The Government confirms the elimination of subsidies for the first home

The government has confirmed it plans to scrap the first home grant scheme, with applications ending from Wednesday.

This would recover around $245 million over four years.

It has also announced $140 million in new funding for 1,500 new social housing places from July next year, which will be provided through community housing providers rather than Kāinga Ora.

Housing Minister Chris Bishop announced the measures this afternoon at a press conference called with just half an hour’s notice.

“Kāinga Ora is no longer accepting new applications for first home grants. They will continue to process applications that have already been received,” he said.

National MP Chris Bishop

Photo: RNZ / Angus Dreaver

“The government has made a deliberate decision to prioritize low-value spending towards more important policy priorities.

“At a time when the waiting list for social housing exceeds 25,000 applicants, we have made a difficult but necessary call to focus support on New Zealanders who need it most.”

He said the First Home Grant was an “expensive and inefficient way of supporting first home buyers” and had gone from covering around 10 per cent of a standard deposit when it was introduced in 2010, to just over 4 per cent. percent of a standard deposit in 2024.

“The evidence shows that the subsidy advances the purchase of a first home, but in most cases it does not matter whether someone can buy a house or not,” he said.

He said it was expected to have a “minimal effect on home ownership rates.”

Labor Housing spokesman Kieran McAnulty previously said removing subsidies would be a cynical move.

“It will mean that there are people who could have bought a house and now they can’t. There is a kind of social contract with people when you announce a plan to help them do something so crucial and so significant in their life is like buying a house, which Don’t play with her.”

He said eliminating the subsidies, while restoring interest deductibility for landlords, would make things even more difficult for renters.