KiwiBuild Reset

KiwiBuild Reset

By Andrew Collins, General Manager Urban Development

Last month the Government scrapped its KiwiBuild target of building 100,000 homes in 10 years and unveiled a reset of its KiwiBuild policy. The revised policy includes a $400m progressive ownership scheme and greater support for first-home buyers.

I was convinced the reset would include dropping the name “KiwiBuild” - thinking the name would be somewhat tarnished after two years of market and media criticism of unrealistic targets and policy misfires. However, while the name remains, the policy itself is now very different: There are no numeric targets. The previous target of “100,000 new houses in 10 years” has been dropped and the Government now aims to build “as many new homes as possible”.

- There is an allocation of $400m for a progressive home ownership scheme (which may include “rent to buy” or shared equity schemes). I’m quite encouraged by this although there’s a lack of details at this stage.

- There are more flexible eligibility requirements for buyers of KiwiBuild homes (including reduced deposits and buyers can sell or rent the homes to others after one year instead of three years).

- There is a reduction in the Government’s commitments to underwrite developers of KiwiBuild homes (to avoid developers building in the wrong locations and to the wrong price-points and then relying on Government underwrites instead of actual market sales).

I believe these are all good changes that learn from the experiences of the last two years and move us forward. To be fair, even though aspects of the previous KiwiBuild policy turned out to be flawed, at least the ambition and effort has been fully evident.

Urban Growth Agenda

The KiwiBuild policy continues to be just one component of how the Government is prioritising urban growth issues through its Urban Growth Agenda initiatives, with others being:

- An ambitious social housing expansion programme (currently led by Housing New Zealand).

- The new urban development agency, Kainga Ora – Homes and Communities, which brings Housing New Zealand, HLC and the KiwiBuild units together from 1 October this year (with new powers to facilitate large-scale developments in the legislative pipeline).

- A proposed National Policy Statement for Urban Development (to replace the existing NPS Urban Development Capacity) that strengthens Future Development Strategies and requires Councils to make room for growth “up and out” (meaning more emphasis on intensification).

- Pending reforms to the Resource Management Act and related legislation (inquiry underway).

Additional comment by Greg Rozen - Technical Lead in our Advisory Services team

I think the Government has finally taken onboard what the market was telling them: It's not a housing supply problem, it's a housing affordability issue.

The idea of looking to assist first home buyers and those in the community who are having real issues getting into housing needs to be addressed and KiwiBuild in the old form just wasn't addressing the real issue.

While the changes are a good step forward to addressing the factors behind the poor performance of KiwiBuild, the Government organisation in the new format of Kainga Ora will need to explore a multifaceted approach as just building homes has proven to not be the answer. Of the 300 Kiwi Build homes built, 100 are still awaiting owners.

HNZC has shown it can build quality housing fast - but only offering young first starters a Government-owned dwelling isn't the right solution. Rent to buy and other financial tools seem now to be the focus. These are interesting times for both the direction of housing in New Zealand and getting the population into home ownership.

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