David Hargreaves sees bad signs from the Government's so-called Kiwibuild 'buying off the plans' scheme

By David Hargreaves

Everyone loves a trier.

Therefore, it can come across as churlish in the extreme to criticise someone for trying their best.

However, the counter point to that is we would be foolish to accept what someone does just because the intentions are good. After all, the road to Hell is paved with good intentions.

I think the launching by Housing and Urban Development Minister Phil Twyford this week of the so-called 'Kiwibuild: Buying off the Plans' initiative will likely mark the point at which the much vaunted Kiwibuild initiative started to come horribly off the rails.

I was taken aback when I read the Invitation to Participate (ITP) document prepared by Ministry of Business, Innovation & Employment. I could just see a lot of potential problems ahead with this scheme, which lest the title should mislead you, is a taxpayer underwriting scheme for private developers. That's what it is - and whenever taxpayer money is put up, there is risk.

Under pressure

The shape and style of this scheme demonstrates the pressure Twyford now feels under to start getting 'runs on the board' - or in this case a running tally of house numbers that he can put under the 'Kiwibuild' umbrella.

Twyford would know well that the National Party will have all its researchers constantly framing Parliamentary questions along the lines of 'how many Kiwibuild houses had been built as of...' Expect a torrent of sarcastic media releases.

After all Twyford established a name for himself in opposition with his onslaught on National's (abysmal) attempts at ramping up house construction, through refrains such as "...you cannot live in a consent or a section".  

The answer to all National's perceived ills was always the magical Kiwibuild. It was the solve-all. Nirvana. But now he's having to do it, Twyford's being met with the full realisation of just how hard it is in the New Zealand market to ramp up house building activity.

In fairness to him, he did talk about the 'buying off the plans' idea immediately on becoming Minister in order to get the ball rolling, so, this week's announcement shouldn't be a complete surprise.

A bribe

However, I certainly did not picture something quite in the shape of what's been released this week.

In essence, this is a kind of a bribe - a plea to private developers to build more houses.

The Government is imploring developers to throw some low-cost housing into their developments on the understanding that such low cost houses will be underwritten by the taxpayer.

What it effectively means is those low-cost units will be 'pre-sold', so the developer can go to their bank and say: 'We have this portion of properties pre-sold, with a Government guarantee'. Now, your friendly corner banker is going to presumably take kindly to such a proposition. Jam for tea and all that.

I should stress at this moment that the idea of subsidising building activity in order to ramp up activity was probably always necessary. But I think what's being proposed is somewhat different than a mere subsidy as such. And again, if you read closely that 47-page ITP document from MBIE I think it's impossible not to leave with a sense of feeling unnerved.

Problems

I'll go through some of the perceived problems:

The initiative is welcoming two 'tiers' of building operator to apply; essentially the big boys and smaller, even new players. That last bit bothers me a lot. Whenever taxpayers' money is being floated as an incentive there's always people attracted to the idea of a free lunch. Could we get fly-by-nighters setting up, interested not so much in building houses but harvesting taxpayer guarantees? What do you think?

Okay, that then comes back to the monitoriing of this scheme at the outset in terms of who gets approved for one of these taxpayer underwrites. 

Now Kiwibuild is very new. The Government agency that will ultimately, ahem, house it, has yet to be created. How well resourced is the unit, currently residing in MBIE? What are the levels of expertise like? Is is possible that a skilled, fast-talking, fly-by-nighter is going to be able to put one over on them? What do you think?

What's covered?

Then we come to another potential fishhook. 

The supporting literature on this ITP seems to reasonably spell out that the only thing being underwritten is houses or units that are specifically tagged as low cost ones - 'Kiwibuild' units. 

How closely is this going to be policed though? 

The scheme as proposed doesn't give any target or limit for the number of Kiwibuild properties that have to be included in a development. The only reference here is the magnificently general word "significant" when talking about the portion of a development that has to be Kiwibuild.

What's significant? 

Who is going to go out and physically check which houses are Kiwibuild and which are not? Are the houses going to be 'tagged' in some way? I bet they won't be you know. So, there could be ambiguity about what's covered and what is not.

Enticing developers

Clearly the hope with this scheme is that developers will be enticed to throw some low cost housing into their developments by the relative ease they may find of getting finance, given the Government guarantee.

