Heather du Plessis-Allan: Housing package likely makes it harder for first-home buyers

Author
Heather du Plessis-Allan,
Publish Date
Wed, 24 Mar 2021, 4:20PM

Heather du Plessis-Allan: Housing package likely makes it harder for first-home buyers

Author
Heather du Plessis-Allan,
Publish Date
Wed, 24 Mar 2021, 4:20PM

Now that we’ve all had a chance to properly get our heads around the government’s housing package, my overriding feeling on this is that I feel really sorry for first home buyers. 

This is not really going to make it that much easier to get into a house, but it really runs the risk of making it harder.

The thing that is supposed to be the greatest help for first home buyers is that you can now use your first home grant on a slightly more expensive house. 

In Auckland, the cap on existing houses has now been lifted to $625,000.

Do you know how many Auckland houses now become eligible for first home buyers? 414 – that’s not a lot  in a city that big. 

In Wellington the cap is now $550,000. I went through TradeMe.  There are 15 houses in Wellington for sale under that price. One them doesn’t have a bathroom.  That’s not much help, is it?

On the bright side, the package will probably slow the rate of house price inflation, but the most optimistic prediction – from a fist home buyers’ point of view – is that it forces prices down by 10 percent. 

You know where that takes us back to?  Prices of four months ago.  Could you afford houses in December?  Exactly. 

But then as if that isn’t demoralising enough, this package is probably going to drive up rents.  That’s the general consensus from Treasury through to economists.  But how can you scrape together a deposit – which is hard enough already – when your rent is probably going up? 

And the reason that might happen is predominantly because landlords have just lost their tax breaks, so the only to recoup that lost money is by charging more from tenants.

But it’s exacerbated by the fact that if investors sell up, and they sell to a first home buyer, that’s another rental gone out of the market, so that supply just diminishes further. 

Plus the new rules preventing owners from renting out their family homes if they move somewhere for a period will also take potential houses out of the rental market.  

I think the most telling thing in the last day and a half is that almost no one is praising this housing package.  Not first home buyers, not investors, not economists, no one.  It’s such a let-down. And frankly, I feel for everyone stung by this, but most of all, I feel for first home buyers who thought this government – finally – was going to help them.