Monday, August 25, 2014

National on housing

National launched its campaign over the weekend, with a new policy aimed at the housing crisis: increased grants for newly-built first homes. Supposedly this will help 90,000 people over five years, but as Polity points out, either they're massively overestimating numbers, or the actual assistance people will receive will be derisory. Looking at their best-case example highlights another problem:

Housing Minister Nick Smith said a couple in Auckland each earning $50,000 who had contributed to Kiwisaver for five years would be able to withdraw $35,000 and receive a $20,000 Kiwisaver Homestart Grant, making a $55,000 deposit.

And because the Welcome Home Loan Scheme allowed a 10 per cent deposit, the would be able to buy a home up to $550,000 in value.

Which, according to Westpac's mortgage calculator, will cost them $3159 a month in mortgage payments on a 30-year term. Meaning they'll be spending 38% of their pre-tax (and 45% of their after-tax) income simply on their mortgage. Meaning it is unaffordable according to the 30% of after-tax income threshold used by Statistics New Zealand. This isn't going to help people pursue the kiwi dream. Instead, as with so many other National policies, its just a PR scam, designed to give the impression of doing something while actually doing nothing.