How widely might that Government guarantee be applied?

Who is going to be responsible for clearly delineating what portions of a development are 'Kiwibuild' and what are 'market' - IE supposedly the bits of the development not covered by the taxpayer underwrite?

What of the situation, possible surely, where a developer gets into financial trouble. Would there be efforts to get that Government guarantee stretched right across the development? Are we going to end up with a situation where the taxpayer in effect could end up underwriting an entire development?

I think it's possible. I certainly think in a situation where a company that had undertaken to do some Kiwibuild houses goes under you could see the Government sued for money by creditors. 

Putting a floor on prices

As interest.co.nz commenters have already remarked, this scheme would seem to be putting an artificial 'floor' on house prices, which is a strange position for the Government to put itself in. We know how unaffordable houses are and okay, the aim of this is to provide affordable housing, but if the market's naturally going down, then providing a floor for prices through a taxpayer guarantee is an odd way to go. 

The market could potentially make houses more affordable if prices are allowed to drop - but an underwrite ensures that prices will stay up.

There are many more questions about this scheme, but I will just close off with the thought about what this does for the whole development sector.

Anecdotally financing is now quite hard to come by for developments.

What about the banks?

Giving a Government guarantee to developers is clearly going to help those developers get finance.

Does this mean, in effect, that the banks will swing their support behind developments that do have a Government/taxpayer backing - and ignore those that don't?

This looks like a recipe for market distortion.

The other thread to this, and very much related, is that this initiative clearly points toward the Kiwibuild initiative simply replacing other developments that might have been done. 

Anybody who had thoughts of doing a development might now simply throw in the minimum amount of Kiwibuild units to get the taxpayer backing and just go ahead with something they had a mind to do anyway. It's not adding to the supply, it's simply re-tagging or substituting it.

Twyford is going to be able to point to charts that show 'X' number of 'Kiwibuild' houses being constructed as some way of suggesting his initiative is working. 

Exposed to risk

But the reality is overall numbers of houses being built are not necessarily going to rise.

The only difference potentially is that we now have taxpayers exposed to market risk.

I don't think the housing market is going to crash, or even fall very much. But it IS a risk. Just because something's never happened you can't suppose it could NEVER happen.

This scheme subjects the taxpayer to that additional risk.

It's a bad idea and it shows very clearly that Twyford is not getting the traction he thought he would be with the Kiwibuild initiative. It's a hell of a lot easier in Opposition.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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85 Comments

David, thank you for calling the new Kiwibuild scheme what it is, namely, I quote you:

"a taxpayer underwriting scheme for private developers - That's what it is"

David has missed one thing. The government does not need to sell these builds at a profit.

In fact, it would make political sense to the govt to sell them at a loss, offering housing at cut prices to the plebs while retaining some to increase the state housing stock. The loss gets absorbed as sovereign debt, which would be in the tens of billions over ten years and could get paid off quite smartly by long term bond issues. The battler/plebs stump up the rest. The winners are builders, banks, plebs and investors. The tax payer loses, but only a little bit, and not forever. Probably in a way they won't notice, and in any case, the battlers are the taxpayer. It also should satisfy economists who call for debt expansion at this time.

Yes there is risk from the construction sector not delivering, but investment and risk go hand in hand, right? Yes it's a bribe, but who actually cares? The world is full of bribes.

This must be the strategy from this government's perspective, limiting plebs exposure to personal debt while servicing sovereign debt collectively. The alternative of selling kiwibuilds at the purchase price with ordinary people borrowing half a million dollars in personal loans is the kind of policy that would sink New Zealand under the waves.

There is some fundamental challenges to the scheme. For instance, you could add 3 bedroom houses to Wainuiomata (in Hutt City) and $650,000 is more than the existing house stock would sell for. What was you have to consider in any Government intervention is 'what is the market failure' - namely if this is such a good idea how come the market hasn't done it.

I do think there is some 'market failure' in the housing market that the Government can help overcome. I think we have lost the art of building cheaply - and some bulk purchase may bring material costs down and the Government may have a role in promoting prefabricated construction. I do wonder whether the Government would be better saying something like ' all schools built in Auckland should be modular off-site construction' - which would underwrite an industry change and remove some of the competition from Auckland's overheated construction market.

