Government housing package promises more sustainable housing market

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The Government has announced a housing package that it says will increase the supply of houses and remove incentives for speculators, to deliver a more sustainable housing market.

“This is a package of both urgent and long-term measures that will increase housing supply, relieve pressure on the market and make it easier for first-home buyers,” Prime Minister Jacinda Ardern says.

“The housing crisis is a problem decades in the making that will take time to turn around, but these measures will make a difference.

“There is no silver bullet but, combined, all of these measures will start to make a difference,” Ardern says.

$3.8 billion housing acceleration fund

Housing Minister Megan Woods says the Government is speeding up the pace and scale of house building with a $3.8 billion Housing Acceleration Fund.

“We estimate the Housing Acceleration Fund will help green light tens of thousands of house builds in the short-to-medium term.

“Investment in infrastructure has been identified as one of the key actions the Government can take to increase the supply of housing in the short term.

“This fund will jump-start housing developments by funding the necessary services, like roads and pipes to homes, which are currently holding up development.

“The Government will also assist Kainga Ora to borrow an additional $2 billion that will assist in bringing a range of development forward through strategic land purchases,” Woods says.

Extra support for first home buyers

First home buyers will also get more help to get into the housing market, with increases to First Home Products’ income caps and changes to regional price caps.

In 2019 the Government changed the rules so people only needed a 5% home deposit before they could apply for help. That is being expanded to ensure more people are included.

This expansion comes alongside the recent RBNZ Loan-to-Value Ratio changes announced that will see investors require a 40% deposit from May 1, 2021.

“Income caps to get financial assistance will be lifted from $85,000 to $95,000 for single buyers, and from $130,000 to $150,000 for two or more buyers. The changes to the house price and income caps will take effect on April 1, 2021,” Woods says.

Changes to regional price caps on new build and existing properties will also reflect the increased price of housing.

“This package of measures will help first home buyers into the market and boost activity and create jobs in the construction sector, as we recover from the impacts of Covid-19,” Woods says.

A further package specifically targeted at Maori housing is being developed for Budget 2021.