Chris Trotter says the only people who aren’t happy are those who believe that publicly funded social interventions on the scale of KiwiBuild should be directed first to those most in need

Middle class capture, working poor miss out

By Chris Trotter

KiwiBuild, Labour’s flagship housing policy promising first-home-buyers 100,000 affordable dwellings by 2028, is a dog. It started out as a political fix and has yet to mature into coherent policy. Nowhere are Labour’s ambitions for KiwiBuild matched by the resources needed to fulfil them. Worst of all, the people most in need of 100,000 extra dwellings – beneficiaries and the working poor – are not the scheme’s targets. KiwiBuild is a perverse mixture of corporate and middle-class welfare, offering a handsome subsidy to builders and a generous hand-up to young professionals.

KiwiBuild began its life as David Shearer’s answer to David Cunliffe. In November of 2012, convinced that the Labour Left was plotting to replace him, Shearer was casting about desperately for a political circuit-breaker. He needed something that would halt the ambitious Cunliffe in his tracks and reassure the party’s rank-and-file that he was a Labour man through-and-through. KiwiBuild was that something. His announcement that the next Labour government would build 100,000 affordable homes for young New Zealanders brought Labour’s 2012 annual conference to its feet. In the warm glow of the membership’s support, an emboldened Shearer banished Cunliffe to the back-benches.

Having served its purpose, KiwiBuild was filed and forgotten. The necessary detailed development work on how it would be implemented, by whom, and at what cost, never progressed much beyond the hurried sketch vouchsafed to conference delegates and the news media six years ago. The consequences of Labour’s failure to fill in the gaps are now embarrassingly clear.

A Labour Party with stronger connections to the world beyond Parliament would have identified much sooner the practical limitations of KiwiBuild. The people and the products required to build 10,000 dwellings every year for 10 years simply aren’t out there. New Zealand’s construction industry remains chronically short of labour. The private sector will struggle to meet its own deadlines – let alone the government’s.

Unlike the First Labour Government, Jacinda Ardern’s coalition is attempting to build thousands of additional new dwellings with a construction industry at full-stretch. John A. (Jack) Lee, the man who oversaw Labour’s massive state-house-building programme between 1935-1938 could summon thousands of unemployed carpenters, tilers, plumbers, electricians and other construction workers to the cause of housing the people. Idle factories could be reactivated to supply the required building materials. This is what made “The Houses That Jack Built” possible. The absence of such vital enabling factors explains the houses that Phil Twyford cannot build in 2018.

Six years ago, when KiwiBuild was born, the full extent of the housing crisis had yet to emerge. Back then, affordability was the issue. The near impossibility of young professionals getting their feet on the first rungs of the housing ladder. Fortuitously, these same young professionals just happened to be the Shearer-led Labour Party’s prime electoral targets. First and foremost, KiwiBuild was a political “solution” to a middle-class “problem”.

Six years on, and the focus has shifted to beneficiaries and the working-poor sleeping in their cars or shivering in the overcrowded garages of family and friends. Voters for Jacinda’s transformational “politics of kindness” they may be, but they’ve not been deemed worthy of 10,000 houses per year. For these, the working-class people in whose name Jack Lee built the “social housing” of 80 years ago, 6,000 new state houses, in total, is considered adequate.

The irony is that, at an estimated price of $650,000, KiwiBuild’s “affordable homes” are rapidly moving beyond the reach of all but the luckiest of middle-class offspring. Those to whom the Bank of Mum and Dad still happily provides a deposit. Those for whom the wills of Mum and Dad hold out the prospect of eventual relief.

Undeterred, the Housing Minister presses on. Treasury may have revised downwards its projection of the scheme’s contribution to residential investment – but what do those “kids” know? Twyford is willing to buy Labour’s promised houses straight off the property developers’ plans. At a stroke, bad financial bets are transformed into sure things. Phil’s happy. The developers are happy. The banks are happy. And the winners of KiwiBuild ballots are over the moon.

About the only people who aren’t happy are those who believe that publicly funded social interventions on the scale of KiwiBuild should be directed first to those most in need. Tragically, however, the Coalition Government is selling the poor a pup.


This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 2 November 2018. It is also posted here, and is on interest.co.nz with permission.

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107 Comments

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We need to acknowledge that KiwiBuild was a cunning campaign platform dreamed up by a desperate Labour Party.

In that sense it delivered - sensationally!

But that’s it - it has nothing further to deliver.

TTP

Actually I see this as the first step towards a Singaporean model of social housing development. KiwiBuild will end up being a perpetual project just like Kiwisaver, Kiwibank etc. I'm not saying it's the right way or the best way but based on past precedent...

Bollocks

We need to acknowledge that something had to be done after 9 years of inaction. Maybe its not the best solution, time will tell. Id be interested to hear your suggestions though ?