In accordance with the scheme, Kiwibuild's in Wainui would need to be brought to market at or below $500,000 inc. GST.

I wonder how these price points will be achieved. Imagine you were a construction company.

You could build smart by setting up factories and cutting middle men out of the supply chain.

OR

You could just make the house smaller and nastier in every possible way. Who needs carpet that actually lasts 10 years? Steel mesh in their driveway, nope. Who needs more than one power point per room?
Building 9 clone houses but have that one odd section with the driveway on the north? No problem, rotate your north facing cookie cutter plan 180 degrees and the driveway works. Who cares if the house gets no sun...

If nobody is dumb enough to buy your shithaus for $499,999.99 Taxinda will pay for it!

I dont quite agree. I think we build "cheaply", if we are lucky a new house meets the NZ building code, IF we are lucky.

What we are doing very well is pricing at as much as the market can stand and frankly in some ways I dont see that as wrong. I mean if I was selling anything I would want the maximum return I could reasonably get, is it unreasonable not to expect others to do the same?

For me as long as land is so over-priced there just isnt anything any Govn can do until they fix that IMHO.

Land prices are only high because house prices are high. When you value land you work out what it would sell for with a house on it; take away the cost of building the house (with suitable margins)- and that gives you land value.

One of the problems with Auckland is that there was a lot of land banking that pushed up land prices - and some of that may be reversed with the new Auckland Plan.

?

Huh?

The "New" Auckland Plan, the same as every previous Auckland Plan, cuts land supply to Auckland City to force up land costs. In fact the "New" Auckland Plan is even worse than the old ones. It shoves Takanini development back a decade and blocks development with big "large lot" areas created inside the RUB. It does of course also increase the amount of exurban sprawl to become 100% too much for any sane city.

The Auckland Plan is to make housing unaffordable and build massive sprawl.

Oh revered town planner unaha-closp.

The only thing we have 100% too much of in Auckland city is your daily ramblings about an uneducated understanding of the AUP.

Congratulations nymad, you get an uptick for reading my schtick.

Next time you are stuck in traffic and wondering where all these cars have come from. Its the massive sprawl we are building. And it is only going to get worse.

I'm not a town planner. Maybe you are. Maybe there is one reading this who can explain this to me.

I take a bike ride from the edge of Auckland, ride out from the old suburbs, biking trough countryside. Quite pleasant riding apart from there being a lot of cars on the roads. Then after 4 or 5 or 10 km of riding through countryside I plunge into new suburban development. What has just happened there?

Why are there new suburbs sprawled all the way out there in the countryside? What is the point of putting houses where public transport and biking commutes are intentionally made difficult?

I've found this developmental scatter to be unique to Auckland.

Good analysis but not sure why you conclude that he is "not getting the traction he thought he would"?

Isn't that "traction" dependent on the quality and quantity of responses they get to the ITP - and the subsequent number of affordable (in accordance with their criteria) houses that are built?

I quite like the sound of the Tier 2 participants - as it seems to invite medium/small enterprise/entrepreneurs to propose and subsequently test new design ideas. In many cases these entrepreneurs have the design ideas but not the land - and not the right risk profile/borrowing power to buy suitable land to test the market for such new designs. I'm hoping the underwriting of their projects means we'll see a lot of innovation put into practice.

Well that's a positive spin on it. Meanwhile I kind of suspect the reality will be the tax payer will pick up the costs for this debacle.

Thank you so much, David, for your excellent, critical piece above, I fully retract my commentary "Were has Interest.co.nz's critical reporting gone?" on your article of yesterday

The original aim of Kiwibuild was to provide MORE dwellings to deal with the "housing shortage" (100'000 more?). The new Kiwibuild scheme simply transfers private developpment into the taxpayer backed developpment which the Government can now claim to be "Kiwibuild". I doubt it adds much more dwellings though

Yes and no. To meet that price point in say, the Auckland market, there will need to be a re-think from a design perspective. What you find in many/most large new subdivisions is that minimum design requirement, or caveats, apply to what is built on the land. These minimum design requirements add cost and serve to maintain an inflated land price on the balance of land (i.e., future stages) of the development.

