The Government's willingly put itself under enormous pressure by inviting registrations for KiwiBuild houses - and getting loads of responses - at such an early stage

By David Hargreaves

There is such a thing as being too popular and/or successful.

The astonishing response to the Government's opening up of registrations of interest for a KiwiBuild house is already running the risk of falling into this category.

What's the problem, you say?

Well, in the simplest of terms - managing expectations. That will be the problem.  Because believe it, the Government's going to have a job on its hands.

At the time of writing 17,000 people and counting had registered, which is making the KiwiBuild 'list' the hottest ticket in town. 'I'm on the list - are you?'

Obviously, just because people have registered, it doesn't mean they will go the whole hog and properly apply. But you would have to suspect that a pretty fair portion of people will.

It's fantastic that there is so much interest. It would not be a good look if Housing and Urban Development Minister Phil Twyford had got up, said his piece and then NOT been killed in the rush.

But if you think about it, there should be no surprise at the stunning popularity, particularly given that the salary cap has been set as high as $180,000 a year for couples and $120,000 for singles.

Inevitably this has already led to criticism that this is middle class welfare. But I'm not sure how much option the Government really had. 

If the Government had really clamped down on the upper income limits for KiwiBuild houses this could have led to insufficient numbers of people coming forward.

It was presumably seen as important for interest to be generated in order to inject some momentum into the KiwiBuild programme.

Arguably perhaps, Twyford is happy for public pressure to go on - such as through a big wait-list - because this ensures the Government does have to be fully committed to the initiative.

I've already previously said I think the Government needs to go 'all-in' with the KiwiBuild strategy and fully commit to it. It can't be half-hearted or the plan won't work.  

Time to deliver

By creating such a level of public expectation at this stage then the pressure really goes on the Government to deliver. It can't backtrack. And maybe, with such a level of expectation the pressure is on to free up more capital to put into the KiwiBuild programme.

The $2 billion committed so far looks very light, even though the Government has said it will be 'recycled' as houses are completed and brought to market. But more financial muscle upfront would help.

Remember, the plan at this stage is for 1,000 KiwiBuild houses by June next year, another 5,000 in the year to June 2020, 10,000 in the year to 2021 and 12,000 a year after that till completion of the 100,000.

What that all means is that even if just half  (8,000-9000) of those currently registered to receive KiwiBuild information eventually end up on the wait list for one, some of those people who've registered this week would definitely not get a house till 2021 at least. Do they know that?

The ballot process the Government's talking about - of which it has yet to release full details - therefore becomes quite crucial. It also becomes a very likely centre piece for discontent and claims of unfairness from those waiting.

This is where the managing of expectations kicks in.

A reality check

It will be important that the Government stresses that not everybody who applies is going to get a house. It needs to stress that people may have to wait years. There will be disappointment. Also, and dare I even mention this, I suspect the Government will have to make absolutely clear these things are not some kind of a free lunch. That is - if you get a KiwiBuild house you WILL need a mortgage and the usual bells and whistles. Look, people might think me ridiculous for even saying that - but expectations can be funny things. These are not free houses and there are some people out there who might not be absolutely clear on that.

I had occasion many years ago to get involved in communications work for a community-based trust that was sitting on some very valuable assets. It was decided to sell the assets and pay out the money to members of the community. The talk was of households getting cheques for a four-figure sum. Nice.

But the thing was, having raised the expectation that this would occur there was then increasing frustration among the community when the money didn't appear to be forthcoming as quickly as people thought it should. Households that had seemingly managed before to get by on the money they had - before talk of them getting a four-figure cheque -  suddenly absolutely NEEDED that money NOW. Where is it? Give it to me! And it all got a bit tense and yes, expectations that had been raised from nowhere now had to be managed.

The Government's walking into a similar but much bigger situation with KiwiBuild. It's promising houses. It's inviting people to apply. And people will expect they can get one. And they won't want to wait.

And of course, the next thing will be - what of the people who are turned down, who don't meet the eligibility criteria?