What you people that keeps blaming the government for inaction don't seem to get is most of it was driven by cheap credit world wide. Let's keep this simple. You have 10 lollipops and you have 10 people and let's say every one of them has to borrow money to buy one. Currently the cost of borrowing is high so one can borrow just enough to buy 1. But suddenly the cost of borrowing goes down to where one can borrow to buy 3 lollipops. What happens to the prices of the lollipops even without any population changes? And are you blaming the banks? Central money planners? Or even the lollipop makers for not making them fast enough? No, you are blaming just the government and they don't have control over the cost of credit. It's not the government's job to build houses either. Most things they touch usually turns to custard just like this Kiwibuy.

Its the governments job to look after its citizens. Housing is an issue that was neglected. Yes I blame the last lot for refusing to even admit there was an issue.
With your analogy, there was never a supply issue anyway, just a demand issue from people who had the ability to borrow more and stupidly bid the price up. It does however explain why I have a warehouse full of cars. Shoulda bought lollipops.

Stev-o's first two sentences says it all.

Oh for goodness sake , its NOT the Government's job to house and feed its citizens, except when they cannot do it for themselves .

Your idea that the Government must build and supply a home to everyone who wants one is so detached from reality , its simply laughable

You do realise that your grandparents and possibly your parents (if you're a boomer) benefited enormously from precisely the type of housing policies that you currently decry? The family benefit housing scheme, with cheap State Advances loans - in place until the 1980s/1990s were responsible for thousands of Kiwi families getting into their first homes and the creation of an affluent middle class. The point being that the initial taxpayer investment was repaid back to society multiple times over.

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Easy to criticise KiwiBuild for its failure to instantly solve a problem and for its embarrassing photo opportunities for politicians - wouldn't we all prefer a few building labourers handing keys over to new home-owners.
But to defend KiwiBuild it is Labour's half-baked effort to do something after a decade of Nationals inaction.
KiwiBuild will be a game changer if it builds houses during recessions. Our housing problems go back to the last recession when building stopped, building companies dissolved and experienced building workers went overseas. If KiwiBuild reduces boom and bust building it will be worthwhile. So my judgement is reserved.

Exactly agree Lapun. During an economic downturn when immigration reduces and property developers are building less, is exactly the time we want government to push forward with sustained building projects so that we aren't caught out again the next time there is a population boom. In a downturn, government infrastructure spending also helps to provide jobs and support for the economy. If we are headed into a cyclical economic downturn the Kiwibuild might turn out to be an amazing boon for NZ.

So long as they employ proper regulated builders and not the builders that have been used to develop New Zealand's first shanty towns that have sprung up around Auckland.

Dream on gingerninja

Had the national party done what was being called for by the building industry to keep capacity in country instead of letting it leave there would have been kiwibuild in 2009. National wouldnt even listen to its own constituency!

This comment does not make sense ?

A key question seems: Is Kiwibiild providing an opportunity for young people to get their first house when they would otherwise not be able to buy one; or is it providing a subsidised opportunity to provide a step up on the property ladder by providing a better more attractive and newer home for some one who would have probably otherwise been able to get onto the property ladder while those who struggle to get onto the bottom step still miss out.
The point Judith Collins was making was that couple concerned was most likely in the later case.
The reality is that while 100,000 houses may be built under KiwiBuild, that will not mean that is anything like 100,000 additional affordable homes will have otherwise been built and nothing like 100,000 couples who would not being able to buy a house doing so.
If KiwiBuild's intention was to build an additional 100,000 homes and to enable homeownership to 100,000 couples/families who would otherwise not be able to afford a home - which seems to have been the intention - then KiwiBuild is an unmitigated failure of the highest order.

I disagree that they are subsidised, but with that put aside, kiwibuild achieves both. The young couple in question got a new shiny dogbox of a home, and thus didn't buy an existing home, leaving that on the market for someone else. Kiwibuild isn't building enough houses yet to have much of an effect, but if it scales up that demand removal from existing houses will slowly lower the price, enabling less well off people to be able to borrow their way into a home.

Yes
But the demand was already there for that house to be built and there was the builder available to build it so it would have been built KiwiBuild or not. Net gain nil except for subsidy advantage.

So how come it wasn’t built? If supply was matching demand then the average house price in Auckland wouldn’t be $1mil would it?

The housing industry has been at capacity for sometime now, so reason this house was not already built is because they were building a another house obviously.

As for the outrageous price. that is due to the asset bubble the whole world is in due to cheap credit.

You are welcome.

Yes
But the demand was already there for that house to be built and there was the builder available to build it so it would have been built KiwiBuild or not. Net gain nil except for subsidy advantage.

Except without KB there was no building of "affordable" houses, it was all about trying to jam as much of a McMansion onto the land as you could. That is the one thing that KB is actually starting to address. Prices are still too high, but that is because they are not subsidised, so would be good if you quit throwing that rubbish about.

100% agree - the types of houses being built in Auckland seems to have changed overnight. Auckland couldnt continue to only build the big detached houses that the free market favoured.