Hopefully, the need to target this lower price point will see much more modest first home options (such as the basic, 'kit set', relocatable Beazley Homes of yesteryear) come onto the market.

The Labour Government's philosophy is
Let's meddle with the nature and go against evolution!

Every government's philosophy is that. What have you been smoking?

If "corngate" is anything to go by. What's new?

If you want to eat food, this is reality. Nothing you eat that is commercially grown hasn't been meddled with via selective breeding over 10s of thousands of years.

ITP doc. says:
The New Zealand Housing market requires that, predominantly, building developers need to meet financial institution presale thresholds before development funding is available.

I thinks sums up the whole rationale for the ITP kiwibiuld.
ie. That a developers ability to presell a certain % of his proposed development ( in order to get bank finance ) is what constrains him from building houses.

I'm not sure if a financial institution would consider a few homes sold at just above cost ( kiwi build ), as meeting normal presale requirements..???

There is a "cost" for developers in being part of Kiwi build, and that is that they will have to commit to selling some of their developments at , possibly, below market prices....???

Will be interesting to see if this gets traction.... I'm not holding my breath.

Therefore, it can come across as churlish in the extreme to criticise someone for trying their best.

He is not trying his best. In the report there is a list of factors constraining supply and biggest one, listed first, is land supply constraint.

In opposition Phil Twyford promised to open up land supply and reduce land costs, but now new is in office he has generated this policy to set a price floor for land costs.

Another politician breaks another campaign promise.

I wonder if this will lead to poor quality dwellings? I could imagine a developper, knowing he's guaranteed to get $600k for each unit, would choose the cheapest materials possible, so he can maximise his profit. i.e. he makes more profit if he spends $500k rather than $550k on each unit. There's no incentive to use nice or quality materials to sell the units since they're pre-sold
Maybe that is what should be expected anyway as these are "affordable" (i.e. entry level) dwellings?

Well, exactly! If they are at the more affordable end of the market then use of cheaper lower cost materials is to be expected.

The criticism of this scheme is really flawed.
Yes it will create a form of price floor, but that floor is well below the current market.
Show me new 1 bed apartments in Auckland selling for anywhere near as low as 500k. Similarly 2 beddies anywhere near as low as 600k.
Sure, it would be nice if these price points were a bit lower. But to the critics of this scheme - please advise how else we will get new houses selling at these lower price points.

Yes, here's a good example of a new build from Wainuiomata, Wellington Region;

http://classic.realestate.co.nz/3317566

It doesn't meet the price point as is, but doesn't miss it by too much.

For the FHB or the retiree, a better design might be single story, 3 bed, 1 bath with a carport with secure, lockable storage and a section of at least 500m2 (instead of the 333m2 in the existing design plan) so that the home has room for additions in future.

Our first home was a 3 bed, 1 bath with a carport and it was perfect for our needs at the time but you just don't see these coming on as new builds anymore.

???

I don’t see buying off the plans as problematic provided:

• The crown gets a discount versus other buyers - given the advantages to developers.
• The crown makes a small profit to facilitate recycling of capital.
• The right checks and balances are included in the building process and potentially some form of bond or long term insurance to protect against quality risk.
• There is no risk to the crown from a failure to complete the build - the bank should cover this risk with the crown covering the risk of sale I.e. the crown will always buy.

If all of these are in place then good for them.

I do want them to get on with factory built houses ASAP and I trust this is in train. What happened to those big land purchases being discussed down by pukekohe? They should be doing that.

Maybe the crown could free issue the building materials? Cut out that retail + builders margin on materials.
Also, rather than Winstone Wallboards, Tasman Insulation etc paying rebates to the retailers they could pay rebates to the Government.

@Nzdan ............ for goodness sake mate , you are suggesting we embark on a massive public works program to build houses like was done after the end of WW2

Firstly , we dont have the money
Secondly , we dont have tens of thousands of demobbed and now unemployed soldiers to convert guns to nail-guns .
Third, we actually dont need to do it at all , we just need to stop unregualted immigration and get on top of the backlog

My suggestion was that the Government who are already underwriting the capital might see some savings in direct procurement of materials which could see some savings passed on to the end user. I don't see how you can read that and deduce that I am talking about some massive government Labour force.

Are you feeling okay?

