More expensive Kiwibuild ‘a good thing’

First-home buyers may have to pay up to $280,000 more for a Kiwibuild house, but bankers and housing economists say that’s actually a good thing.

Housing Minister Megan Woods announced an increase to the Kiwibuild price caps, with houses built as part of the scheme increasing from $50,000 to $280,000 each, depending on size and location. The higher price caps ranged from $550,000 to $860,000 – up from $500,000 to $650,000.

While people who do win a Kiwibuild ballot will now have to pay more for their first home, industry players have welcomed Wood’s decision. They say the previous caps were so low, they thought the Government was phasing out Kiwibuild – as developers couldn’t afford to build houses at those prices.

James Kellow, a director of property financier NZMS, said the new price caps were an ‘‘exciting’’ moment for property developers and meant Kiwibuild would benefit more first-home buyers.

Hours after the announcement, Kellow and NZMS announced $600 million worth of loans would be made available for developers to start Kiwibuild projects over the next few months.

Kellow estimated that could see 1000 homes built as part of the scheme, from the NZMS financing alone. He said overall the Government’s price caps increase should see thousands of homes built for first-home buyers in the year ahead.

‘‘Every other bank should be able to match us, at least,’’ Kellow said.

Kiwibuild was the Government’s flagship programme to build more homes for first-time buyers when Labour was first elected back in 2017.

Former housing minister Phil Twyford made the promise of 100,000 homes in 10 years – but modest interest from developers has meant just 1380 houses have been built so far, with a further 1223 under construction.

Core Logic chief economist

Kelvin Davidson said Kiwibuild’s impact on the housing market so far had been severely limited, with relatively few developments.

He said the private property sector had seen record developments, 51,015 dwellings receiving consents in the year to May 2022.

Given the hot property market, there was little interest in Kiwibuild, Davidson said.

But he said this week’s news arrived at the right time, with the construction sector set to decline due to higher costs and interest rates.

‘‘If the wider sector is slowing, the Government stepping in to do more is a sensible thing. It may just be fortuitous timing,’’ he said.