The dream can be yours

For a lot of people, buying a house was becoming an unobtainable dream.

This Government is now waving something in front of them that they may or may not be able to get - but certainly the Government's giving the impression they can get.

Expectations are being raised. If you raise expectations, you have to manage them, and you have to manage the inevitable fallout when people get disappointed.

Really good on this Government for having a go at this. 

But I do fear there's a huge streak of naivety at the core of KiwiBuild and the way it's being put together.

The next part of the process - defining eligibility, and making it clear just how long people might have to wait - is going to be crucial..

Turned off and disillusioned

If people get turned off or disillusioned by the KiwiBuild process, well, that's going to blow up in this Government's face quite quickly, and at the ballot box.

Did the Government really need to start the whole registration process now, before it's got houses built? The Government's advertising its runs on the board before it's got runs on the board.  

Well, as I've implied, there was probably a desire to create interest in order to actually put the Government under pressure to get the job done.

There's some logic in that.

But there's also logic in not putting too much pressure on yourself. And there's logic in not over-promising before you've definitely worked out whether you can deliver.

And KiwiBuild has not been delivered yet.

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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94 Comments

I don't think it's surprising so many people are applying for a Kiwibuild house because the lucky ones will get a house that's worth more on the open market than what they paid for.

Yes, need to get me one of those lotto tickets.

Only problem is how? given I already have a house. Maybe me and the missus can split, then we are eligible for two tickets.

Noncents , sorry you're out of this lucky draw mate, for now , until everyone rorts the system , after which you may get a chance

I am used to missing out. I am the "Scraps" generation.

Born between 77-83. We are the small politically irrelevant group of people that are too old to be Millennial's, and too young to be Gen X-ers.

Ironically the PM is one of us.

Noncents, we are all exactly what we believe we are, and as we all like to be right, our subconscious goes to amazing lengths to prove us right. This is true wether you think you are missing out, unlucky, lucky, deserving, happy, miserable etc… We inherit our beliefs from our parents but once adult, we have the power to choose what we believe. It may not be that easy to change one's core belief but it is so very much worth it. Good luck to you.

How do you come to that conclusion Yvil?

One could look at it another way and say that there are now 17,000 potential buyers who are waiting around on a list for a nice brand new house.. How many of those 17,000 are now going to be absent from the immediate market to buy and what does that do to prices in the secondary market?

Yep, buyers are being given a massive incentive to wait and watch the market continue its slide. labour promised cheaper houses and they've just removed demand....... Lots of supply, no demand.. win/win for first home buyers ..... Tell you what that 40% equity you've mentioned looks like a sensible position Yvil as there will be an awful lot of specuvestors who will be up to the eyeballs and probably not sleeping very well.

Very well said. Due to the ballot process, anyone who falls under the income caps will hold off on their home purchase. Labour have given incentive for FHB to step back from the FOMO mindset for a moment.

NZDan

It's a very effective way of killing demand for several years. 17,000 buyers so far ( the numbers will be much higher in reality) ... now sitting on their hands, doing nothing and waiting for a new build..... remember these are a diminishing pool of people anyway who haven't already raided their funds in kiwisaver.....

All the while, credit is tightening across the ditch, fewer students are coming here next year apparently (STUFF - https://www.stuff.co.nz/business/industries/105296990/drop-of-44000-inte... ) so fewer foreigners to service the rental debt... whilst buyers sit on their hands waiting for a cheap new build.

To say it's a genius way of killing any demand is an understatement......and all the bleating below about build costs being higher than value etc etc, you have no idea gents - it's end of the credit boom! how cheap will an Auckland shed have to get to be able get rid of them at the end of all this?

Positive cash flow of 2k per year whilst you lose $10,000's on the value every year for a couple of decades..... definitely wouldn't want to be negatively geared right now! Oh yeah the rents go down in recession as well so that positive cash flow becomes piss poor 'subsidised' cashflow...

You got to know when to hold em, know when to fold em, know when to walk away, Know when to run, on a bank who have leant too much to too many fools...

