The Kiwi dream just got further out of reach for first home buyers with the Government confirming it's scrapping the First Home Grant - effective immediately.
Housing Minister Chris Bishop rushed out his announcement on Wednesday after Newshub revealed the plans on Tuesday.
Bishop admitted it's not going to be popular.
Bal Bhatia has been dreaming of buying his first home.
He's been squirrelling money away to get a foot on the property ladder.
But the Government on Wednesday delivered a brutal blow.
"[It's a] bit of a gut punch," Bhatia said.|
"I think it's pretty brutal. It came very suddenly, especially when we're trying to future- plan."
Bhatia said he now won't be able to afford a deposit.
As revealed by Newshub on Tuesday, the First Home Grant is gone and all grants already approved will be honoured. But no more applications will be accepted - it's over
"We've had to make the tough, but I think the right decision, to discontinue the First Home Grant to reprioritise that money to social housing places," Bishop said.
"I appreciate that will not be popular with everybody and I appreciate that this will cause some pain for some people."
The housing grants were $5000 per buyer for an existing home or $10,000 for a new build, so a couple could have been eligible for up to $20,000 for their deposit.
But the minister argues they were ineffective because $5000 only amounts to about 4 percent of a 20 percent deposit for an affordable home.
"He is out of touch. He thinks that oh well it's only 4 percent so it doesn't matter," Labour housing spokesperson Kieran McAnulty said.
"I don't think he gets how important this is for a lot of people, how hard it is to buy.
"Social housing and first-home buyers miss out - landlords don't," McAnulty said.
The money will be redirected toward 1500 social housing places, which Labour said was fewer than it funded.
"I appreciate there'll be some people who will like the money and acknowledge that but the evidence suggests it doesn't make the difference actually buying a house or not," Bishop said.
Prime Minister Christopher Luxon added: "I appreciate not everyone's going to like it but we're making a choice."
But, last term, National in fact pushed for an increase to the price caps so more First Home buyers could access it - its press release saying Labour was leaving first home buyers out in the cold.
"Yeah, well that was then this is now and we have just had to front the fiscal conditions that we are in," Bishop said.
Analysis
The injustice of finding $2.9 billion to reverse interest deductibility changes - the so-called landlord tax cut - is not going to be lost on many first-home buyers struggling to squirrel away a deposit while paying sky-high rents in a double whammy cost of living and housing crisis. The Government will be hoping the tax cuts in the Budget will offset the pain but any first-home buyer doing the math will figure out the $1300 a year they've been promised by National is nowhere near the $10,000 they could've had toward a house deposit - which they've had swiftly whipped out of reach on Wednesday.
National promised to help the squeezed middle. Wednesday's announcement will feel like the complete opposite to the squeezed middle.