As much as I wish that could be true, unfortunately savings in cost don't tend to get "passed on" when you set artificial floor price. I suspect the savings what would bring the price down would be passed on to the wallet of the developer in "administration costs" or some other ambiguous expense line.

Maybe they could remove the tariff off plasterboard competitors altogether. This is the elephant(board) in the room.

Maybe they could update the building code to include a standard solution for waffle style foundations that can be made from commodity products instead of people having to pay big bucks for Firth's "engineered solution" ©®™$$$$ which is just bits of plastic and rocks.

That's another option. But watch out, Boatman might think you're suggesting the government import retired servicemen from other countries for a Public Works program.

Wasn't Twyfool talking about factories and prefabs a while back? It seems like he's forgotten about that since. It must have been amnesia after all the drinks he shared at the Fletchers golf resort dinner.

Does someone have Twyfool's email? Since Auntie Helen had no problem with Chinese free trade I reckon Phil should give this a shot: Alibaba Kitset Housing - it even features warm wooden window frames. Something Fletchers will never deliver.

That fertile Pukekohe volcanic land should be zoned rural and never subdivided. The rate the country is subdividing volcanic land someday our veges will have to be imported.

Haven't we got a lifetime supply of turnips stored in that beehive place?

And melons

Great piece David ...

So, this is a novice way for getting around the LVR restrictions and new bank rules then !!

i.e. shafting the RBNZ rules by offering a bribe ( aka underwriting) to enable developers to build what they would have already planned to do anyway but were stopped by lack of lending or funding, low sales, and high prices ... and claim the development as KB.

Is that what it is all about?... claiming credit ? saving face?

So why go through all this SICK way in exposing taxpayers to high risk?? Why not lend FHBs part of their deposit to own a house of their choice at no interest ?

Why not buy or lease thousands of houses already on the market NOW and put homeless and beneficiaries in them next month? the market is full of stock for sale !!

Most of the above money will be spent/lost anyway according to the ITP. What will happen if they couldn't sell these KB portions in a development ? .... the Gov will surely pay for them ( and wear the loss) ... i.e become a Landlord and pass it to HNZ !!

This shows , in my view, how incompetent, clueless, and uncreative this LOT of few ministers dealing with this matter under the auspices of RH PT are !

The devil is always in the detail,
but people continue losing faith in this inexperienced Government from its everyday ill cooked actions, and there will be little faith left in 2.5 years

People in business are going to stream into the Housing Ministry offices to sign up to try and make a quick buck.

Think of the TAB on Saturday morning as every punter sees this as a chance

I don't think I've seen anybody mention this story on Oneroof (Herald):

https://www.oneroof.co.nz/news/is-it-time-vendors-adjusted-their-price-e...

How on earth did they sneak this one past Anne Gibson and her REINZ minders???

In the apartment market, where Dunn specialises, there is a standoff between buyers and sellers, although the traders have started to return.
Vendors, he says, are expecting $10,000 a square metre on their properties. Yet most apartments are selling for less than that and some for as little as $6000 to $7000 a square metre.
Dunn says vendors will have to temper their price expectations “big time”, although eventually the pent-up demand and shortage of homes will catch up in Auckland.

The cooling market could mean $100,000 less on a $1 million suburban property, says Sandra Forrester, Barfoot & Thompson branch manager. That can be hard to stomach.

Vendors do need to be looking at what has happened in their market over the past six weeks, not six months, says Sandra.

“It is the current market they have to be thinking of. It could be worse in three to four months. I hope not. But it probably won’t get any better.”

The link you referred to is written by RE agents, of course they want vendors to lower their price expectation, it makes for a much easier/more likey sale = commission

Paints a very dire picture of the market. No-one turning up to open homes, ignore your RV, you wont get that much.. good way to scare off anyone thinking of selling. And tales of conditional sales stacked four deep.. hmmm, bugger that for a joke.

The market is really dead. But you will hear zip on that from MSM given their vested interest.

It can’t be dead!

If Labour pulls the plug on the life support by actually passing the ring fencing legislation we'll find out. Or if the appropiate authorities look into the quality of the loan book/lending practices...

"“It is the current market they have to be thinking of. It could be worse in three to four months. I hope not. But it probably won’t get any better.”"

She says: “We have had years, and years, and years of massive capital gain.

