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Home ownership plan slammed

You’d think real estate agents would enthusiastically applaud government plans to introduce some sorts of subsidies for first home buyers.

Thursday, March 13th 2003, 1:24AM

by Jenny Ruth

Afterall, in Australia where the government has been handing out lump sum contributions (starting at A$7,000 and rising to A$14,000) towards deposits of first home buyers, shows what a fillip such a move can provide an already sizzling housing market.

Official figures show the median house price in Australia’s major cities rose 18.4% in 2000 – Sydney’s median price has surged almost 80% in the past five years (of course, not all of that could be attributed to the first home buyers grant).

Quite a gravy train for real estate agents.

But Real Estate Institute of New Zealand (REINZ) national president Graeme Woodley is arguing against this country copying the scheme, even though that’s precisely what our government is currently looking at.

Acting Housing Minister Steve Maharey said, last week, that the government is keen to restore New Zealand’s home ownership levels which have fallen from 74% of the population to 68% in the last decade.

Schemes which might be included in the next budget include guaranteeing mortgages for those with no collateral, and offering suspensory loans, Maharey said. However, he ruled out returning to the days when the government was the major mortgage lender to families.

"We believe any scheme to encourage access to first home ownership should recognise the distortions any form of lump sum, or de-facto lump sum, scheme might cause," Woodley says.

"Lump sums by way of government funded deposits, or de-facto versions of lump sums such as guaranteeing mortgages for those with no collateral, is bound to cause distortions and could end up as another student loans situation," he argues. Any suspensory loan scheme would still have to be repaid some day.

REINZ has studied the Australian scheme and has concluded "such a scheme effectively removed part of the savings ethic while inflating housing demand, largely for the benefit of the home construction industry."

Instead, any government assistance should encourage people to use their own endeavours to achieve home ownership, Woodley says. He suggests the government provide incentives for saving a home deposit, with using tax deductibility as the most sensible approach. A scheme involving tax breaks "would require the potential home owner to make a contribution and a commitment."

« Role of banks questionedSovereign takes regulation bull by the horns »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.45 7.05 6.85
ANZ 8.64 7.99 7.49 7.35
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.39 6.89 6.75
ASB Bank 8.64 7.39 6.89 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - ▼7.29 ▼6.85 ▼6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.95 7.65 7.45
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.15 - -
Co-operative Bank - Owner Occ 8.40 7.35 6.89 6.75
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.85 7.39 7.25
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.85 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.59 7.29
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.35 7.89 7.65
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.35 6.89 6.75
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.90 7.39 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.30 7.89 7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.30 8.89 8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.95 7.45 7.29
SBS Bank Special - 7.45 6.95 6.79
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 7.05 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.19 7.55 7.55
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.39 6.75 6.75
Unity 8.64 6.99 6.85 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 7.15 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.45 7.37 6.77

Last updated: 23 February 2024 11:59am

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