Price Caps Limit Usefulness Of First-Home Buyer Grants On Conventional Houses

As a first-home buyer, the market is clearly tough to enter right now. House prices continue to boom, as they have done for at least the past year, and it doesn’t look like there’s an end in sight. House prices keep creeping upwards and move further and further out of reach for first home buyers who just want to be able to buy an affordable home.

The Government is aiming to help by offering a $5,000 grant for those who earn under a set annual amount. For couples, it’s even better, as they can gain $5,000 each towards a house if their income is under a combined amount.

However, in the current market, even a $10,000 head start may simply not enough for people to be able to make a purchase, especially with the price cap on the home you can buy with the grant. The cap amount changes across regions, and in Auckland, you can buy a house that’s $625,000 or under. As of February 2021, the median house price in Auckland was $1,100,000, creating a clear gap between how much you can spend and what’s available. In other regions, there is a similar gap between the price cap and median house price in the area.

That’s why many first-home buyers are turning to other solutions, such as turnkey homes or transportable homes in NZ. These types of solutions come at a fixed cost, with none of the price wars that are currently raging over the few houses up for sale or auction. This may be the only way that first-time homebuyers are able to get their foot on the property ladder right now.

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