That's property nic, you take the good with the bad, the highs and the lows. It's not all about capital gains, if that is what you think then you miss the point completely, it is a business of providing accommodation long term. Capital gains are just icing on the cake, investors should not rely on cg, if they happen they happen. When things slow down as they have then the property business starts to show it's core without the hype. People like property because it is tangible as in bricks and mortar, and direct investment is still the most popular investment class for investors for that reason.

Oh that’s such garbage. Long term holders of investment property are in for the tax free capital gains, period. The yields are terrible. Investors view tenants as a necessary evil to get those gains. From the sounds of it people like eco bird and TM2 look at them as life’s losers, when they aren’t actively discriminating against them. Purlease.....spare us, I’m fine with the greed it’s just the dishonesty I have a problem with

I've heard that some "property investors" break the law and don't submit tenancy bonds either.

you are a better man than me then Bobster, you're fine with the greed but not the dishonesty....... I just struggle with the f....in stupidity of what has become an enormously large part of the Ponzi..... but maybe I've seen too much... this is going to be a right mess.. short banks and keep cash off shore.

That view of the world is based on your sharetrading speculation, quick exits when there's volatility or about to be, trading the trends and channels, picking highs and lows. Maybe you mean that you only invest in shares bc of the capital gains (taxed or not), and not the dividends. Divs are probably a pittance compared to the short term capital gains you make from growth companies. On yields, your dividend yields are what the directors decide, and you have little influence over. Not so with property. Now let's see who is honest?
If it were true that Ppty investors were only there for tax free gains then as soon as CGT is legislated, they will sell out and the rest of the world and Australia would be examples of that. But they're not. PI is the most popular form of personal investment and always will be
Houseworks

Nic, would you mind sharing where your expertise with property comes from and how many years experience you have. Thanks

What exactly is the subsidy in KB that will allow purchasers to buy at a discount to market value?

I've been asking that too Bob but haven't seen an answer, maybe I will down the page.
Just read a stuff article using an example of someone buying a KB for $500k that is worth $1m, with no indication of any factual basis to the example.

Its not that it "will" its that it "could" because there is a price cap. These houses don't exist yet so on one can tell if they will or not.

BUT

If you register and they overrun on cost (due to increase price of building material for example) and have to sell at a lost due to the cap. You can pull the trigger. Equally if they build them, they come in under budget and you are offered one at 645k but don't like the door handle then just don't execute.

Everyone should register. It makes no sense not too if you qualify.

The Kiwibuild houses have to be sold for less than market price. It is just logical. After all, the very point of KiwiBuild is to create "Cheaper" housing.

- They can't sell for more than market value, or no one would buy one.
- If they were sold at market value, then Kiwibuild has failed it's single political goal.
- So they have to sell for less than market value.

We wont know the exact numbers, but we do can do some back of the hand calcs.
- Median Auckland House Price: $810,000
- Kiwibuild max fixed price in Auckland: $650,000

That is $160,000 below median market value at the time of sale.

The volume of Kiwibuild to be built made available, and the indication around location. Would suggest that many are likely to built in areas with even higher median market values.

They are quite literally the best investment you can make.

But KiwiBuild may not produce units that reflect the average dwelling. So you think that KB dwellings will be sold below the actual cost of construction? I have seen no statement anywhere to indicate this is the case. Their lower costs will reflect their lower spec. Their costs will reflect the development cost of lower spec houses, but they won’t be a giveaway. I struggle to see how this represents a “can’t lose” scenario.

The "can't lose" scenario as you put it is because this is registration only.
No one is being asked to commit to anything so you are getting the option to buy at no cost, that has value and there is nothing to lose. But if you don't register you don't get anything.

Standard game theory, you have to register even if don't think you will want one because if you don't and some new information comes out later you will have missed out.

No, people aren’t registering as a result of “game theory”, they are registering cos they think they are going to get a give away. No one is able to explain to me what that give away is

The give-away is that in all likelihood they get a $800k house for $650k.

The only caveat is that they can't sell for 3 years.

