Property experts are split over whether the Government should lift Kāinga Ora's "unrealistic" First Home Grant caps to help Kiwis get on the ladder.
Just under 50,000 Kiwis have been helped into their first home by the scheme since November 2017 - but it has come under increased scrutiny as median house prices have risen by close to 20 percent in the last year.
Critics say this surge means the grant is no longer effective for most New Zealanders, citing data showing just a third of homes across New Zealand are beneath their regions' respective price caps - and they want the Government to lift them.
But others believe raising the cap threshold will just add fuel to the housing crisis, arguing that it's a stop-gap solution that doesn't address the key issues.
How the First Home Grant eligibility criteria works
Kāinga Ora First Home Grants are available to Kiwis wanting to make their first step onto the property ladder.
It entitles those eligible to $1000 for each of the three or more years you've contributed to KiwiSaver, with $5000 the maximum you can get for an existing home.
For a new build, the amount you're eligible for per year of contribution to KiwiSaver doubles. This means you can get as much as $10,000 from the Government, provided you've paid into the scheme for five years.
If you're a couple buying a home together you can pool your grants, which gets you a maximum of $10,000 for an existing property and $20,000 for a new one.
However there are restrictions on which people and properties are eligible.
Those wanting to buy must be over 18, have earned less than $85,000 in the last 12 months (or a combined $130,000 if you're a couple), not currently own property and must agree to live in the property for a minimum of six months.
They must also buy a property within the house price caps for that region.
In Auckland and Queenstown, the cap sits at $600,000 for existing properties and $650,000 for new ones. In Hamilton, Tauranga, the Bay of Plenty, Kāpiti Coast, Wellington, Tasman, Nelson, Waimakariri, Christchurch and Selwyn, this falls to $500,000 for older houses and $550,000 for new builds.
Those in the rest of New Zealand are only eligible for a First Home Grant if they're buying a property worth less than $400,000 or a new build worth up to $500,000.
Current caps 'killing the Kiwi homeownership dream'
In November last year, the Real Estate Institute (REINZ) released data showing the proportion of properties in New Zealand selling for beneath their region's First Home Grant cap had fallen to just a third - down from 40 percent just four months earlier.
For prospective first-home buyers in regions like Christchurch and Waimakariri, cap thresholds aren't of much cause for concern, as the majority of homes there sell for beneath the regional cap of $600,000.
However they are a serious worry for buyers in Auckland, where just 12 percent of houses are beneath the cap, and in regions like Wellington (8 percent), Queenstown (6 percent), Tauranga (8 percent), Hamilton (16 percent) and the western Bay of Plenty (13 percent).
That's despite the caps in many of these regions being set at higher levels than other, less desirable locations, in an effort to make homeownership more achievable there.
Upon the release of the REINZ figures, chief executive Bindi Norwell called on the Government to review its thresholds for the First Home Grant.
"With house prices having risen by 20 percent over the last year alone, and with median prices in Auckland hitting the $1 million mark for the first time, it's our view that the caps should be reviewed in order to help first-home buyers," she said.
"If you're in Queenstown-Lakes, Porirua City or Wellington City, less than 10 percent of properties selling in the current market are below the local thresholds, making it extremely difficult for first-home buyers in these areas. It's not much better in Auckland, Kāpiti or Hamilton."
Real estate company Century 21 backed these calls, and said the income caps of $85,000 per year and $5000 per person should also be lifted.
"All the numbers in and around Home Start need to be revised urgently, particularly as the market is set to only increase over the coming months," said company owner Derryn Mayne.
"As it stands, every day, fewer and fewer properties and first-home buyers qualify, killing the Kiwi homeownership dream for many."
Lifting Home Start caps 'doesn't resolve the issue'
But not everyone agrees that lifting First Home Grant caps is the answer for first-home buyers.
Auckland property developer Cameron Grant, who has been building and selling terrace homes for 25 years, admits the current caps are "unrealistic" - particularly for those in cities like Auckland and Wellington, where he's not sure you could find any property at that price point.
And he says it'll only get tougher for first-home buyers, particularly with loan-to-value ratio (LVR) restrictions returning on March 1 requiring them to stump up a 20 percent deposit to get a mortgage.
However he's not sure if raising First Home Grant caps is the best approach, as he thinks it will add further heat to a property market in desperate need of cooling.
"If you find a $650,000 home and the Government gives you a grant [of $10,000], all that's going to do is push house prices up for that price range," he said.
Shamubeel Eaqub, an economist at Sense Partners and one of the leading critics of the handling of the housing crisis, agrees - and he told Newshub lifting the caps won't help address the key drivers of the housing crisis.
"There are a lot of restrictions - it's not just [grant] caps, it's incomes and other circumstances. That's a really tiny part of the market, and not a particularly big deal," he said.
"The issue with people letting people borrow even more money is it just allows first-home buyers to pay bigger prices more. It doesn't resolve the issue that we're not building enough of that type of housing.
"So it's not just that house prices have become more expensive, [it's that] we're still not building enough of those lower-quartile houses. Most of the houses we tend to build are too expensive - they're likely to be more like a mansion than apartments and terraces and that sort of thing."
Will the Government act?
Housing Minister Megan Woods told Newshub the Government reviews its First Home Grant caps regularly "to ensure the policy remains effective over time", but wouldn't say whether recent escalating property prices would prompt a cap increase.
"Housing affordability is an issue across many parts of New Zealand, and not everyone will be eligible for assistance as the focus of these initiatives is on supporting first-home buyers to purchase modestly priced houses," she said.
However Woods said the Government would be making an announcement on a new plan to cool the housing market and address the impacts of property speculation by the end of February.
She added that the Government had a range of measures already in place to help first-home buyers into property, including the construction of KiwiBuild homes, Kāinga Ora First Home Loans, First Home Products and the Progressive Home Ownership scheme.
