Buying your first home

How much do you really have for a first home deposit? When you combine your retirement account savings, the KiwiSaver HomeStart grant and other savings you could have, you may be surprised how quickly these add up.

Housing affordability often features in the news headlines, and for good reasons. Over the past decade, house prices have risen considerably, making it harder for Kiwis to get their foot on the property ladder.

In the last five years alone, New Zealand’s property market value rose 8.5% and in January 2019 the median house price was $550,000. Median prices for the country excluding Auckland reduced to $473,000. Rising prices is good news for existing home owners, however they make it harder for first home buyers to save the 10-20% mortgage deposit required by most banks.

How much do you really have?

• Dairy Industry Superannuation Scheme: After you have been a member of the Scheme (or a KiwiSaver scheme) for more than three years, you may be able to withdraw a portion of your savings to put towards your first home.
• Government contributions: As the Scheme is a ‘complying fund’, you may qualify to receive government contributions that equal 50 cents for every dollar you contribute (up to $521.43) to your Locked-in Account. More information about this can be found in the Member Booklet, available on the Scheme website.
• HomeStart grant: This grant is available to Scheme members who have been contributing to their Locked-in Account (or a KiwiSaver scheme, exempt employer’s scheme, or another complying superannuation fund) for a minimum of three years. For purchasing an existing home, the grant is between $3,000 and $5,000 per person based on $1,000 for each year of KiwiSaver membership (you must have contributed during these years). If you plan on building a new home or to buy land to build a new home on, the grant is in effect doubled to $2,000 per year of membership per person, up to a maximum of $10,000. This means that a couple buying a home together could potentially have $10,000 available for an existing home, and $20,000 for purchasing a new home or undertaking a new build.
• Other savings: Withdrawing your Scheme savings can take some time to process, so having additional savings available can be helpful to put towards the deposit listed on the sales and purchase agreement. The deposit can often be due upon the agreement going unconditional, so cash in the bank allows you to make the payment on time.

Combined, these start to quickly add up, and here’s an example of how this could look:

*HomeStart grant is administered by Housing New Zealand. Rules apply and more information can be found at hnzc.co.nz