5% House Deposit: National's New Policy Explained
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What is the new 5% deposit policy and why is it being introduced?
Hello and welcome along to the Property Academy podcast by Urbus Partners. I'm your host, Steve McKnight. I'm
in Trinidad.
And this is the show that helps Kiwis go from zero to five investment properties so you can be financially free and stick around for the next 15 minutes because you're gonna learn how to buy a house with just a 5% deposit. National's new housing policy that'll mean even rich people can get government support, and how many extra first home buyers this policy really could create. Now, National has just released a proposal to let more. First home buyers purchase properties with just a 5% deposit. This is going to mean that households earning up to $300,000 per year, a lot of money, it means that they could qualify for the first home loan scheme. And so what I want to do is use this episode as a really good reminder for what that first home loan scheme is, because whether national
Get in and are able to implement this policy or not. I'd actually forgotten how good of a policy this is and like how even today first-home buyers can get in with just a 5% deposit. Now, just before we do get into the policy and all of that stuff, Andrew, I was recently on breakfast talking about this policy on TV one. And one of the questions they asked was how Big of a barrier or how hard is it for somebody to buy a first home right now? And I want to get your take on it.
I think that people forget that. Buying your first home is always hard. And if you take a newspaper from nineteen seventy, I guarantee you the same kind of headlines will be coming out in First home buyers, housing unaffordable, those kind of things. But you're gonna remember Well you were there in the nineteen seventies. What was it? And you gotta re remember there was a rec but right now there is a record share of properties being bought by first home buyers. They're buying at the moment twenty nine percent of houses. Now the major obstacle for them typically is that deposit saving up that first amount of money that they need to put in.
And the thing you've got to realize is that that big first home spend up right now is really only happening because first home buyers are able to get access to really low deposits. Not all of it comes from this specific government scheme that we're talking about today, but about half of first home buyers who bought in the first six months of this year are using less than a twenty percent. Deposit. Remember, for your own home, 20% deposit is pretty standard. But amazingly, I think in January it was about 51%. In July, it was about 48%. So basically, one in two first-home buyers are buying up with a really low deposit. That's because, under the Reserve Bank's rules, the banks do have some discretion around giving out some loan.
coins at lower than twenty percent deposits, but that is really being concentrated among those first home buyers. And that small deposit really makes quite a large difference.
Yeah, so if you think about a first home bank, say seven hundred and fifty thousand dollars. If you've got to have a twenty percent deposit, that's a hundred and fifty thousand dollars of your own money that you need to put into the purchase. Based on a ten percent deposit, that drops down to half of that, seventy-five thousand. Funny that a five a five percent deposit is only $37,500. Now, if you think about that, where's your deposit coming from? Well, some people have savings, some people might sell an asset, but most people are going to use that Kiwi Saver. And I'd say that a lot of people are going to have $35,500 in their Kiwi saver, certainly more than they're going to have $150 being able to remove.
And that $112,500 less deposit that you need means that you can get into the market sooner if you want to.
It's a it's a massive difference, right? And I suppose with Nashville's policy, they want more people to get access to those first home loans. Now, in terms of of what they actually want to do, like how does it work? Like what is what is the specific scheme that already exists that they want to expand?
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