KiwiSaver Is Making It Easier To Get Into A New Home

November 1, 2016

This year, the Government introduced a number of changes to make it easier for certain homebuyers to purchase a home. Perhaps the most important of these changes is in how KiwiSaver accounts can be leveraged to pull together a deposit and contribute towards the overall settlement. At First Avenue Property we have noticed a dramatic increase in interest from first-time homebuyers this year, which we attribute largely to these rule changes.


Changes to KiwiSaver HomeStart scheme

In July 2016, changes to the KiwiSaver HomeStart scheme were made to make it easier for prospective homeowners to get on the NZ property ladder. The primary change was a modest increase in income caps. For a single person, the cap was raised from $80,000 to $85,000, and the cap for a couple increased from $120,000 to $130,000. House price caps were also increased to more realistic levels.

In addition, KiwiSaver HomeStart grants are no longer restricted to first-time homebuyers. The new rules allow certain people who previously owned a property to apply for the grant. Essentially, individuals who are on the same financial level as a first-time homebuyer may be eligible for this funding. Building and Housing Minister Nick Smith explained that this change would benefit “mid-life, middle-income earners who had been struggling to get back into home ownership, such as those who have been through a separation or business failure”. The move promises to benefit thousands of people.


Most first-time homebuyers are using KiwiSaver

According to Director of Loan Market Bruce Patten, KiwiSaver is an important financial asset for people who wish to purchase a first home. These individuals may be using the KiwiSaver withdrawal scheme or the HomeStart grant to achieve their homeownership goals. He reports that:

  • 70-80% of first home buyers use KiwiSaver in their overall deposit
  • The average KiwiSaver withdrawal for purchasing a home has increased from $14,658 to $17,896
  • The number of KiwiSavers using their retirement money to buy a house has more than doubled, reaching 31,368 this year
  • Thanks to changes that have been to withdrawal rules, $496 million was withdrawn this year to March (more than double the $214 million that was withdrawn during that period last year)

These numbers make it abundantly clear that more people than ever are leveraging their KiwiSaver accounts to get into a first or second home.


Aspects for sellers to consider

If you are selling a property, you must be aware of how these changes affect your target homebuyer market. There’s a good chance that your buyer will want to leverage their KiwiSaver account and/or apply for a KiwiSaver HomeStart grant. In order to receive these funds, buyers need to jump through certain hoops, which can take a little more time than usual. If you are selling a property, you should consider giving prospective buyers 15 working days (rather than the traditional 10) to fulfil finance conditions. In addition, your buyer may need longer settlement dates in order to arrange for the balance of the funds to be available in time. While you might have to wait a little bit longer to sell, the good news is that your target market is now much larger thanks to the KiwiSaver rule changes.

Another interesting aspect is an increased interest in new build properties from first-time homebuyers. The KiwiSaver HomeGrant encourages buyers to purchase new build properties, which is any property that had their building code compliance certificate issued less than 6 months ago. Individuals wishing to purchase a new property are eligible to receive up to $20,000 in HomeStart funds, compared to a cap of only $10,000 for existing properties.


Learn more

If you’re a prospective homebuyer, please contact us at First Avenue. We work with our sellers to ensure that settlement and financing dates are realistic to accommodate those who wish to access KiwiSaver funds. Likewise if you have a property to sell and want to learn more about catering to those using KiwiSaver funds, we encourage you to speak with one of our experienced agents at First Avenue. We can be reached on 03 377 0509 or via the contact form on our website.


Numbers and Finance by Ken Teegardin, CC BY-SA 2.0

3D Realty Handshake by Scott Maxwell, CC BY-SA 2.0

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Filed under Property management \ Real Estate Investment

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