NZ government made 21 shared equity loans in 7 months

The new National Government has disclosed the shared equity home loan scheme set up under the Labour Government 7 months ago to help first home buyers has made just 21 loans. Housing Minister Phil Heatley told Parliament yesterday the government would complete the pilot but was unlikely to extend it.

The new National Government has disclosed the shared equity home loan scheme set up under the Labour Government 7 months ago to help first home buyers has made just 21 loans. Housing Minister Phil Heatley told Parliament yesterday the government would complete the pilot but was unlikely to extend it.

Here’s the exchange in parliament with the patsy question from Chester Burrows to Heatley.

CHESTER BORROWS (National—Whanganui) to the Minister of Housing: What reports has he received regarding the shared equity home purchase pilot?

Hon PHIL HEATLEY (Minister of Housing) : I have seen reports on the shared equity pilot, which was a flagship Labour policy to address housing affordability. I have seen reports advising that, despite the promises that the pilot would see between 500 and 700 families helped under the scheme over 2 years, actually only 21 loans have helped 21 families in the first 7 months.

Chester Borrows: Has the Minister seen any reports on how the shared equity home purchase scheme was developed?

Hon PHIL HEATLEY: Yes. I have reviewed 12 announcements between 2004 and 2008 heralding the shared equity scheme. When the scheme was finally delivered many years later, in the pre-election environment, the market had changed, and as the paltry 21 loans clearly illustrate, the scheme was a case of too little, too late. National promised to keep the pilot. We will keep the pilot, but we do not hold much hope for it.

Hon George Hawkins: Why is the Government making it so hard for young Kiwis to get into new homes, when on the other hand its leader seems to be offering Fisher and Paykel shareholders the promise of extensive help?

Hon PHIL HEATLEY: The new Government is not making it harder for young Kiwis to get into new homes. In fact, that appears to be getting easier for them. But we are equally concerned about those who bought homes recently and are seeing their asset being eroded.

What I think

It was a dumb idea to start with. New Zealand home buyers didn’t need more finance. They were getting plenty from the banks. What they needed was lower prices, lower interest rates and higher incomes.

They are now getting that and we have predicted housing will become affordable again for most New Zealanders by the end of the year at the current rate of improvement, although the increasing difficulty of getting big loans from banks is a spanner in the works.

Heatley, who I know from my days as a student at Massey University where we were in the same Halls of Residence, is right to kill this project.

This article has kindly been republished courtesy of interest.co.nz.  To view this article and other news updates from interest.co.nz click here.

Posted: 20 Feb 2009

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