Experts warn the subsidy proposal by the National Party, aimed at expanding house supply will have flipside of pushing up demand.

The loan subsidies could help many young people into their first homes but some experts believe the proposed looser rules will have more effect on prices than on boosting the supply of affordable houses for first home buyers.

National's proposed policy aims to boost the supply of new houses by doubling the grants for first-home-buying couples who both have been in KiwiSaver for at least five years from $5000 to $10,000 a person, or from $10,000 to $20,000 for each couple. The income limits for the grants are unchanged but the house price caps would be lifted in all regions.

First-home buyers would also be able to withdraw their government tax credits as well as their own and their employers' contributions to KiwiSaver since they started saving.

While some experts say anything that further fuels demand at this time is unhelpful, others maintain that developers would try harder to get product below the price cap for Welcome Home loans which is $550,000.

Real Estate Institute figures put the median house price in Auckland last month at $624,500. The median was above $550,000 in all sub-regional areas except Waitakere, where the median was exactly $550,000, and "outer Auckland", with a median of $542,500.

Source and full story: NZ Herald