Thankfully the government has abandoned the unachievable house build target that was becoming a milestone around its neck. Kiwibuild 2.0 is born.
Even though the government promised it would slash immigration numbers, we are still importing circa 50,000 people per year who need about 17,000 houses. We can hardly keep up with that demand let along the now broken promise of 100,000 new homes over 10 years from the government.
Image source: https://www.interest.co.nz/property/97023/new-figures-show-aucklands-housing-shortage-still-getting-worse-should-start-decline
Work with the private sector
The reason given for dropping the target was 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 thin air and hope it would all just happen and then blame everyone when it failed.
Common sense prevailed and Mr Twyford, or as I, in my childish way call him Mr Twitford was given the boot and now we get a new housing minister Dr Megan Woods.
KiwiBuild 2.0 has aspiration, plus measures to encourage construction & ownership, and importantly opportunities to gravitate from renting to ownership, including.
- 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.
The government has finally acknowledged that the shortage in suitable housing won’t be solved overnight, however they should have come to this conclusion sooner.
The target of 100,000 houses over 10 years has led to houses being built in places where there was little first-home buyer demand.
I suspect the government (your taxes) will prop up losses for homes purchased, built and not sold in Te Kauwhata, parts of Canterbury & Wanaka. All these houses were underwritten which also is changing such that developers are incentivised to sell to KiwiBuild first-home buyers instead of triggering the underwrite, which may be at a lower level.
As you may be aware another layer of paper shuffling fog has been established being the “The Urban Development Authority, Kainga Ora – Homes & Communities. Again, this is duplication where changes to the RMA to provide clear direction on the amount and requirement to have land ready to provide housing would have been much simpler. However, something must keep the paper shufflers employed.
The idea 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 has merit but you need to fix the supply side of you getting house inflation and that is the last thing a soon-to-be first home buyer needs.
The key message that needs to be made is having land available and infrastructure in place is one of the biggest drags on getting a house built. You can have all the will in the word and be blessed with a new ministry but if there is nowhere to flush the dunny or for the stormwater to go then it is all wasted. The idea of providing a leg up through rent to buy and lower deposits is very positive but the supply size – being ready to build sections should be a higher priority. There should be more land ready to go than is needed so you do not create crippling land price inflation and prevent first home buyers or anyone for that matter being able to live in a warm, dry house. Well one step forward is better than Mr Twitford telling us “everything is awesome”.