23 May 2024

First Home Grants scrapped: Hopes for ownership dwindle

6:44 pm on 23 May 2024

People blindsided by the government's announcement to scrap the First Home Grants scheme say the news comes as a slap in the face.

The scheme, introduced in 2010, gave eligible buyers up to $5000 for an existing home or $10,000 for a new build.

But on Wednesday, Housing Minister Chris Bishop nounced the scheme will end immediately saving about $245 million over four years - with $140m to be invested in new social housing.

Kainga Ora's 1pm cut-off line came half an hour before the government's official announcement.

On Thursday, Prime Minister Christopher Luxon reaffirmed he stood by the Coalition's decision, saying they had been talking about the housing crisis for a decade and something needed to be done.

Speaking to media after a visit to Metco Engineering in Lower Hutt, Luxon said he understood some would be disappointed by the decision. "As we've said, we'll stop some programmes, and we'll power up some other programmes.

"We live in a country the same size of Britain and Japan, with a lot less people, and yet we have very expensive housing crisis and it's very hard to get hold of housing in New Zealand."

'A little bit like being slapped in the face with a wet fish'

A 58-year-old Queenstown woman, who spends about three quarters of her income on rent, told RNZ the announcement put the hopes of owning a home out of reach.

"It was such a shock to hear that, and especially if you consider that, if you only have enough money just to barely cover what you need in the week, that by the time you put rent, [and] electricity, in the South Island is expensive, there's just nothing left ... so how do you save up for a deposit?" she said.

The woman, who did not want to be named, said it was unfair that landlords got the better deal, but renters and those saving for a home were disadvantaged.

"My landlord, they would've got their tax deductability, but of course that didn't stop my rent going up another $50 a week so it was a little bit like being slapped in the face with a wet fish," she said.

The woman said she would need a 20 percent deposit and that the grant was crucial to her.

She said she felt "devastated" and blindsided by the sudden decision.

"There was no consultation and it wasn't really part of anything that we heard for, the Coalition agreement that they had, to say that their intention was if they got into power, to stop that payment," she said.

Aucklander Tayo Wright, 25, bought a home this year with the help of family and the First Home Grant.

"I don't think I actually would've been able to buy my home, if it wasn't for the First Home Grant, and I know my friends who've recently bought wouldn't have been to either," Wright said.

"So it's like a huge plus, like a positive, especially our age, like it's so hard to save the 20 percent anyway, I just don't know how people do it without help."

Owning a home 'near impossible'

Auckland homeowner Siiri Wilkening said she was disappointed with this change, and the potential impact on young people.

"I think it's sad, I think it was a helpful addition. The amount wasn't enough any more, houses are so expensive that $10,000 only make up a very small percentage of what is needed for the deposit," she said.

"I think it should've been increased, not scrapped."

She worried about the prospects of home ownership for her two adult children.

"Neither of them I see getting a house without any help from us, or someone, even with a good job, it's near impossible."

A 26-year-old health science student, who only wanted to be known as Hannah, said the scrapping of the scheme went against the government's pre-election promises to young people.

"It seems disappointing that National has claimed pre-election that they want young Kiwis to stay in New Zealand, but they are scrapping one of the only policies targeting younger people to help them establish themselves here," she said.

"It's hard being a young person here, because a lot of people are struggling with employment after university, cost of living, and mental health, and I know for myself, home ownership is a big goal but just seems so out of reach."

Hannah said she had thought about moving to Australia after graduating, where there were higher salaries for rural health workers, and more chances of getting on the property ladder.

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