November 24th, 2024

Government increases support for first-time home buyers

The minimum First Home Grant house price cap for new build properties has been raised from $500,000 to $650,000, with even higher increases in some regions.

Other updates include a reduction in the First Home Loan insurance premium from 1% to 0.5% of the total loan, which will alleviate some of the cost of homeownership for first home buyers during a time of rising interest rates.
Other updates include a reduction in the First Home Loan insurance premium from 1% to 0.5% of the total loan, which will alleviate some of the cost of homeownership for first home buyers during a time of rising interest rates.

New Zealand's Housing Minister, Dr Megan Woods, announced today that the government is implementing changes to First Home Grants and Loans to help more people achieve home ownership. These adjustments come in response to changes in house prices since the last update in May 2022, which led to a significant increase in the delivery of grants.

Dr Woods stated that the government is addressing the inherited housing crisis by investing in infrastructure and record house building. These new changes aim to assist first home buyers in overcoming the deposit barrier and enable more eligible individuals to purchase new homes.

The minimum First Home Grant house price cap for new build properties has been raised from $500,000 to $650,000, with even higher increases in some regions. This change reflects the rising cost of construction and allows more eligible first home buyers to choose between buying an existing or new build home.

Dr Woods said that increasing the minimum new build house price cap would enable more eligible first home buyers in smaller regions, such as Southland and Central Hawke's Bay, to choose between buying a new build or existing home with the support of a First Home Grant. In total, First Home Grant price caps for new build homes have increased in 37 areas, supporting the supply of new homes and benefiting first home buyers in those regions the most.

Other updates include a reduction in the First Home Loan insurance premium from 1% to 0.5% of the total loan, which will alleviate some of the cost of homeownership for first home buyers during a time of rising interest rates. For example, someone with a mortgage of $600,000 will now pay $3,000 towards the insurance premium instead of $6,000.

Additionally, minor adjustments have been made to the KiwiBuild price caps for three-bedroom homes in some areas. In the Queenstown Lakes District, the three-bedroom price cap for KiwiBuild homes will increase from $845,000 to $860,000, reflecting current market values. The three-bedroom KiwiBuild price cap for Hamilton, Christchurch, and places outside the main urban areas has increased by $5,000.

According to Dr Woods, keeping KiwiBuild house price caps aligned with current market values will ensure the scheme remains commercially attractive to developers, facilitating the ongoing delivery of these homes. The government is committed to providing access to warm, secure, and affordable housing, and these changes represent another step toward achieving home ownership for many New Zealanders.

The changes to the First Home Grant and KiwiBuild will take effect from 15 May 2023, while the change to the First Home Loan will take effect from 1 June 2023. House price and income caps will be reviewed every six months to ensure their continued relevance.

For more information on first home products, visit the Te Tūāpapa Kura Kāinga - Ministry of Housing and Urban Development website and the Kāinga Ora – Homes and Communities website.