In our last issue, we explained the changes that the government has made to the KiwiSaver HomeStart scheme to allow more Kiwis buy their first home.
For the uninitiated, the house price limits have increased from $550,000 to $600,000 for existing homes and from $550,000 to $650,000 for new build homes in Auckland. The income thresholds have gone up from $80,000pa to $85,000pa for individuals and from $120,000pa to $130,000pa for couples. This means that couples who earn $130,000 per year or less would be eligible for the KiwiSaver HomeStart grant worth $20,000, which, along with the five-year investment in the KiwiSaver worth $45,000, would make for the 10% deposit for a house worth $650,000 through a Welcome Home Loan.
Continuing our discussion, this week we spoke to the experts from the industry to get you a realistic idea of whether these changes will do any good to the prospective first homebuyers or not. This is what they had to say:
Rakesh Bansal, Mortgage Advisor | Kiwi Mortgages
“The revised income threshold at 85k for individual and 130k for a household under the new rules of KiwiSaver scheme is realistic and covers a majority of low-wage earners. The increase in price caps is also a step in the right direction and will benefit, as there are dwelling units available in this range, even in Auckland. A basic search on Trade Me for houses/townhouses/units in Auckland costing less than 600k recently returned more than 1,000 results, while for less than $550k, the available houses were only half that number.
That said, we believe more could be done in terms of the price cap, especially in Auckland. Raising price cap to 700k for old houses in Auckland would possibly make a lot of difference at the current price level.
The real issue first homebuyers are facing is the deposit requirement and the bank’s reduced capacity to lend at less than 20% deposit due to LVR restrictions imposed by RBNZ. This necessitates exploring other and more direct solutions, for example, a more relaxed, say five per cent, deposit requirement for first homebuyers with conditions that they live in the house for at least two years and do not sell for five years.”
Ajay Kumar and Aseem, Mortgage Advisors | Global Financial Services
Ajay Kumar
“Something is always better than nothing. Increasing the limit by $50K for existing homes and $100K for new homes may benefit some of the prospective buyers. In the same way, increasing the salary limit may also benefit some to buy their dream home. However, from our experience, we have only seen the grant being used in one to two cases out of 100.”
Suman Sharma, Mortgage Advisor | Reliance Financial Solutions Limited
“These changes will definitely be helpful for first homebuyers, as increased income limit will enable more buyers to be eligible for subsidy under KiwiSaver HomeStart scheme. Similarly, with increased income caps, more buyers will be benefitted.
These days we come across many first homebuyers earning handsome income—more than 80K individually or more than 120K jointly. They will definitely be benefitted with the increase in income threshold and will be eligible to buy their first home under the KiwiSaver HomeStart Subsidy scheme.”
Venu Chawdrapu, Registered Financial Advisor | Squirrel Mortgages
“In my opinion, the latest changes to KiwiSaver HomeStart scheme will have a positive impact on the first-time homebuyers.
And the recent changes in regard to LVR restrictions by RBNZ for the investment properties all over New Zealand have also started impacting the market, which will favour first-time homebuyers, as the property market will ease in the coming times.
The $600k limit for an existing home and the $650k limit for a home to be built for Auckland properties will definitely increase their chances of getting their property. The income cap limit change to $85k for single and $130k jointly will also be beneficial. Earlier, in old rules, a lot of customers missed this opportunity.
My feeling is that apart from central suburbs, there are some other suburbs in Auckland where they can find reasonably good properties soon in the price range of $575–600k for existing homes and $650k new homes.