How...if a house costs $800k to build, will the govt effectively gift them $150k as a discount to the development cost? And the gift will do that 100,000 times? It makes no sense. KB will be about building lower quartile dwellings and seeking them at cost. What’s the handout supposed to be

It's not about the cost - it is about market value, refer below for some examples.

How...if a house costs $800k to build, will the govt effectively gift them $150k as a discount to the development cost? And the gift will do that 100,000 times? It makes no sense. KB will be about building lower quartile dwellings and seeking them at cost. What’s the handout supposed to be

Yes

You're wrong.. I'll always grab a zero priced option on anything that might be worth something down the line if all it takes is 1 minute to type in an email address.

.

It's not related to the cost of the build, it is related to the value in the open market.

Imagine a typical suburban street in Auckland, It is absolute middle NZ. It has 3 houses, on 3 very similar sections.

The house in the middle is brand new, modern layout, insulated, double glazed,modern fittings and fixtures including extractor fans, dishwasher, and heat pump (Albeit low spec versions) Kiwibuild. It cannot sell for over $650k.

The two on either side are relatively tidy houses from the 80s, although they have no insulation, extraction fans, or inbuilt heating options. But do probably have dux quest plumbing, tiny rooms, dated fittings/fixtures, and maybe even a bit of mould. But lets be fair and give them a nice new DIY Bunning's kitchen, and a lick of internal paint (Both done on the cheap to flick the house last year). Bothwere purchased in the last 12 months by two young FHB families for $750k. Both families are not eligible to buy the KB house.

We now have multiple scenarios.
1. The open-market value of the three houses is deemed to be $750k. Winner = Kiwibuild owner (KBO) who instantly gets a free $100k.
2. The open-market value of the three homes is deemed to be $650k. Winner = KBO, as existing owners have now lost $100k equity.
3. The open-market value of the Existing homes remains unchanged, but the KB one is valued at $800k as it is all nice and new.... Winner = KBO again.

I struggle to see how it represents anything other than a "Can't lose" scenario.

Don't forget option 4:

Kiwibuild comes in under cap $640 and offered at market price, but you don't like the neighbours because they have a cat so you pull out. Winner = KB option holder.

The market value of a developed unit is the price of comparable existing units. The input costs for a development are the same whether it is procured by the private or the public sector. The biggest cost is land, then build cost. To have a viable development the market value of the delling when completed, ie its sale price, needs to be not less than the input costs plus a risk premium as profit.

I don’t think anyone could seriously suggest the public sector would have any material advantage in terms of input costs. So if KB is going to sell a dwelling “below market value” you need to identify what is going to disappear from development pricing in order to allow its sale at an “undervalue”. KB could sacrifice its risk premium as developer, but I would be surprised if this “profit” on a $650k dwelling was more than $50k. Happy to be corrected on that. It may well be less. If the discount to market value was greater than that KB would be making a loss on input costs on each of the 100,000 units it is apparently to deliver. That’s at least a $5 BILLION subsidy. I are not seen any statement from govt that KB will make a loss on every single KB dwelling it sells, indeed if it were to say so there would be an absolute uproar. It seems to me there is zero chance that a discount of this nature to “market value” is politically sustainable. So yeah, I struggle to see how KB is a “you just can’t lose” scenario, as the idea the govt can give KB buyers subsidies on this scale just fails the common sense test. At some point, even an opposition as dumb as the current national party will see the issue. KB buyers will get what they pay for, which will probably be pretty crappy but if that’s what they want, here it is come and get it. They will be lower lower quartile dwellings, for a cut rate price, they will be value for what they are but the idea they will be $50k, $100k, $150k “money for jam” giveaways as against market value is just pie in the sky.

Didn't you just point out the difference in the first paragraph?

There is no/lower risk premium since they have an assure sale. So the developers margin would be lower than a non kiwibuild house of the same standard. So they have a cost advantage, limited supply and a price cap. All in a zero cost call.

Boom, I'm in!

Game theory wins again!

