I stumbled across a 2020 OIA request to NZ Treasury where someone asked:
what analysis Treasury has done on the KiwiSaver First Home scheme affecting house prices, and how much taxpayer money gets transferred into the housing stock
Treasury released a few internal docs and they basically say that increasing caps would lead to higher house prices and that subsidies for renters/buyers tend to be captured by landlords/sellers instead of improving affordability long-term.
The advice was apparently ignored.
Funneling money to landlords is the system working as intended.
We know that supply problems mean our house prices are entirely dependent on what people can afford. You give people money for housing, they can afford to pay more, then house prices rise.
But realistically, interest rates have a far higher impact as they apply to almost everyone, not just those buying their first home.
The real answer is to build more houses, to the point that supply exceeds demand, but the government cancelled all that Kāinga Ora work so it’s not happening any time soon.
It’s election year…vote out the clowns.
