In todays budget the NZ government announced plans for assistance of $5000 to first home buyers.
The scheme “Kiwi Savers”is linked to a compulsory savings program for all employees. The plan is that once an employee has been contributing to the scheme for three years they will be eligible for a 5k FHOG and assistance with mortgage insurance.
You are entitled to $1000 for every year you have saved with Kiwi Savers upto a maximum of $5000.
Problem is, by the time you’re entitled to it the properties would have gone up $10,000
True! However, seems like a step in the right direction for encouraging national savings. The buzz is that probably only around 1/3 or 1/4 of NZ tax payers would be inclined to join the scheme.
The rest could either do better on their own or plan to do better and never get around to it.
I was just reading that the scheme gives you access to your own funds as well as the free $5000 when you go to buy your first home.
From what I remember of the Aussie FHOG the govt just threw cash at people without requiring them to do anything in return.
Not that I would have complained if I was eligible for the cash back then.
The other problem is you can’t join the scheme until 2007 so that means you won’t be able to draw on it until 2010 (3 years).
I think it’s a bit of an insult. While I agree with the encouragement to save to qualify for the entitlement, it is too restrictive.
Labour had a similar scheme about 20 years ago. You paid into a Post Office Home Ownership account for x? period and were entitled to a very cheap loan for the deposit on a house plus a grant towards fees etc. That didn’t work either.
Then there was the Housing Corporation First Home Loans – interest rates were 7% when everyone else were 17%. You had to earn under a certain amount in order to qualify.
JeffRentMasterMember@rentmasterJoin Date: 2003Post Count: 85
I like the idea that the govt is not just throwing money at people – they want them to take responsibility for their savings first, to prove they are worthy, and then reward them for their savings.
It has been suggested that quite a few people who were considering buying their first property might wait until 2010 to take advantage of the handout, which may remove some people from the market temporarily. Reducing demand.
From 2010, there might be a heap of buyers coming into the market again – increasing demand.
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also delaying the purchasing decision for that long will have a positive effect on the demand for rental accomodation as would be first home owners wait until they qualify to purchase?
I agree completely regarding initial demand for rental accommodation and delayed demand for properties. I see potential opportunities in low priced homes and for wrappers in 2010.
I also see the intended objective for the Govt. being a waste of time and money. If someone saves $5k and qualifies for the FHOG they will have $10k towards a house. Then a house that would normally be $90k will become $100k as the buyer has 10% deposit and will be only be looking to borrow 90%. The scheme will fuel property inflation for low cost housing come 2010 and beyond.