No, because the reduction of the risk premium by virtue of KBs role as guaranteed offtaker doesn’t mean that risk ceases to exist, it just means that risk is borne by taxpayers and is unpriced. And that risk is only one of the bundle of risks that is priced by a developer as part of its general risk premium, if you carved it out what’s its worth, $15k? Sales risk isn’t the only risk they need to price. Is mitigation of sales risk significant in terms of affordability? So politically the calculation is, KB acts as guaranteed offtaker, takes market risk and just hopes that the risk doesn’t turn around and bite it? As a taxpayer, f@ck that.

National should be all all over this, but I’ll leave it in the capable hands of Amy Adams to raise the red flags. Good luck with that, National are a total disgrace as an opposition. They should be all over KB, but their front bench are so dumb I don’t think they even understand the issues. This used to be prime National party territory, guarding the public purse, what happened? They have been totally discombobulated by the John key credit bubble, they don’t know which way is up. They need a complete clear out.

I think it would be highly hypocritical of National to be “all over kiwibuild”.

Agreed, but to be honest I don’t really care about their sensitivities I want them to be an effective opposition. They can’t undo their past mistakes, but they can atone for them. To do that they need to recognise those mistakes (ie repudiate key and English bubble economics), come up with ideas about how we are going to navigate our way out of the debt jungle and hold the govt to account for their dumb ideas. KiwiBuild is a massive stick and the govt are just begging to be hit with it. But national just show no sign of even understanding what the issues are

Fair point. Be a better opposition than Labour were.

Now, lets imagine that same street, but instead of 2 existing homes and 1 brand new, it is 3 existing homes. All exactly the same.

All three went to auction this morning (10am for those that are a stickler for details)

The Auction is packed with FHB, and a solitary Govt representative looking to purchase some houses for the Kiwibuild programme.

The houses have a reserve of $725k

Bidding on the first house is strong, eventually the Govt wins with a bid of $750k.
1. They have now outbid legit FHB.
2. They now have a house they cannot sell for more than $650k.

Second house also goes well, This time it gets to $745k and a FHB gets it (Turns out the Govt rep was playing solitaire and missed out on the bidding)

Third house bidding stalls a bit, but eventually hits $810k, after the FHB realised this was their last chance.
The Govt stop bidding at $800k, after being distracted by a cute picture of the Prime-baby.

As soon as the auction is complete, the govt immediately pick a lucky KB approved buyer and on sell the house to them for $650k.

Tell me - who do you think won?

I'll give you some hints:
- it wasn't the taxpayer - they took a $100k hit.
- It wasn't the second auction winner, they paid $95k more than the KB Owner for the same place.
- it wasn't the third auction winner, they paid $160k more than the KB owner, and $65k more than the other "winner" for the same house.

Third dream sequence.

Imagine the Govt acquires some land at zero cost, they keep half the land to use for Kiwibuild, and sell the other half to a private developer for $200k per section.

The Govt then commissions the private Developer to build 100% of the houses.Which they do happily for $400k per house..

We now have a nice new subdivision.
The KB houses cost $400k each, and so are sold for that. After all, we can't have you and me the taxpayer the Govt make a profit from a poor downtrodden KB buyer.

The developer on the other hand needs to make a bit of profit so sells their houses for $650k, to a bunch of non-eligible KB buyers.

The council come around and slap an RV of $600k across the lot.

Who was the winner?
Hint:
- It's not the poor saps that bought from the developer.

Final Dream sequence.

The Govt purchases a block of land for Kiwibuild. They then build a bunch of houses on it.

The total cost of each house was $500k.

They initially plan on selling them for $500k so as to break even. But in the 2 years it took them to build, local House prices have plummeted, and all private development has stopped as costs are not recoverable.

The Govt can now only sell them for $400k. As any higher and the registered KB owners will go and buy elsewhere.

Who is the winner?
Hint, it's not the taxpayer that just lost $100k per house.

Govt moves state housing clients, and accomodation supplement recipients from privately rented properties into new KB houses, stops handing over hundreds of thousands of dollars per week to private landlords. effect of doing this also pushes down market rents for other families that still get accomodation supplements so further reduces payouts. Also decreases health spend on sick kids due to shitty low quality un-insulated properties.

