woods.
Other updates include:
Adjusting the First Home Loan insurance premium
Borrowers who use the First Home Loan are charged an insurance premium to cover the cost of underwriting their low deposit loan. This insurance premium is currently 1% of their total loan. With the changes this will decrease to 0.5% so, for example, someone with a mortgage of $600,000 will now pay $3,000 towards the insurance premium instead of $6,000.
This reduction in premium will relieve some of the cost of homeownership for first home buyers in a time of rising interest rates.
Adjusting the KiwiBuild price caps for three-bedroom homes in some areas
Minor adjustments have also been made to the KiwiBuild price caps for three-bedroom homes in some areas. The three-bedroom price cap for KiwiBuild homes in the Queenstown Lakes District will increase from $845,000 to $860,000, to reflect the current market.
Elsewhere, the three-bedroom KiwiBuild price cap for Hamilton, Christchurch, and places outside of the main urban areas has increased slightly by $5,000.
“Keeping KiwiBuild house price caps aligned with current market values will ensure the scheme remains commercially attractive to developers to ensure the ongoing delivery of these homes.
“The Government firmly believes everyone should have access to a warm, secure, affordable home. These changes are another step for many Kiwis’ towards achieving their goal of home ownership,” Megan Woods said.
Changes to the First Home Grant and KiwiBuild are expected to take effect from 15 May 2023. The change to the First Home Loan is expected to take effect from 1 June 2023.
House price and income caps are reviewed every six months to make sure they remain up to date.
Further information about the first home products is available online on the Te Tūāpapa Kura Kāinga- Ministry of Housing and Urban Development website, and the Kāinga Ora – Homes and Communities website.