17 May 2012

Low interest cuts need for cheaper houses - Key

8:46 pm on 17 May 2012

Prime Minister John Key says a scheme to provide up to 100 affordable homes at Auckland to people on low incomes is not needed because low interest rates mean there is greater capacity for people to buy their own homes.

Mr Key has been explaining the Government decision to scrap its Gateway scheme to help those on lower incomes buy homes in its flagship Hobsonville Point development, in Auckland.

It would have provided affordable homes in a flagship Auckland housing development but has been wound up with just 17 houses built.

The Gateway scheme in the Hobsonville Point development was launched three years ago to allow low-income buyers to pay only for the house and not the section for most of the first decade.

Mr Key says the Government has decided it is not the most effective programme.

He says mortgage rates are considerably lower so the possibility for a person to own their own home has improved.

Mr Key says the Government's zero budget will take pressure off the Reserve Bank which will ensure it is not under pressure to raise interest rates.