Not all bad.

How is a state housing tenant going to afford a mortgage?

Or are you suggesting the Govt is going to pay the mortgage for them? effectively gifting them a free house?

State housing tenant. Govt retains ownership.

That is not "Kiwibuild" though.

It is just an increase in state housing.

Which is also needed.

It shouldn't be "needed" though.

We need to stop treating the symptom, and start treating the cause.

The govt is getting round to it.. in a half-arsed way (ring fencing, brightline, foreign buyer ban). Now they just need to listen to the TWG and others, and put a CGT on all housing stock, or a land tax, and stop pissing around at margins like they all do.

CGT is never going to happen under Labour

You can't flog off 100k houses to the Public then tax them for the privilege.

It wouldn't just end their term in power, it would probably end the party completely.

Keep telling yourself that, plenty of support for a CGT from lots of voters, mostly younger, eventually one of the parties will wake up and see the pile of reports and studies that point out how real estate is tax advantaged to a huge degree and even things up in the attempt to actually spur a productive economy in NZ. Won't be this lot, they are collectively too dull.

The young are voting for it because they don't own homes. It is not about equality, it is about screwing those that have something they do not. The minute they get the keys to the front door...

You’re assuming that FHBS are in it for capital gains.

Be serious....all house buyers are in it for the capital gains, it’s not the only reason but it’s a big reason

Any capital gains we see are indicators of losses we would have been in for had we procrastinated on our first home purchase last year. E.g. Our property has gained 16% in a year on our purchase price according to homes.co.nz, which equates to 3 years of payments without factoring in interest.

Good on you for buying your own home Nzdan! Increase in value aside, I'm sure you would agree that the benefits of homeownership outweigh the much stated disadvantages like reduced freedom and flexibility and increased responsibility. There's nothing like personal experience to change someone's perspective.

It’s great. We shifted an internal door over 600mm because we didn’t like where it was. Only gibbed one side of the wall because we couldn’t be arsed finishing the job so for the past 9 months we have had “recessed shelving” in the hallway.

In my experience the handyman jobs get finished right before the house goes on the market :)

No, some people just want a place to live.

Whether it should or it shouldn't it is, and more so than it has in some time. It won't change, not now, the gap between income and housing costs is insurmountable at the moment and will be for some time. In fact, some people will never be able to afford more than state housing.
The market will only exacerbate that, even the theory of Adam Smith acknowledges just that.

Its one option for dealing with kiwibuild houses if they can't be sold.. And hey, this is your dream sequence.. you weirdo :)

Get outa my dreams then :-)

Now I am confused, is this the whole "Inception" thing?

How do you come to that conclusion Yvil?

One could look at it another way and say that there are now 17,000 potential buyers who are waiting around on a list for a nice brand new house.. How many of those 17,000 are now going to be absent from the immediate market to buy and what does that do to prices in the secondary market?

Yep, buyers are being given a massive incentive to wait and watch the market continue its slide. labour promised cheaper houses and they've just removed demand....... Lots of supply, no demand.. win/win for first home buyers ..... Tell you what that 40% equity you've mentioned looks like a sensible position Yvil as there will be an awful lot of specuvestors who will be up to the eyeballs and probably not sleeping very well.

Nic, would you mind sharing where your expertise with property comes from and how many years experience you have. Thanks

When they do the ballot, will they televise it, have balloons, music and perfect teeth?

This ballot is already in place and has been under the National Government as well .

I think you're confusing ballot with ballet.

