KiwiBuild reset missed opportunity

Kiwis scrimping and saving for their first home are right to feel deflated by the Government demolishing its KiwiBuild targets. For big chunks of Labour’s nine long years in Opposition, home ownership would have seemed an impossible dream as house price rises far outstripped pay increases.

Labour’s KiwiBuild programme promised to act as a circuit breaker — to inject an average of 10,000 affordable homes into the market each year for a decade.

The project sounded hugely ambitious — and it was.

If the task of building quality homes quickly and cheaply was easy, private developers would have already done it and there would have been no need for Government intervention.

Labour first announced the policy in 2012, giving them five years to before the last election to sort out the feasibility of the policy.

Even if the former Housing Minister Phil Twyford hadn’t got his ducks in a row while in Opposition, he had the full force of Government ministries behind him once he took office.

Twyford maintained for more than a year that KiwiBuild’s targets were feasible, despite a growing tide of scepticism.

It wasn’t until January that he admitted the scheme would have completed only 300 of the 1000 homes forecast to be done by July.

The Government has now pulled back from KiwiBuild’s targets altogether.

After this week’s KiwiBuild “reset”, announced by Twyford’s replacement Megan Woods, the scheme aims to produce only “as many houses as we can, as quickly as we can”.

“When policies aren’t working we are honest about that and fix them,” Woods told reporters this week. Based on the programme’s pace to date, the public should not expect much.

The reset did contain a string of other measures and relaxed some of the rules for KiwiBuild buyers.

The Government, in the reset, earmarked $400 million for a “progressive housing programme”, which is likely to contain a rent-to-buy scheme.

It also plans to drop the required deposit for a Government-backed mortgage from 10 per cent to 5 per cent and allow more than two people to pool their First Home Grant and KiwiSaver funds for a house. These will be welcomed by many renters and will help some into their first home.

But they don’t compensate for KiwiBuild scaling back the very thing that promised to make it so effective — the construction of more houses.

New Zealand’s housing market has long suffered a supply-side problem of too many people vying for too few homes.

Expensive land, costly building materials, red tape and labour shortages have all combined to push up the price of home construction.

If KiwiBuild was the answer to untangling this Gordian knot, it was found wanting.

And nothing new announced this week appears to provide a solution either.