The Kiwi dream of owning a home is not always a reality these days. So the government is bringing in a scheme to try and make it a reality for first home buyers buying "starter houses", aiming to help up to 700 households realise the dream.

The government is spending $35 million to help more people into their first homes, but critics say the planned extension of the shared equity housing scheme will help only a few people.

Housing Minister Maryan Street sas there has been an unprecedented rise in house prices over the last six years and this has had the effect of locking families which could previously afford their first home, out of the market.

Under the scheme, the government will lend home buyers earning less than $85,000 a year, who have a 5 percent deposit, up to 30% of their house price to up what they're already borrowing from the bank.

However, restrictions on the value of the house mean that in Auckland - where the average house price is more than $500,000 - the house has to be worth less than $305,000. Buyers can spend up to $260,000 in Wellington, but the average house price is nearly double that and, in Christchurch, it's $255,000, compared to the average house price of $362,000.

The National Party says tax relief is a better option. "House prices, even first homes are more expensive than that. First home buyers know it. Why doesn't the Minister of Housing?" says Phil Heatley, National housing spokesman.