Govt could soon be the biggest investor in housing

A shared equity scheme is being considered by the Government for first-home buyers. The Kiwibuild programme is planning to build 10,000 houses a year, which will is expected to be priced at 650,000 to first home buyers.

But this might still be out of reach for many NZ’ers, so the govt is deciding to implement a co-ownership scheme. At $650,000, if a couple has a 10% deposit, they may not be able to afford a $585k mortgage. However, more people can qualify for a $400k¬† – $450k mortgage, with the government or a third party putting up the balance and co-own the property.The buyer could then buyout the government or third party when they could afford to, including any capital gains.

This would definitely help more first home buyers get into the property ladder.

This plan is all good news for the construction industry because there will be plenty of building work in the years to come.

But putting that aside, while home ownership is desirable, it is important to note that not all developed countries have high rates of ownership and they still do fine. For instance Germany has 52% home ownership, Switzerland has 42% home ownership, compared to 63% for NZ.

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