A new Christchurch Housing Fund will be set up to help families into their first home.

Christchurch families struggling to afford their first home will soon get a helping hand from a new $6 million housing initiative.

The Government announced on Wednesday it would contribute $3m to establish the Christchurch Housing Fund to help residents on modest incomes buy their own home through a shared equity scheme.

As part of the agreement, the Christchurch City Council would contribute $3m to the fund, but the council was yet to confirm its contribution or identify exactly where the money would come from.

SUPPLIED Christchurch City councillor Vicki Buck has been working with the Government on a new shared equity housing initiative.

The council had been working on the initiative for about two years and would be responsible for its implementation.

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The fund would provide a second mortgage of up to 40 per cent of the house purchase price.

Councillor Vicki Buck, who has led the initiative, said the details still had to be worked out, but it was likely people would apply to the scheme to help fund their deposit.

If someone bought a $400,000 home and the fund provided $40,000, the fund would own 10 per cent equity in the home. The homeowner could buy out the share at any time or it would be paid back when the house was sold, based on a nominal interest rate of about 2 per cent per annum, but the rate had yet to be determined.

Buck said there was not a lot of risk for the council with the scheme and the repaid capital would be put back into the fund.

"If you're looking after Government and community funds, you don't want to lose them."

The council's housing policy, approved last year, stated the council would consider innovative housing solutions to break down barriers to home ownership.

Buck said this initiative ticked all the boxes.

"Christchurch is a city where you can still buy a place to live for less than $400,000, so we are an affordable city to buy your first home. This announcement means a new group of people will have the chance to do that."

The fund would use several criteria for deciding who would receive financial assistance. It would prioritise households at or below the median income level for Christchurch, households with children and those with existing savings.

It was expected between 25 and 40 households would benefit from the fund in the first three years.

The fund was likely to be ready to accept applications by the end of the year. It would use the Government's money to begin with and then top it up with the council funding.

Buck said she envisaged the council contributing $3m over three years. It was possible the money could come from the council's $100m Capital Endowment Fund. The council set up the fund in 2001 using its $75m share of the proceeds from Orion's sale of its investment in a gas company.

Social Housing Minister Amy Adams said the Government committed funding in 2015 to support the council to achieve its housing objectives.

If the council did not match the Government funding, it would have to pay back the Government's $3m within three years. The money would be treated as a debt to the Crown, the minister's spokeswoman said.

The Taxpayers' Union has criticised the council's $3m contribution, describing the move as "disturbing".

"It kicks that can down the road for what is needed to fix housing affordability issues – that is supply."