When the monthly migration figures come out next Wednesday showing New Zealand is still importing a net 50,000 migrants/year – requiring half the 35,000 homes/year for which building consents are granted – dropping the Government’s KiwiBuild target of 100,000 new homes over 10 years won’t seem smart.
The reason given for dropping the target is that it was “overly ambitious”. The number wasn’t the ambitious part of the exercise. What was ambitious was to pluck a figure out of the air and hope to achieve it without a clear path to doing so.
The KiwiBuild reset that new Housing Minister Megan Woods announced on Wednesday still contains aspiration, plus a few measures to encourage construction & ownership, and opportunities to gravitate from renting to ownership.
- Shared ownership schemes
- Building more homes where evidence shows they’re needed
- Widening the $10,000 deposit assistance scheme to include friends & family
- Reducing to 5% the deposit required for a Government-backed mortgage
- Reducing the amount developers receive for triggering the Government underwrite rather than selling to KiwiBuild buyers.
Woods’ focus on “right places”
Dr Woods said: “The housing crisis developed over decades and won’t be solved overnight. We’ve made a good start across the wider housing portfolio, but KiwiBuild isn’t working so we are changing it. When policies aren’t working we are honest about that and fix them.
“By making improvements to our build programme, we can get more New Zealanders into warm, dry, secure homes whether they be public, rental or affordable KiwiBuild homes.”
She called the target of 100,000 houses over 10 years “overly ambitious”, saying it “led to contracts being signed in places where there was little first-homebuyer demand.
“Instead of the target, we will focus on building as many homes as we can, as fast as we can in the right places. Each month we will release a dashboard of housing statistics so New Zealanders can easily measure our progress.
“Homes in Te Kauwhata, Canterbury & Wanaka that haven’t sold will be released to the open market, allowing us to reuse the Government capital to get more developments underway where there is clear demand.
“We will also be making changes to that Government underwrite, reducing the amount available in future developments so developers are incentivised to sell to KiwiBuild first-homebuyers instead of triggering the underwrite, which may be at a lower level.
“The Urban Development Authority, Kainga Ora – Homes & Communities, will co-ordinate developments across New Zealand, making sure that we get the mix of public housing, market-priced homes & KiwiBuild homes. We will now target those homes to areas where there is a clearly identified demand & need. We will look for opportunities for build-to-rent with long-term institutional investors through these developments.”
Other programmes continue
Dr Woods said the reset would sit alongside other actions the Government had already taken to begin to address the housing crisis:
- Banning overseas speculators from the market
- Stopping the sell-off of state houses
- Reforming tenancy rules
- Helping hundreds of homeless people to get into a home with wrap-around services, including addiction services & mental healthcare
- Building record levels of state & public houses
- Starting reform of the Resource Management Act.
“We’ve set aside $400 million from the KiwiBuild appropriation for a progressive home ownership scheme, like shared equity, to help more people buy their own home.
“We campaigned on helping more people into their first home and this new scheme will help struggling families buy a share of a house, reducing both the deposit needed to get a mortgage & their repayments.
“The scheme will mean that over time the family can buy further chunks of the mortgage until they own the home outright.
“We will also be reducing the deposit required for a Government-backed mortgage to 5%, and changing policy settings so that family & friends can each use their $10,000 first home grant and their KiwiSavers to buy their first home together.
“Taken together, these changes will help more people access innovative new support to buy a home, and help people who have been locked out of the market.”
The support system:
New minister Megan Woods got rid of a popular target for critics on Wednesday when she dropped the 100,000 new homes in 10 years aspiration, but she still needed to point to a sound way forward.
Housing NZ & HLC Ltd (the former Hobsonville Land Co) provided support in their briefing papers to the new minister in July, released by the Government yesterday.
Housing NZ & HLC Ltd told Dr Woods in their briefing papers that they have about 150 participants in their panels for builders, demolition companies & site works “pre-approved to deliver with pace & certainty.
“This has provided build capacity, and is supporting us to deliver KiwiBuild & transitional homes, alongside meeting the Government’s aim for an increased supply of state homes. We have contract arrangements in place that leverage the scale & longevity of Housing NZ’s build programme in both civils & house building, and that will fundamentally change the capacity & commitment of the market to deliver state houses.
“We are well poised to move forward at pace; supporting the Government & other agencies to achieve good public outcomes for housing, customers, neighbourhoods & communities in New Zealand. This briefing provides a detailed description of what we have already delivered, our plans for the future, and how we will support a smooth transition to establishing Kainga Ora.”
Briefings to incoming ministers:
Housing NZ: Housing – HNZ.PDF1.34 MB
Housing & Urban Development: Housing – HUD.pdf11.57 MB
Housing – MSD.PDF
Treasury: Housing – Treasury.pdf200.52 KB
Attribution: Ministerial release, briefing papers.