The caps, which dictate the level at which the $5000 first-home grants are accessible for first-home buyers, are out of touch with reality, buyers and property brokers say.
At issue is the current cap of $400,000 for existing properties which applies to ‘‘regional New Zealand’’.
This includes greater Dunedin, most of the rest of Otago and Southland.
This compares with a cap of $500,000 for other urban centres, including Christchurch City, the Selwyn district and Upper Hutt, and $600,000 for Auckland and Queenstown Lakes.
However, latest house pricing from QV shows the average house value in Dunedin is now at $527,101 — well ahead of Christchurch’s average value of $510,575.
Bayleys Metro Dunedin sales manager Adam Gain agreed an urgent review was needed, particularly for first-home buyers who were tapping into their KiwiSaver for deposits.
"The average sale price has increased to a level in the city where family or first homes under $400,000 are in very limited supply. This makes it very difficult for home buyers to qualify for the subsidy."
Government policymakers revised the cap for new builds in December 2018, pushing regional caps up $50,000 to $500,000, though the cap for existing or older properties remained at $400,000.
One young Dunedin couple, who did not want to be named, missed out on a combined $10,000 after paying $450,000 for a home in Mosgiel, using $90,000 of their combined KiwiSaver to pay the deposit.
"We were actually really lucky to get into the market for that price, though we think they should really raise the cap here as current levels make it really out of reach for us.
"That money would have been useful for renovations or adding equity into the house — and really finding something at the lower level is just laughable."
Housing Ministry manager of market and supply response Caleb Johnstone said while the ministry recognised affordability was an issue across many parts of New Zealand, "there are no immediate plans to review the price caps or income caps further".
This reflected comments last year from Minister of Housing and Urban Development Phil Twyford that regional areas still had "relatively low" house prices, relatively high first-home buyer numbers and home ownership rates that were higher on average.
"Increasing the existing home loan grants is more likely to inflate house prices. Other aspects of the Government’s housing and urban development programme will help the regions more effectively," he said.
Measures would include reducing construction costs and direct support to housing supply as well as broader measures such as the Families Package and through the Provincial Growth Fund, Mr Twyford said.
