The Government is pumping almost $4 billion into housing supply to boost development in a plan to address the country's housing crisis announced today.
It's making more first home buyers eligible for grants and loans and is doubling the bright-line test in today's housing package.
The Government has been under pressure to address the housing crisis, which has seen prices surge, coupled with huge demand and a soaring public housing waiting list.
Prime Minister Jacinda Ardern described it as "a package of both urgent and long-term measures that will increase housing supply, relieve pressure on the market and make it easier for first-home buyers".
"The housing crisis is a problem decades in the making that will take time to turn around, but these measures will make a difference."
National leader Judith Collins described the package as "another cheap swipe at landlords".
"By removing interest deductions and doubling the bright-line test, fewer houses will be built, fewer houses will be available for rent, rents will increase, and more kids will grow up in motels."
$3.8 billion Housing Acceleration Fund to encourage supply
The multi-billion dollar fund is set for a combination of private and Government development of housing, with additional money going to increasing the use of vacant or underutilised Crown-owned land for housing.
It will go into contestable funding for infrastructure projects across New Zealand, alongside speeding up the delivery of large scale projects of public, affordable and mixed housing.
The Government want local councils to open up land and to enable housing intensification.
Housing Minister Megan Woods expected it to "help green light tens of thousands of house builds in the short to medium term".
"This fund will jump-start housing developments by funding the necessary services, like roads and pipes to homes, which are currently holding up development," Woods said.
First home buyers
The Government is changing the regional property caps for the First Home Loan Grant and allowing people to earn more to be eligible for the grants and to access five per cent loans.
First home buyers are able to access grants of $5000 for an existing house, or $10,000 for a new build - however the property needs to be below a certain price, which is different in every region.
Auckland, which has a median house price of $1.1 million according to REINZ, has its cap increase from $625,000 to $700,000. Wellington, which median house price sits at $890,000, increased from $550,000 to $650,000.
Christchurch increased its cap from $500,000 to $550,000.
The eligibility of home loans of five per cent for first home buyers has been expanded.
The house price cap for the loans has gone from $650,000 to $700,000, a person can earn up to $95,000 or have up to $150,000 with more than one buyer.
The income caps were originally $85,000 for one person and $130,000 for more than one.
The bright-line test is being doubled from five years to 10.
The bright-line property rules taxes money made on an additional house as income, if it is sold within a certain period of time. It does not apply to the family home.
The current bright-line test of just five years will be kept the same for new build investment properties.
Finance Minister Grant Robertson said the extension would "dampen speculative demand and tilt the balance towards first home buyers".
Interest deductibility loophole removal
The ability for property investors to offset interest expenses against rental income is being removed.
The Government is also considering closing interest-only loans to speculators.