Affordable housing has become a major problem for two areas of New Zealand - Auckland and Christchurch. National and Labour are promising a solution. Political editor Dene Mackenzie investigates the policies.
Owning a home has always been regarded as the Kiwi Dream. The National and Labour parties are both promising to help first-home buyers and young families into a house of their own, but in different ways.
The focus of the two major parties has been on the large vote catchments of Auckland and Christchurch. But their policies will affect every first-home buyer in New Zealand as they save for a deposit.
High loan to value ratio (LVR) lending by banks as a proportion of new mortgage flows remained steady at 6.5% in July, slightly lower than the 6.7% in the previous month.
The Reserve Bank introduced the LVRs in an attempt to slow down the rise in house prices. Regions complained about being incorporated into the LVR regime because the problem was only being seen in New Zealand's two largest cities.
Since the high-LVR restrictions took effect at the start of October 2013, the proportion of banks' high-LVR lending fell sharply - from 25.5% in September last year to 6.5% this July. Buyers need to find a 20% deposit, in most cases.
National said it would help 90,000 first-home buyers by changing the KiwiSaver First Home Deposit subsidy with a KiwiSaver HomeStart grant.
National would also allow people to withdraw more money from their KiwiSaver account to use as a deposit on their first home.
First-home buyers would be allowed to withdraw the Government's annual contribution to their account - the member tax credit of up to $521 a year - as well as their own and their employer's contribution.
More people would be able to get Welcome Home loans, meaning they required only a 10% deposit to get a government-guaranteed loan.
Prime Minister John Key said the changes would give a lot more people the confidence that if they joined KiwiSaver, and kept saving, they could put together a deposit for their first house.
Labour is promising to build 100,000 start homes over 10 years for first-home buyers through its KiwiBuild programme.
Labour housing spokesman Phil Twyford said building 10,000 modest affordable homes a year was an ambitious but achievable target so long as it was well-planned and private-sector construction firms had long-term certainty on the project's scale. The KiwiBuild programme would scale up over three years.
''This takes into account the need to have all systems in place, the need for precision in sequencing the builds in order to manage the fiscal impact and the resource implications of the Christchurch recovery.''
There would be a slow build-up as people were trained or brought in from overseas to help with the construction. Labour's policy would create thousands of jobs, he said.
Property Investors Federation executive officer Andrew King said the National Party's housing policy correctly focused on assisting a first-home buyer to raise the deposit to build a new home.
A federation study into housing affordability showed owning your own home cost about the same percentage of income now as it did in 1985.
''This is because mortgage interest rates, usually the largest cost for a first-home buyer, have fallen since 1985."
The affordability debate had focused on income and house prices but the cost or mortgages and size of homes hugely influenced affordability. Bigger homes meant it had become harder for first-home buyers to save a deposit.
The KiwiSaver first home deposit subsidy had helped first-home buyers with deposits. National's HomeStart plan would increase assistance with deposits if they built new homes, he said.