“If you have owned property in that time you have been very lucky with the growth.”

Sell now lock in those gains.

"Sandra says the banks aren’t helping matters by making it hard for borrowers, especially investors.

“They just about want to take your first-born child,” she says."

I'm getting a little misty eyed.

Well done Mr Twyford.
You blurt out all this wind about how poor that National did with housing, and now you are going to actually inflate the price of gousing even more.
The private developers will cram all these small box’s in and ask for the 600to 650k prices when they aren’t worth that!
What has happened to the Unitec 4000units or houses which would be sufficient for the quota for the first 6 months or so in office.
Reality has set in with this lot and they now know that they are a dead duck come next election as their promises are not going to happen, except they will give away 900 million to overseas countries that contribute million could have bought a few loaves of bread for NZ children!
We are heading for major disappointments with this mob as Several have been saying since they got into so-called power.What an absolute stuff up this MMP is when a bunch of losers can all get into power!

A number of very valid points, David. Given a clean sheet of paper, what approach would you recommend the Government take?

Excellent question. I shall have another go at this subject next week, if time and Budget coverage commitments allow.

So here's a question for everyone lauding this Governments housing plan , which clearly does not see private property investors as part of the solution to the provision of housing :-.

WHAT ABOUT THOSE PEOPLE WHO WILL NEVER AFFORD TO OWN THEIR OWN HOME AND ARE NOT SO POOR AS TO QUALIFY FOR A STATE HOUSE ?

People like my daughter for example , teachers , or her cousin , a Policeman married to a librarian .

Their income puts them outside State Housing criteria , forcing them to rent in the open market AND unable to raise a deposit to buy a home .

Whats the plan for this massive group of ordinary folk ...........the middle of the road Kiwi, if you like ?

I think you're asking the wrong question there, the one you should be asking is why teachers, policemen/women, librarians have been priced out of the market. Why middle-income New Zealanders can't buy houses, I'm sure there are some helpful people on here who can tell you why, save your wrath for them, not a Govt that's trying to remedy a crisis.

Boatman

Did you not see the pictures of the auction rooms a few years ago.

The “middle of the road Kiwi” was trampled over in the mad scramble – and the damage was done.

Government of the day said there was nothing to see.

And now that same Government is nothing to see.

I was one of the ones trampled who just happened to be reaching that stage of life at the wrong time.

I know those who did the trampling and I know those who enabled it and cheered it on.

But I learned a few things too.

Probably the most important of which is that most of my parents generation is so full of s*** it oozes out their mouth with every word they say.

Brock....I understand and empathise with what you say, but want to add that in making a fair assessment we have to consider where that generation are coming from, the cultural milieu of their youth was one of word of mouth, where information moved much more slowly and was challenged much less often, where authority was synonymous with legitimacy and fact. They grew up, having authority figures as the main source of information. In their formative years, this was what was done to them, and that is what many of them fought against. They couldn't access a published piece of research or snopes at the click of a button. The mere act of questioning was an act of rebellion. Questioning for the youth of today, conversely can sometimes be an act of futility or vanity, which is problematic in a completely different way.

I don't agree so much that it's s*** oozing, but more a product of the culture and environment in which they were raised and actually fought hard to over throw. Other generations ooze their own s*** in a different way, and all environments and ages create different strengths and weaknesses.

There has always been generational conflict and friction at times of great change. But we won't find a way to mutual benefit if we dismiss each others perspective, as frustrating as that might be.

Proof that some boomers are very entitled. 100 took more than $4,000 of free travel to Waiheke https://thespinoff.co.nz/auckland/10-05-2018/the-great-waiheke-island-fe...

I can verify the mindset in my own family, as my parents use it as a day out for free. They also vote NZF. You can bet the man some call political pus won’t stop this rort

Have you tried sitting down with them and educating them on being a bit more savvy with their money?

When I decided to buy my first house I stopped drinking $5 takeaway coffees and had home cooked meals maybe they could try the same?

Breaking News - Revealed: Four simple steps to buy your first home!

1 - Live at home rent free
2 - Raid your retirement savings
3 - Stop wasting money on iPhones and flat screen TVs and avacados.
4 - Get handouts from daddy

Simple Boatman.
You have the capacity to be their banker.
You have that 10 Acre spread in Greenhithe.
Worth quite a few million

Many of the comments here are inane, totally ill informed or highly politically motivated.
Disappointing.

