by The Landlord
"Shared equity is a new model of home ownership that may be attractive to some New Zealand families who are unable to afford outright ownership given the sharp rise in house prices," Housing Minister Chris Carter said.
"The Labour-led government wants to explore how much demand there is for this type of ownership model in New Zealand, and Budget 2007 funds the design of a scheme to offer it. A targeted pilot of the scheme will then be considered for next year's budget," he said.
Shared equity schemes are common overseas, and typically involve the government or a private entity taking a share in a house (sometimes up to 30 per cent) at no cost to the homebuyer. The homebuyer then seeks a conventional mortgage on the remainder of the property, and when the property is sold, a percentage of the sale price, equivalent to the equity share, is returned to the supplier.
"The advantage of this type of scheme is that it provides a pathway into home-ownership in higher-priced metropolitan markets for families that would otherwise be shut-out of those markets. It complements the government's Welcome Home Loan scheme, which is successfully underwriting some families in rural, provincial and urban fringe areas in to homes," Mr Carter said.
"Shared equity will also be introduced at the same time as the government seeks to increase the number of houses in the price bracket affordable to first home buyers. Measures to improve housing supply are being considered as part of a possible Housing Affordability Bill.
Home ownership is important for families' long-term financial security. That's why KiwiSaver, the work-based saving scheme, also allows savers to withdraw funds to be used as a deposit on a first home.
"Home ownership has been a big part of New Zealand's national identity. The government believes we have a responsibility to do what we can to maintain this tradition and ensure an evenness of opportunity between generations," Chris Carter said.
Press Release: Hon. Chris Carter
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