Prohibitive deposits are ‘cruel’ given the excellent borrowing environment
Realty company Century 21 New Zealand has called on the government to lift its cap on the KiwiSaver HomeStart Grant, saying now is the perfect time to give first-home buyers that extra leg-up to get them into home ownership.
Century 21 NZ owner Derryn Mayne (pictured) says that record low interest rates and have resulted in excellent borrowing conditions, and with the Official Cash Rate likely to be cut to another historic low, mortgage repayments would in many cases be cheaper than the “crippling” rents that tenants currently pay.
The KiwiSaver HomeStart Grant currently offers first-home buyers a grant of up to $5000 for individuals and $10,000 for couples, which is doubled if the purchase is for a new home. Mayne says that now is the time to double this grant, as it would be a massive help to prospective first-home buyers facing prohibitive deposit levels.
“It’s over 12 years since KiwiSaver came into effect,” Mayne said.
“Many Kiwis have been contributing to the scheme for a long time, and so I believe the HomeStart grant now needs to recognise and reflect that reality. Instead of a capping the grant at $1,000 every year for just their first five years of contribution, why not extend that out to 10 years? That would effectively double the maximum grants to $20,000 per couple for an existing home and $40,000 for a new home.”
Mayne says that with rents growing twice as fast as wages, experts are warning that the renting situation is only going to deteriorate further – a situation that’s especially cruel for potential first-home buyers, given the favourable borrowing environment.
“We know that rents in the likes of Wellington are growing twice as fast as wages, and that rents in less-affluent districts like Kaipara have gone up 45% in the past five years,” Mayne explained.
“Instead of people’s retirement savings just sitting in KiwiSaver accounts helping to fund external private and public sector initiatives, we should be empowering and enabling more renters with a KiwiSaver accounts to get into homeownership – a factor which has historically proven to be a huge advantage come retirement.”
