$300k Cap for First Home Loans Sparks Concern Over Rising House Prices

National has announced plans to replace income limits for its First Home Loan scheme with a single $300,000 cap for every applicant. This move is expected to lift house prices in New Zealand. The current thresholds of $95,000 for a single person and $150,000 for a couple have not been updated since 2022.

The policy allows eligible buyers to access the scheme with just a 5% deposit, rather than the 10-20% typically required by lenders. These loans are underwritten by Kāinga Ora and sit outside the Reserve Bank's high-LVR restrictions.

Critics argue that this is a demand-side lever that will inject borrowing capacity into a supply-constrained market, driving up prices rather than benefiting buyer welfare. Australia removed income caps from its own 5% deposit guarantee scheme last year but retained house price caps, and within six months homes below the price cap rose 6.7%, while those above it rose only 3.6%. National's version does not retain price caps.