Fritz, of course they are politically motivated, because NZ has been shafted big time by this Govt. That is in power due to combining the votes of 3 losing parties that barely made more than National by itself.
If people knew that this was going to be the result then I know that they would not have voted the way they did.
One tax after another and yet they said no new taxes.

Glad you have admitted your bias against anything this government does. It was pretty obvious mind you.
Me? I will call it how I see it regardless of politics. That's why I will say this is great policy, yet also say I am annoyed with the govt's lack of action on migration

Fritz – are you a long lost twin.

I couldn’t agree with you more.

My condolences. With twins like these .. Separated at birth ( from their brains that is ).

?

TM2,

You and the other frothing-at-the-mouth right w(H)ingers,must be choking in your gins at the findings of a poll published in the herald today.
92% agree that public services like health,education and transport need more money;65% agree that the government should RAISE TAXES to ensure that public services remain at their current level,while 66% agree that their should be a higher tax bracket for higher earners.
It shows that not all Kiwis are motivated by pure self-interest. I am one of the lucky ones;a pensioner with income above $70,000 and I would support the top rate reverting back to 36% before Key helped himself and his mates to an unnecessary tax cut.
This government will make mistakes,some small and some major and i will not be slow to tell them so,but i support the general direction of travel towards a more socially and environmentally aware society. No one party ever has all the answers and I am quite prepared to switch my vote as i have done in the past,but I truly despise fundamentalists like you.

Why would we froth at a loaded question poll? It’s reported that these were the questions in the poll conducted by Labour pollsters UMR. It provided two options:
a) "the government should increase tax to at least maintain public services at their current levels into the future" or,
b) "tax collected should stay the same while reducing public services".

They must have a fixed mindset not to have a third option to become more efficient.

This is unmitigated spin. You Lefties just can not get it into your heads that you don't have the broad support no matter how much you try to spin it. Roll on the next poll.

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Great comment linklater, I wholeheartedly agree with it. Likewise I would have no problem with the 38% tax rate being reinstated, and I wouldn't complain if it was 40% tbh, and yes, it would affect me.

I didn't vote for any of coalition partners, but I am glad they are trying to address several problems in NZ that weren't addressed and barely acknowledged by the last lot. Becoming less enthused with their methods of addressing the issues, the oil/gas exploration announceent was a waste of time and totally counterproductive IMO, and this approach to buy houses instead looks like a fizzer to me.

I hope they can start releasing more better thought out policies, but for now i'll give them a B-.

The price floor thing bothers me and so does potential issues with build quality when there is a guaranteed buyer. These issues are not insurmountable as long as the government is going in with eyes wide open.

David, is it possible to take these potential issues into an interview with Twyford to see what thoughts they have about them?

At least they are trying, but still deserve flak for doing S.F.A. to deal with the biggest cause of the housing crisis - unfettered mass immigration.

Good grief – yet again, sanity prevails – there is hope.

Exactly. I sent an email to the minister of immigration's office 2 weeks ago and am still waiting for a reply.

I think Key was clever – but a somewhat short term populist - mass immigration suited the brief.

It’s something of a Ponzi scheme – the economic benefits appear miracle like – and once started it’s hard to just simply turn off – the miracle is then quickly exposed for what it really was.

We should never have been placed in this position – but we are – to bring the immigration madness to a grinding halt tomorrow will bring economic disaster – I hate it, but that’s the reality – we should never have been put in this situation – stupidity and madness won the day.

The band aid needs to be removed – from a political and economic stand point it’s going to have to be a slow boat – for the want of a number maybe 5,000 to 10,000a year.

The coalition are going to have to dress it up as best they can.

As I have posted before – I am just so angry with what was allowed, nay, encouraged to take place.

And now all this mindless carry on, bickering and silliness as to what to do with the resultant problems – housing, transport and infrastructure is to only name a few of the headline acts.

But now back to the inevitable and perpetual moaning and groaning from previous cheerleaders....

