The Government will end first home buyers grants — shifting the money to fund about 1500 new social housing places to be provided by external organisations instead of Kāinga Ora.
Housing Minister Chris Bishop made the announcement today at Parliament.
Existing applications would be progressed but no new grants would be accepted, effective immediately.
The First Home Loan scheme — which allowed for 5% deposits — and first home buyers’ ability to dip into their KiwiSaver for their house deposit, would remain.
The 2024 Budget would allocate $140 million in new funding for the social housing spots — all money from ending Kāinga Ora’s First Home Grants.
“Funding for new social housing places under the previous government ends in June 2025,” Bishop said.
“This is yet another unexpected situation that the coalition Government has had to confront.”
He said the investment would become available from July next year, intended to allow the community housing sector “much-needed certainty about the social housing pipeline, allowing them to plan for the future, and scale-up their build programmes”.
“These new social housing places will only be allocated to Community Housing Providers (CHPs), not Kāinga Ora.
“The Kāinga Ora independent review which reported back earlier this week shows that Kāinga Ora is not financially sustainable in its current form.
“Until the Government has received and approved the turnaround plan demanded of the refreshed board, no further funding will be budgeted for the organisation to deliver additional social housing places.”
Bishop said the community housing sector did an “outstanding job” of housing those in need, currently providing more than 13,000 social houses around New Zealand.
“They have the capability, expertise and desire to grow further.
“Funding for the new social housing places can be delivered by ending the government’s First Home Grant, currently delivered by Kāinga Ora.
![National's Bishop holds the portfolios for Housing, Infrastructure, RMA Reform and Sport and Recreation.](https://tvnz-1-news-prod.cdn.arcpublishing.com/resizer/v2/chris-bishop-asked-about-emergency-housing-fast-track-consen-BZLY4HSPGVARXNNWIB2NWZGFDI.png?auth=1c7cfd2dcbff6aa09ddb0f42fee8f9a31275a4c36112eb286e7919aa7422145e&quality=70&width=767&height=431&focal=960%2C540)
“The Government has made a deliberate choice to reprioritise low value expenditure to more important policy priorities. At a time when the waitlist for social housing is over 25,000 applicants, we have made the tough but necessary call to focus support on New Zealanders who need it most.”
He said the First Home Grant — which provided eligible first home buyers with a median of $5000 towards a house deposit — was “an expensive and inefficient way to support first home buyers”.
“In 2010, when the grant was introduced, the lower quartile house price was $255,000, compared to $580,000 in April 2024. For first home buyers, this means the grant has gone from being nearly 10% of a standard deposit in 2010, to just over 4% of a standard deposit in 2024.
“Evidence shows the grant brings forward the purchase of a first home – but in most cases it does not make a difference to whether someone can buy a home or not.
“The answer to New Zealand’s housing crisis is not demand-side measures like the First Home Grant, but supply-side solutions contained in the Government’s Going for Housing Growth agenda.”
He said the Government would retain the First Home Loan initiative, which allowed first home buyers to purchase a home with a deposit as low as 5%.
Bishop said that programme was “more effective at supporting buyers over the deposit barrier”.
“The Government is also retaining the ability for KiwiSaver members to withdraw funds for a first home house deposit.”
He said ending the First Home Grant was expected to generate savings of $245 million over the four-year forecast period from 2024 to 2028 — with a minimal effect on home ownership rates.
“Kāinga Ora is no longer accepting new applications for First Home Grants. They will still process applications that have already been received.
“Applicants with existing approvals can still access the First Home Grant, and pre-approvals will still be valid for six-months from the application approval date.”
This morning, RNZ reported about 12,168 applications were approved for a first home grant in 2023.
Government ‘shattering the dream of home ownership’ – Labour
Labour leader Chris Hipkins said the Government was “tilting the playing field” towards property investors instead of Kiwis pursuing their dream of home ownership.
“This Government are shattering the dream of home ownership for an entire generation of New Zealanders whilst give $2.9 billion dollars worth of tax cuts to landlords. They’re cutting one of the schemes that a lot of New Zealanders rely on to get that deposit together to buy their first home.”
He said the $2.9 billion tax break – the reintroduction of interest deductibility – could expand the first home buyers scheme and help increase social housing places.
“This is actually them cutting support to first home buyers to fund tax cuts.”
He said for some the first home grant made all the difference to their ability to buy their first home.