The key is transparency, i.e. if there are sticking points we should know about them. There are plenty of vested interests who have been riding the gravy train and will resist reform. The building industry definitely doesn't want scarce resources diverted into cheap(ish) housing when they want to be building million dollar cash cows. Good speech by Phil Twyford here >>> https://www.youtube.com/watch?v=HPOH7rbfyiU

Phil talks all the right things. Yes we have problems all through the process from hoarded land to ripoff materials. But when it comes to action it seems to be in the wrong direction. We have a lot of regulations in place which enable land banking and monopoly materials and ripoff council fees. PT doesn't seem to be changing any of this - so far he is just throwing tax payer money at the same industry, same people and expecting a different result. How can Phil not knows the result will be the same number of houses per year. Bottom line is Labour don't care about kiwis they just want to slap their brand all over houses that would have been erected with or without KB.

The icing on the lolly cake is the lottery - yeah that's not going to be exploited by every man and his "ex"wife, infant child and brother in law's best friends sister.

Lolly scrambles are a bad idea for fixing bloated/constipated industries - it's actually better to cut out sugary treats and make them survive on lean diet.

The truth is you need a six figure salary to buy a 600'000 home, talk is that mortgages should not be approved for more than 4.5x salary to be affordable, even with a hefty deposit a six figure salary is needed for a kiwibuild to be deemed affordable.

I put my childrens' names down. If they win the ballot, I will bring forward their inheritance and pay cash if it looks like a good money spinner. They wouldn't qualify for a credit card based on their current part time earnings. Thanks COCM.

All my kids have a goal to buy their own house in the next three to five years so I will tell them to register for this ;)

Get in first and then wait for capital gains.

I notice many of the property spruikers who ridiculed the kiwibuild are now jumping on the band wagon..

If you can't fight them, then join them..

If you can make a dollar, why not? It’s a zero cost call option. It doesn’t get any cheaper. It’s not an endorsement of Twatford’s magnum opus.

You must be a twit to take advantage of something and not give that person credit for sponsoring it

Indeed , I have warned of this some weeks ago on this forum .........creating an unrealistic culture of expectation.

In our family case , we have filed 2 applications on the AXIS system in the past fortnight for our 2 eldest offspring who qualify for the ballot .

I suspect the difference is that our children, if they win this "lotto" , will be actually be able to take it up as my wife and I have set aside about $200k to help with the deposit .

I wonder if 100,000 houses is enough ?

How do we know that these so-called KiwiBuild houses would sell for more than $650k on the open market?
We have no idea whatsoever of what these houses are?
How large are they, are they prefab and where on earth are they?
Registering for something that we know nothing about is blatantly dumb!
95% of those that have registered will probably have absolutely no chance of getting a mortgage from the Banks as they will have insufficient deposit, not a clear credit history or be able to afford the weekly payment of $700 per week or so for 30 years.
KiwiBuild is not happening the way this COL said it will, and will come to backfire on them.

Registering isn't a contract to buy. May as well register if eligible and see what happens, and I assume the system will be if a buyer doesn't take up the purchase when picked (because they don't want to or can't secure finance), the house goes to the next name out of the hat.

There are many unknowns. I would wonder what sort of neighbours there might be and how close all these units are to each other and how many car parks there are etc.

95% of those that have registered will probably have absolutely no chance of getting a mortgage from the Banks...

That's why the government is giving them a helping hand. Cause and effect. Pot, Kettle, Black.

If you need proof ,prior to entering the ballot,that a bank will provide a mortgage what issues may arise for the bank or purchaser if the balloted home is won during a period of rising rates or falling house prices. Will the balloted homes be reduced in price or will the banks pull the plug on fine print.

One does, idly, wonder how many of the Eager Registrants have funny-sounding Surnames?

C'mon Waymad Thats a bit racist , in my experience there are plenty of Kiwis with real funny -sounding names anyway .

Lighten up, chaps and chapesses. The alert amongst yez will have recognised a riff on this - or has the Memory Hole claimed yet more Interest common taters too?

These KiwiBuild boxes whatever they are will not be subsidised by the NZ taxpayer at all.
In fact they may not be worth the money that the so-called lucky buyers pay for them.
Mr Twyford even said a couple of days ago that he didn’t think there would be much capital gain in them if at all, so why would you bother even wanting to be in a ballot for one
Until you see details of what they are offering in regards to size, location etc. you are wasting your time even being registered, although a big proportion will drop off as they won’t be able to borrow to buy.

