National’s making a late bid for votes from Queenstown’s desperate first-home buyers.
Building and Construction spokesman Nick Smith says he’s asked officials to look at hiking Queenstown’s upper limits for the government’s HomeStart grants.
“The most likely outcome is that it will be adjusted to the Auckland rate.”
That’ll please Queenstown mayor Jim Boult, who called on the government to review the caps last Sunday.
Official figures show why Smith had to move.
In the first six months of this year, just 18 HomeStart grants, totalling a paltry $133,000, have been paid in Queenstown Lakes.
That’s less than 1 per cent of the $36.8 million doled out across the country.
Labour’s Phil Twyford pans the KiwiSaver-linked scheme, saying the limits are so low it’s “failed Queenstown”.
Twyford: “So few grants and so little money to help first-home buyers in Queenstown shows that it’s basically a band-aid – and a pretty ineffective one.”
Even Smith agrees surging house prices in the resort have made the scheme “ineffective”.
At the moment, caps for the grants sit at $500,000 for existing houses and $550,000 for new builds.
But that won’t capture many houses, as median house sale prices sit near $1 million.
If Smith gets his way – and National’s re-elected – from January 1 the grants will be upped to $600,000 for existing houses and $650,000 for new builds.
But that won’t happen till after the election, he says, because officials are yet to run the numbers.
Government number-crunchers reckon the new limits would have captured 16 per cent of sales in the Queenstown Lakes last year – instead of 4 per cent under the existing caps.
HomeStart grants will be increased by National if they win the election.
National’s announcement, last Sunday, said eligible couples will get up to $20,000 for an existing home and $30,000 for a new build.
Twyford says the subsidies are so small “it’s of questionable value”.
If you take the Queenstown Lakes’ median house price of $883,000, a 20 per cent deposit is $176,600.
But Twyford admits Labour would keep the scheme, but not increase it.
Labour says it’ll tackle the housing crisis through its home-building KiwiBuild programme – building 100,000 affordable homes over 10 years – by taxing speculators and shutting foreign buyers out of the market.
Twyford worries more HomeStart grants will stoke demand “by throwing subsidies at the problem”, which will push up prices – something Treasury warned about in 2014.
Smith says: “We walk a line between making the house price caps at a level where people can access it but not setting it so high that we are simply contributing to house price increases.”
He says HomeStart grants are only a “relatively small” part of the market – but then admits there are 15,000-20,000 grants a year, compared with 80,000 house sales in an average year.
Smith says National’s response to Queenstown’s housing crunch is to “get the foot flat to the floor on growing supply”.
Boult said last Sunday for the housing crisis to be fixed, “we’re going to have to do it ourselves”.
Both major parties say they’d work with the council, particularly on providing crucial staff accommodation.
So far this year, more money’s been paid out in the Grey district (42 grants, $200,000), Central Otago (41 grants, $207,000) and Gore (57 grants, $247,000) than in Queenstown.