Could not agree more. Key allowed almost uncontrolled immigration for short term political gain.
This put huge pressure on housing, roads, hospitals etc.
Labour and NZ First promised to slash these numbers. Winston is deafening in his silence on this matter now that he has the "baubles of power".
It does not make sense to build 10,000 or so houses a year when we have constant immigration of 70,000 people flooding into this country, we are just being conned by our dishonest politicians!!

As one of the common taters who did some back-of-envelope figgering on the price floor aspect, I'm pleased to see it aired more solidly than could my bumbling bloviations.

The most distressing thing about a price floor is that it is not confined to new builds. It spreads sideways, and at a discount or a premium, across suburbs, localities, cities and provinces. We are at the far end of this process (I timed its start at 2002-03 when the Welcome Home loan craziness began), and its only cemented itself in more firmly and spread more widely ever since, under both administrations.

The net effect is to jack up the entry price for FHB's, battlers and the middle-middle alike, and to transfer that to existing land and home owners via instant unearned CG. I gave a personal example here, and while that was an extreme and now ancient example, it was indicative of the mechanism in general.

The least we could all urge is that this utterly stupid mechanism should not be spread even wider: because the baleful effects already evident well downstream cannot be wound back: probably a lost cause.

Calculate the unearned CG to all and sundry, conferred by past price floor increases, and divide by the likely WH loans issued or KB homes numbers built. It's not a pretty sight.

Wow imagine buying off the plans and it never gets built.

The government is jumping the gun to make themselves look good. Small problem, selling them is the easy part, the time it actually takes to build them is the major problem.

What a joke, just imaging the length of the queue........."Buy now and move into it in 10 years time"

Humans are intrinsically motivated to take the path of least resistance. Capitalist humans combine this with an appetite to look at opportunities like this and exploit.

In one fell swoop this will provide those opportunistic enough a major reduction in the barriers to entry for any size development. Not only will finance be far easier, but the government will be intrinsically engaged in any such development as they will in effect have a financial (and political) interest in ensuring it doesn't go bust.

As other commenters have noted, this provides a perverse incentive to build as many small, cheap houses as possible on as small a land plot as possible in order to qualify for the Kiwibuild payoff - without any real need to meet any quality standards - hell, it's hard enough to hold developers to the existing building standards as it is.

There's a word used in other countries for developments like this - the word is 'slum'. Sure, it will start out with reasonably nice new build small buildings that the government can show off on the 6pm news. But soon it will be multi storey apartment blocks, then entire suburbs, also subsidized by the government.

Oh but what about so called 'mixed' development - developers won't make 100% kiwibuild 'slums' will they? Why not? The market might actually even demand it. Ask yourself, would you really willing to pay large amounts (say $800k+) for non-Kiwibuild homes, to live right next door? New Zealand's already voted on this one - and the NIMBY's won.

This WILL result in 100% Kiwibuild developments, the houses will be small, shoddy and cheap (to meet the criteria), and there will be shady 'developers' coming out of the woodwork to suck on the the government teat.

It's an incredibly short-sighted, knee jerk reaction to the pressure the minister is under to get runs on the board - everyone can see that. The legacy of this will have dire ramifications for this government come the next election.

It's odd the way people are talking about ''slums'.
KB houses will be inhabited by first home buyers on at least slightly above middle incomes.
That doesn't sound like 'slums' to me.
There is a lot of rubbish being spouted about this programme.

Slum is an evocative word and I can't see how many places in NZ would fit the definition that a slum settlement is a collection of households that cannot provide one of the following basic living characteristics:
* Durable housing of a permanent nature that protects against extreme climate conditions.
* Sufficient living space, which means not more than three people sharing the same room.
* Easy access to safe water in sufficient amounts at an affordable price.
* Access to adequate sanitation in the form of a private or public toilet shared by a reasonable number of people.
* Security of tenure that prevents forced evictions.

No kidding! Fascinating to read however. I'm certain any new build will be ever so much warmer and drier than much of the substandard stock from the 50s and 60s ex-state houses that these same folks are likely to be offering out at outrageous weekly rental prices - subsidised via taxpayer paid accommodation supplements that the same critics are collecting.

Any perceived disruptor to the status quo will be resisted by those benefiting from the status quo.

now I would tend to side with those who think the scheme is shambolic:

http://www.msn.com/en-nz/money/homeandproperty/price-of-one-bedroom-kiwi...