Yes, its not obvious to me what the “subsidy” will be to make these KB houses at a discount to market value. The govt is stuck with input costs esp land like every other builder. If govt acts as guaranteed off taker for units built by private developers those developers can reduce the risk premium for sales risk from their price, but this will be peanuts compared to the other components of the build price. So how are these KB units going to be a “giveaway” to purchasers? I think many people have registered for KB cos they think there’s some sort of giveaway, whereas I am struggling to see what the giveaway is.

Registering doesn't mean you have to buy. So if they turn out to be worth more than the cap you pull the trigger and get one. If not then you pull out. Its crazy not to register if you qualify because there is no cost to doing so as far as I can see.

Do you know a 'call option' is?

That's the answer to your question

A government guaranteed zero cost call option? You would have to be crazy to sign up!! There is also the feel good factor associated with knowing that a teacher or nurse on $40k per year paid (via taxes) towards the house that someone on $120,000 or 180,000 bought ;p

Yeah! That will learn those teachers and nurse. They should have known Labour was going to give us well paid engineers cheap houses.

Excellent article David. you correctly outlined what most sensible people would expect and think of ... well done.

17000 and counting , maybe close to 30000 this time next year, means that there will certainly be a lot of disappointment ... then, more disappointment the year after and the one which follows ...

Disappointments and bitterness aside, there will be a lot of people waiting for 3+ years for that anonymous dream Shoebox to materialise somewhere and still missed out on them just because they were out of LUCK!.
Well, by then the markets will certainly have turned, or close, into the new cycle and most would have missed out on a dream house in a good location they were after (3 years ago) , or prices have gone up by as much as their initial deposit, Or/And interest rates have risen by almost 1% which puts their eligibility for buying a house in tatters ....I can list few more loses ...

I am sure that the Gov will get away with Building False Hopes which equates to providing False Financial Advice by an Adviser ! ... but as you say they will be caught by voters come 2020, and that will be an ugly bitter battle to fight. They have dug up their grave early in the piece ...

The real losers will not be PT and his KB gang ...it will be the poor guys and their families who believed them and lived in Hope for 3 years and missed out on so many thing at the end of it.
That is when crying on spilt milk becomes useless as ever ... and naivety will Not be an excuse for stupidity.

Pity that we ended up with half brained CoLs and newbie leaders misleading its own supporters right to the end of the cliff.

The thing with hope though, is it can be marketed forever. Labour 2020 slogans.

Acknowledgement
"Missed out a KB house this term, vote Labour to make sure you get one next term"

Distraction
"What KB crisis? Haven't you heard about the First-toddler, she is going to be flower girl at the First-wedding"

Continual lies
"Let's do this, again!"

lol, ...No, that won't happen
Some kiwis might be naive, but they are not Stupid.

I reckon that this house of cards ( KB) will collapse with the delivery of the first 1000 units ( if ever accomplished) ... buyers will evaporate when they discover what they are paying for and where ...

Fool me once shame on you, fool me twice shame on me ...

When i asked my kids to register, they looked at me sideways and that conversation ended there ...lol

Naive/stupid doesn't matter to a scammer, the result is the same.

As for your kids I don't see why they wouldn't register. Granted it is likely to be an abysmal failure of eipc proportions, but you still have to be in it to win it. It doesn't hurt to pick up a free ticket. Just ask this guy - https://www.stuff.co.nz/national/105285786/free-lotto-ticket-leads-to-1m...

What's the problem guys? Please can you all just chill and stop panicking? It is a good thing that the COLs are doing this KB thing to help out the poor and the not so rich. It is OK!

This is a terrible cruel trick the Government is doing to the most vulnerable in our society. They are giving them hope then will not deliver. People get angry then dangerous when you promise them something then do not deliver. The Labour Party is known for running raffles as fund raising. This is one huge lottery that is not much better than a giant ponzi scheme. Twyford has talked about recycling the money. This after all is what ponzi schemes are all about until the balloon is popped.