12 Aug 2013

Govt needs to be braver on housing - Salvation Army

2:31 pm on 12 August 2013

The Salvation Army says the Government needs to be a whole lot braver to help people on low incomes get into their first home.

The Government plans to change conditions for two schemes: the Welcome Home Loans scheme, which underwrites loans, and access to KiwiSaver by first home buyers, so more people use them.

But some housing analysts say the changes announced over the weekend will do little to ease high house prices.

Alan Johnson, from the Salvation Army's Social Policy and Parliamentary Unit, told Morning Report the changes will be of no use to people on very modest incomes, but will be of some use to people already getting into home ownership.

Mr Johnson said it is possible 5000 more people per year will enter the housing market because of the changes.

A Wellington housing analyst, Kay Saville-Smith says the proposed adjustments to the two schemes are fringe matters and will help home buyers little.

"There is a real risk unless the supply issues are dealt with very, very quickly this will just fuel house prices, rather than provide more opportunity for people outside of the market to get into it."

New Zealand house prices are already high by international standards, and rose 5.9% in the past year, according to the Real Estate Institute.

Govt sending signal to building industry - minister

Housing Minister Nick Smith says the Government is sending a message it wants the construction industry to build more affordable homes.

Home ownership was the focus of the National Party annual conference at the weekend.

The Government will change the Resource Management Act, aiming to remove obstacles for people wanting to alter their houses.

Also unveiled were changes to the income and house-price limits for the KiwiSaver deposit subsidy, and to Welcome Home loans.

Dr Smith said a project in the Auckland suburb of Hobsonville has shown it is possible to build affordable homes, and a market exists for them.

He said the income thresholds and price caps will be reviewed in two years, to make sure they are keeping pace with the market.

Govt taking a 'polyfiller approach'

The Green Party says the Government is throwing a bit of money at first-home buyers without addressing the country's wider housing affordability crisis.

Co-leader Russel Norman says the Government is taking a "polyfiller approach" to get people into their first homes.

"This is another pretty cynical ploy by National. They're trying to basically get things through to the 2014 election and so they're hoping that people will think they're doing something on affordability of housing even though clearly this won't achieve anything significant."

The New Zealand First leader Winston Peters also believes the changes do not go far enough and fail to address the real issue of "hugely inflated demand" for housing and massive price rises for homes, in Auckland in particular.

And Labour leader David Shearer says the changes are a disappointment and the Government needs to do much more to take the heat out of the property market.

The United Future leader and independent MP, Peter Dunne, says KiwiSaver was established to boost retirement savings, and extending the home ownership provisions will weaken that aim.

He says it is not a political slush fund for governments to dip into to fund attractive policies.

Mr Dunne says a better way to help first home buyers would be to allow them to capitalise Working for Families tax credits towards a deposit.

The Prime Minister insists changing the schemes will help but acknowledges no single thing will fix the affordable housing shortage.

John Key says more land being made available, more houses being built, helping build up deposits, and reform and review of development contributions will all contribute to making houses more affordable.