"The Government estimates recent changes to First Home Grants and First Home Loans will help thousands more first-home buyers every year. However, most Kiwis don't even know these opportunities exist. There must be more promotion," says Tim Kearins, Owner of Century 21 New Zealand.
His comments follow the Government's Budget 2022 announcement on 19 May aimed at assisting more first-home buyers. It increased the house price caps for the First Home Grant and entirely removed house price caps from the First Home Loan.
"Coming up with a sufficient deposit is often the big problem so that's what these two schemes help to address. They're not the silver bullet to home ownership but they'll certainly help many young Kiwis get over the line," says Mr Kearins.
First Home Grants give eligible first-home buyers up to $20,000 for a deposit with property price caps having been now raised to better reflect market prices. First Home Loans allow eligible buyers to purchase a home with a five percent deposit with no price caps.
Mr Kearins says since late last year there have been fewer opportunities for buyers with less than a 20% deposit to get finance due to the Reserve Bank's Loan-To-Value Ratio restrictions (LVRs). Further, banks have been conducting ultra-conservative assessments on borrowers, largely because of Credit Contract & Consumer Finance Act (CCCFA) requirements.
"Raising the price caps for the loan scheme opens the door to first-home buyers with a five percent deposit who can now purchase at any price if they can afford to service the lending. The old price caps, like $400,000 for Taupo, saw virtually no properties qualify. It's great that many more people and properties now qualify," he says.
The Government has estimated that these changes mean funding is now available for approximately 7,000 extra First Home Grants and 2,500 extra First Home Loans every year.
Since 1 June, house price caps on First Home Grants increased in most major cities, including Auckland (from $700,000 to $875,000), Hamilton ($600,00 to $725,000), Tauranga ($600,000 to $875,000), Wellington ($650,000 to $925,000), Christchurch ($550,000 to $750,000) and Queenstown ($650,000 to $925,000).
"Yes, interest rates are increasing, but so too are opportunities for first-home buyers this winter. Thousands more now have access to two key Government schemes designed to get them on the property ladder. That's a positive, but they should be better promoted otherwise that extra support in Budget 2022 will simply be not taken up.
"Hopefully securing a mortgage will soon not be as difficult with imminent changes to the CCCFA. House prices are also softening which will gives entry-level buyers more chances and choices," he says.
The Century 21 leader says in recent years first-home buyers have increasingly been locked out of the property market. While it remains difficult, he says, it's arguably more achievable this winter and that's one silver lining in the current real estate market.
"Rents are at a record high but opportunities for first-home buyers are more plentiful. If a tenant can become a homeowner that will help their lives considerably over the longer term," says Mr Kearins.