UPDATED 1.03pm The Labour party says the National government's left hand doesn't know what the right's doing when it comes to housing policy following the Government’s updates to the KiwiSaver HomeStart scheme.
LISTEN ABOVE: KiwiSaver expert Mary Holm spoke to Andrew Dickens about the changes
From today, the pricing cap on a house purchased under the scheme is now 600 to 650 thousand in Auckland, and between 400 and 550 for the rest of the country.
Building and Housing Minister Nick Smith said it's to help drive growth in residential construction.
He said the adjustment will make a significant difference because the increased pay rates of middle income earners were cutting them out of the programme, so this is a good balance between making it affordable, and not adding fuel to the fire.
But Labour's housing spokesman Phil Twyford said it just tinkers with the margins of the problem, and may even make it worse by making more people borrow more money.
Mr Twyford said the move comes just weeks after Prime Minister John Key pleaded with the Reserve Bank to tighten restrictions on low deposit lenders.
He said it’s in stark contrast with Nick Smith’s announcement today.
He said the Auckland housing market is on the brink of a crash and it doesn't make sense for Nick Smith to increase subsidies on low deposit lending.
He added over the last year only nine per cent of the grants made through the scheme went to Aucklanders - and yet Auckland accounts for a third of the population, and is the region in crisis.
Dr Smith also announced an increase in those able to use the scheme, based on their income.
A single person earning $85,000 or less, and a couple earning a joint income of $130,000 or less will be able to use the scheme, that's up from $80,000 and $120,000.
“This reflects the $50,000 increase in the national median house price since the scheme began.”
Mary Holm told Andrew Dickens there are also other options around using your KiwiSaver.
"You can take the money out of your KiwiSaver without these income caps and without the house price caps. You're allowed to take your own money out and buy a first home."
Dr Smith said the scheme will give middle-income earners ample opportunity to buy a home.
He said 25 per cent of houses sold in Auckland are under the $600,000 mark, so it will provide plenty of opportunity for home ownership.
He said the scheme's never been about getting people into areas such as the North Shore or Remuera, it's about getting middle-income earners into 'modest' houses