Is KiwiBuild finally on its last legs?

A look at the state of the previous government’s affordable housing scheme, and what could come next.

Remind me: What’s KiwiBuild again?

First announced in 2012, KiwiBuild was a flagship policy of the Labour Party heading into both its 2014 and 2017 election campaigns. With Jacinda Ardern as prime minister, the scheme, which pledged to build 100,000 affordable homes within a decade, formally launched in 2018. 

100,000?! 

Yes.

But did it reach this target?

Nope. By 2019, the government admitted that just 300 homes would be built by the middle of that year, 700 fewer than had been promised the year before (by September, the number was actually just 258). The target of 100,000 homes was ditched soon after and a “reset” was announced, which included a progressive home ownership scheme. 

By May 2022, around 1,300 KiwiBuild homes had been built. After the budget was released and a Spinoff contributor suggested the programme was being quietly laid to rest, then housing minister Megan Woods argued that KiwiBuild was alive and well, even if it had slowed. “We’re making good progress, but the problems caused by decades of under-investment in housing infrastructure, National’s gutting of public housing and failure to build more, and no action on growing affordable housing, was never going to be fixed in a few years. The reality is it’s going to take more time,” she wrote.

All right, so it’s still going even now?

Yup! I just bought a KiwiBuild home, so yes, it’s still operating despite its shaky track record. If you meet the eligibility criteria, which includes income requirements and that you are a first home buyer, you can access KiwiBuild properties. All the eligibility details can be found here.

The KiwiBuild website lists 22 developments with homes currently for sale (most are in Auckland, but there are properties in other regions like Rotorua). 

How does it work again?

The Crown underwrites homes in new residential developments either on private land or Kāinga Ora land, meaning it either buys the homes from the developer off the plans at a discounted price and on-sells to home buyers, or it promises to buy any that don’t end up selling once they’re completed. According to the KiwiBuild website, “the underwrite gives developers the backing and certainty required to deliver developments that may otherwise have not proceeded or at a greater pace than originally planned”.

Where are we now?

Latest figures released to The Spinoff under the Official Information Act show the KiwiBuild scheme has resulted in 2,335 new homes being built since it launched in 2018. Most – more than 2,000 – have been in Auckland. In the Greater Wellington area, there have been 106 KiwiBuild homes constructed in the past six years, with 68 in Taranaki and 11 in Canterbury.

Part of KiwiBuild’s initial appeal was the lower price point for a brand new home. For example, the average sale price of a KiwiBuild home in Auckland over the past six years has been $613,437, compared to a national average of $800,000 or Auckland average of over $1 million.

And going forward?

In addition to the completed homes available to buy, according to the data provided to The Spinoff, there are 1,238 new KiwiBuild homes still contracted to be built. Again, most of these – close to 1,000 – are in Auckland. In Wellington, there are 80 contracted to be built. Several main centres, notably Canterbury, have no new KiwiBuild properties in development. Neither does Northland, Hawke’s Bay, Taranaki or Manawatū.

 “Private developers independently submit underwrite proposals to deliver KiwiBuild homes as part of their planned development,” a spokesperson for Kāinga Ora, the agency that runs KiwiBuild, told The Spinoff. “This means at any one point in time there may not be active KiwiBuild projects in all locations. It is also important to consider the wider market context and volume of new residential development in Auckland.”

So is KiwiBuild is on the way out?

The coalition government has pledged to kill the scheme entirely, but there isn’t currently a timeframe for this to happen. While in opposition, the National Party launched its own affordable housing proposal dubbed Going for Housing Growth that included an end to KiwiBuild. It advertised a $1 billion fund for “Build-for-Growth incentive payments” for councils that deliver more new housing, which would be “funded by stopping existing programmes like KiwiBuild”.

Asked for comment, housing minister Chris Bishop told The Spinoff that KiwiBuild was a “disaster” and said the government was keeping an eye on it and other housing schemes (which may include other support for first home buyers, like the First Home Grant). “The government is taking a close look at all housing funds in the context of the constrained fiscal environment and our own priorities around Going for Housing Growth,” he said.

Is Kāinga Ora preparing for the death of KiwiBuild?

A spokesperson for the housing agency said that decision lay with the minister. “As a Crown entity, Kāinga Ora responds to and delivers on the government’s housing priorities and expectations set by our responsible minister,” the spokesperson said.

However, as Thomas Coughlan recently wrote for the Herald, the former government had already pivoted away from KiwiBuild to focus on making it easier for new homes to be built by adjusting planning rules. “After it [Labour government] did away with KiwiBuild, it shifted to a housing strategy based on liberalising planning rules and forcing councils to zone for more housing, first through the NPS-UD, a set of permissive planning rules from 2020, and then through the MDRS, a set of even more permissive planning rules ushered through thanks to a bipartisan deal between the Labour government and the National opposition,” Coughlan said.

Under the National and Act coalition agreement, the Going for Housing Growth policy was adopted along with Act’s promise to make the medium-density residential standards (MDRS) optional for councils.

Meanwhile, a review of Kāinga Ora led by former PM Bill English is expected to be made public in the coming weeks. It was reported last week that some building projects, including KiwiBuild, had been delayed until the review’s findings were known. 

If not KiwiBuild, then what else?

Along with making it easier to build new properties through planning rules, the government recently announced proposed changes to the Building Act that PM Christopher Luxon said would help cut red tape. “We have a major challenge. Our building costs have gone up 41% in just the last five years across New Zealand. To build a house here in New Zealand is now 50% more expensive than it is in Australia,” Luxon said. “We want to make it easier and cheaper to build.”

Part of that, Luxon said, was to amend the Building Act so that product standards from other countries could be recognised.