The Ministry of Housing and Urban Development (Ministry) has slammed Labour’s changes to home loan schemes, insisting that the changes could worsen the housing crisis further.
Labour proposed increasing price caps and funding through the First Home Grant and First Home Loan schemes.
However, the Ministry said in a statement that it does not recommend increasing the price caps for existing proprieties as it would inflate prices further and only provide temporary relief for first-home buyers.
“We do not recommend increasing the income caps for First Home Grants as this would primarily assist households who are already close to being able to buy and may result in prices being bid up higher,” the Ministry added.
ACT New Zealand aired the same thoughts, insisting that the changes ignore basic economics.
“The government has been warned about this before. It was told last year that ‘financial support is likely to increase prices when supply is constrained,’” said ACT housing spokesperson Brooke van Velden.
ACT suggested radically overhauling infrastructure funding through a 30-year partnership with the central government for each region. It also intends to replace the Resource Management Act with legislation designed to facilitate home building and get councils out of the building consent business.
The National Party also slammed the changes to housing loan schemes, emphasising that the new housing package would likely increase rents rather than addressing the lack of housing supply.
“The government panicked and turned to rent controls as the potential answer. Rent controls would have a chilling effect on our housing market. They would discourage investors from building new homes and therefore increasing the supply of housing,” said National housing spokesperson Nicola Willis.
“First-home buyers are predominantly renters. Any measures that drive up rents only serve to make it harder for first-home buyers to put together a deposit, further locking them out of the market.”
Willis said building more houses is crucial to addressing the housing shortage in New Zealand and delivering for first-home buyers.
“National has a plan to require every major city and town to immediately remove restrictions locking-up land and stalling intensification, while also giving councils the cash injections they need to deliver a much-needed surge in new house building,” Willis added.
“What the advice from officials shows is the government is more interested in PR spin and fancy announcements than putting forward policies that will make a positive impact on those shut out of our housing market.”