Great question! The New Zealand Government has recently unveiled updates to the First Home Grants and Loans program, with certain adjustments taking effect from this month onwards. The government has stated that these modifications are intended to enhance the prospects of home ownership and bolster the housing market.[i]

The minimum First Home Grant house price cap for new build properties has climbed from $500,000 to $650,000, with higher increases in some regions. This reflects the rising cost of construction and gives more eligible first home buyers a choice between buying an existing or new build home. Overall, First Home Grant price caps for new build homes have increased in 37 areas[ii].

Adjusting the First Home Loan insurance premium

Previously, borrowers utilising the First Home Loan were subject to a 1% insurance premium to cover the underwriting expenses associated with evaluating their low deposit loan With a First Home Loan, first time buyers only need a 5% deposit. As a result of this adjustment, individuals with a mortgage of $600,000 will now be required to pay $3,000 towards the insurance premium, as opposed to the previous amount of $6,000.

As a result of this adjustment, individuals with a mortgage of $600,000 will now be required to pay $3,000 towards the insurance premium, as opposed to the previous amount of $6,000.

Adjusting the KiwiBuild price caps for three-bedroom homes in some areas

In addition, slight modifications have been implemented to the price caps of three-bedroom homes in certain areas under the KiwiBuild program. KiwiBuild, which was introduced in 2018, aims to offer first home buyers a viable route to owning a home by supporting the construction of affordable apartments. KiwiBuild properties adhere to specific price limits and are allocated through a randomised ballot system.

The three-bedroom price cap for KiwiBuild homes in the Queenstown Lakes District, for example, will increase from $845,000 to $860,000, to reflect the current market. Elsewhere, the three-bedroom KiwiBuild price cap for Hamilton, Christchurch, and places outside of the main urban areas has increased slightly by $5,000.

To ensure the continued delivery of homes under the KiwiBuild scheme, the government is aiming to maintain the commercial appeal for developers. This objective is achieved by regularly aligning the house price caps with current market values.

Changes to the First Home Grant and KiwiBuild took effect from 15 May 2023. The change to the First Home Loan commenced on 1 June 2023.

House price and income caps are reviewed every six months to make sure they remain up to date.

If you are contemplating purchasing or selling a property during the winter season, we recommend reaching out to your local Raine & Horne sales agent for a no-obligation conversation. They will be able to provide you with valuable insights and guidance tailored to your specific needs.

If you're considering buying or selling a property this winter, contact your local Raine & Horne sales agent for an obligation-free discussion. 

[i] https://www.beehive.govt.nz/release/government-lifts-support-first-home-buyers

[ii] https://www.beehive.govt.nz/sites/default/files/2023-04/First%20home%20product%20changes.pdf