Housing spend-up — will it be KiwiBuild all over again?

The Government’s plan to spend $5 billion on housing is surprising given the KiwiBuild debacle, a financial expert says.

Bruce Bernacchi, KPMG’s head of financial services, said the package which aims to build 8000 new homes over the next four to five years is bigger than the $4b allocated to supporting businesses.

“$5b on housing surprised me when KiwiBuild has been such a debacle. It’s like KiwiBuild rising from the dead.” The Government promised to build 100,000 houses over 10 years as part of its KiwiBuild policy at the last election.

But last year it dropped that target, admitting the goal was “overly ambitious” and meant houses were being built in places with little demand.

Bernacchi questioned whether housing was the best use for the money, given that immigration would be lower than in recent years, economists were predicting falling house prices and housing was likely to become more affordable.

“I do wonder if that is the best use of $5b. Or whether it should be left up to the private sector?”

But the $5b housing spend-up has met with approval from the social housing sector.

Dominic Foote, chief executive of the NZ Housing Foundation which helps low-income rental households move to affordable home ownership, supported yesterday’s move.

Ian Hutson, the Salvation Army’s director of social policy, also said the money was needed to answer a huge call and although he was still studying the detail, he welcomed the state house increase.

The Government also said yesterday that a $56 million fund would allow low-income families in a further 9000 homes to have their houses insulated and heated. All this comes as the state housing waiting list is at a record high of about 15,000, almost three times as much as it was when the Government came to power in 2017.

The 8000 new homes will be split between 6000 state houses and 2000 transitional homes, yesterday’s announcement said.

Foote said: “We look in the Budget at the role given to the importance of funding more affordable housing to assist those who could be seen to be too wealthy for social housing.

“People may see a massive drop in income due to Covid-19 but often have a little too much for state housing — that’s the area that we support,” he said.

Well over 100,000 working and renting households were locked out of home ownership, “so we support social housing but it would be great to see affordable houses”, Foote said.

A Government spokesperson said construction had not started on any of the 8000 homes, so they would all be additional to the housing stock.

They will also be on top of the 6400 publicly-owned houses in the four years to 2022 that the Government announced in 2018, and the 1000 transitional homes announced in February as part of the Government’s plan to house the homeless.