Underwhelming uptake for First Home Scheme

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PHOTO: Photo: RNZ / Nate McKinnon

The progressive homeownership scheme, which launched on 5 October 2021, allows first home buyers to purchase property with Kāinga Ora and buy out the agency over time.

Kāinga Ora’s maximum contribution is whatever is lower between 25 percent of the purchase price or $200,000.

But figures provided to RNZ under the Official Information Act show there were no settlements made between 5 October last year and 5 January this year, and initial engagement with the scheme has been high before sharply decreasing at each step.

In that three-month window, there were 2133 applications drafted but only 672 were submitted for an eligibility assessment. This then decreased to 295 eligible applications, of which only 17 managed to get sale and purchase agreements approved.

Kāinga Ora proactively shared that the number of approved applications had risen to 31 by mid-February.

Kāinga Ora home ownership products manager Jason Lovell was aware no settlements was an easy point to criticise, but said the scheme should be looked at as a pipeline of numbers that was building.

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By 25 March, which was after Lovell spoke with RNZ, there had been nine settlements and 28 sales and purchase agreements that had signed.

Homes had to be new builds or off the plan, an option where Kāinga Ora had a number of unconditional deals in the pipeline, Lovell said.

He described the scheme as “a bit of a process” and said people needed to take time “to get their ducks in a row” before applying, which possibly explained the major fall in numbers.

The scheme was also only one Kāinga Ora pathway to buy a home, he said, and was targeted at “those that are more at that buy-ready stage … and generally have slightly higher incomes to those others in the two other pathways.

“They’re generally people who can get a loan, service a loan, have some form of deposit, but it’s just not quite enough to achieve homeownership; the house prices increasing recently have basically, sort of, put them out of touch with being able to achieve that.”

The scheme is only available through two banks, BNZ and Westpac, but Kāinga Ora was working to get others on board, Lovell said.