Housing Minister Nick Smith is defending subsidy caps for first-time buyers, saying it’s not about funding flash homes.
Smith raised the Queenstown caps on the KiwiSaver HomeStart scheme by $50,000 on Monday.
Queenstown mortgage broker Stewart Mitchell says in a runaway market, that’s about as “useful as a chocolate fire guard”.
And Labour Party housing spokesman Phil Twyford tells Mountain Scene Smith’s “just tinkering”.
But Smith counters with independent statistics from analysts CoreLogic which state a quarter of homes sold in Queenstown Lakes go for under $500,000.
“The government’s never been about providing taxpayer grants for people to buy a flash house,” Smith says.
“It’s about buying a modest house, and helping people get their first foot on the housing ladder.”
HomeStart gives first-time buyer couples $20,000 of their KiwiSaver money towards a deposit for a new-build home in Queenstown priced at $550,000 or less, or $10,000 for an existing home priced $500,000.
Singles get half those amounts.
Income caps were also increased by $10,000 to $120,000 for couples and by $5000 to $85,000 for single people.
CoreLogic’s figures show 261 of 1066 sales in the year to March 31 were under $500,000, and 334 were under $550,000.
Loan Market’s Mitchell doesn’t believe the figures.
“There are very few sales under $500,000. I don’t understand that, it’s impossible.”
On Tuesday, new QV figures showed the average house value in the district is $910,000 - up 27 per cent in 12 months.
Yesterday afternoon, there were just four residential properties listed for sale at less than $550,000, not including auctions. Three are new-builds. All are one-bedroom apartments about 50 square metres.
Mitchell wants the government to massively increase the subsidy cap.
“They’re nowhere near the mark.
“It encourages the few who can scrape in to build to an almost substandard quality.”
He says a major increase would alleviate concerns about developers and builders raising prices and improve quality.
But Smith says a high cap would encourage the building sector to build houses that are too expensive.
“We want to provide an incentive for the building and development sector in Queenstown to focus on building more product that is affordable.”
The latest available figures show 74 houses were bought in the district through the HomeStart scheme since it launched in April last year. Forty were new-builds.
Smith considers that a success.
“It’s 74 people who would otherwise not be in a new home.”
Twyford believes Queenstown deserves special government attention.
He says the “hyper-inflation” in the housing market means people just can’t save deposits quickly enough.
“Set against the scale of the housing crisis in Queenstown, this government is just tinkering.”
Twyford calls for publicly-funded, affordable rental accommodation for workers.
“The government needs to throw off its ideological blinkers about not getting involved at that level.”
Smith says planning rules are the most important issue for a long-term fix, with special housing areas and a review of the Queenstown district plan under way.
But there’s no magic bullet. Instead, HomeStart, planning rule changes, supporting infrastructure through a recently-announced $1 billion fund and investing in apprenticeships will be required, he says.