Talking to some older Kiwis, this is not so different from the past in NZ either. Much of the earlier government-driven building activity (you know, part of why NZ's home ownership rate achieved the heights it did and the older generations had access to affordable housing) was designed to address this problem among others.

The point of this article is that it is not addressing the problem of the homeless because they are not building fast enough, its just addressing the home ownership statistic.

Which is fine as I don't mind about my fellow professionals getting cheap Affordable slightly less expensive houses to get a head start on the property ladder. From that perspective its great because once they decide to move they can just sell it to another professional couple because they are the only people that can afford them. Best to keep the poor of our nice ladder. Keep it up kiwibuild!

Pragmatist you are the one throwing the rubbish about

Your usual high quality of comment imhenry. Full of logic, reason and evidence..oh, wait, no it isn't. Just typical team blue cheerleading.

Absolute rubbish Pragmatist

I believe was the intention of Kiwibuild was to reduce the deficit of affordable homes. Whatever peoples financial background or destiny, one Kiwi Built house bought, means one less chance a FHB will be fleeced by a greedy speculator.

Labour led Coalition, keep up the great work.

If this was really their intention, a 650K house is by no means affordable by any standards. Of course all depends whether you define "affordable" as using 40% of your total income for a 30y mortgage, which is completely outrageous. If we really want for housing to become affordable is the land price what should be tackled down, building more expensive houses is just wishful thinking hoping things will improve.

Oh you miss understand. Affordable doesn't mean to the average person but affordable to people who can afford them.

These houses are to give our young Lawyers and Bankers a big helping hand onto the property ladder, a Professional Starter home if you will.

The road to hell is paved with good intentions. If you really believe that this is "great work" then I think you are truly delusional.

NoFax, are you proposing the coalition provide larger taxpayer funded subsidies and price Kiwibuild at $500K? The point is here is that the number of completed Kiwibuild houses already exceeds that of the nine years under National. Under the current speculator infested climate, the more houses that are built, the better. Flood the market with houses. Remove the shortage and therefore the incentive for the greedy speculator.

Labour led Coalition, keep up the great work.

RP - The COL have built zero houses these few properties sold under KB are just rebranded houses already under way before the change of Government ! I think this article is so accurate the efforts should be for the poor not a prosperous young couple. Building more state houses makes sense to me to house the growing number of people who probably will never get near owning a home. KB was and is a political con

@shoreman , thank you for pointing this out ..............

National always had a scheme for affordable housing , it was called Homestart .

Labour has actually rebranded 18 Homestart houses as Kiwibuild

Chancers !

Homestart wasn't a scheme for affordable housing, Boatman.

It was nothing more than an effort to raise the price of housing.
You lower prices though increasing supply, not introducing subsidies which is what Homestart was. Nothing more, nothing less.

It was a con job that obviously fooled you.

Homestart was a terrible policy. Only capitalised into higher house prices. Mysteriously, in such subsidies as this and Accommodation Supplement and WFF and campaigning on increasing these, WFF National seemed to concentrate on policies global experience demonstrates raise house prices and rents.

Retired-Poppy are you really congratulating a GOVERNMENT for putting "kiwibuild" stickers on an already-planned for build as a solution for the broken housing market? I can exceed the number of Kiwibuild houses by next week by putting my own Midgetbuild stickers on new houses too, for a fraction of the cost to taxpayers and in a fraction of the time.

I would expect a government, BOTH Labour or Nats or whoever gets elected to tackle real issues such as land banking, zoning rules, lack of infrastructure funding, private Aussie banks creating NZD to turn record profits every single year... You know, things that grown-ups deal with. My kid can do stickers. And the pictures are cuter.

Here's the mistake, this whole thing should not be about subsidizing or even building "affordable" homes, governments can and should control land price, specially when things get out of hand like they did during the past years. Land price is the problem and can also be the solution.

JMO But i think more state houses need to be built for the needy and not so well off,thereby decreasing the need for people to be over the top rents.
With less requiring rentals the rent prices may/should come down and landlords may decide to sell,making mores houses coming on the market.
Gotta say the Labour led coalition haven't got this right.

Actually Chris, you need some perspective on the price of Kiwibuild homes. They were never designed for low income families and I categorise my own teaching salary in the mix <80k. But if you consider that our largest city in addition to property prices in Queenstown, Wanaka, Wellington, Tauranga and Hamilton you would never be able to attract professionals in the public or private sector to move to these centres if housing is so unaffordable...particularly for first home buyers likely to be under 35 years of age.

Do you suggest, we close the schools/ medical centres/ Police stations due to staff shortages as folk seek more affordable housing elsewhere?

Though I see the cracks in Kiwibuild sales pitch - the concept is aimed at providing for the young professional New Zealanders who need some assurances in remaining here. This way, our 'emerging talent' is retained and they can contribute more to society this way rather than heading off shore for fairer pastures.

As far as low income families are concerned - again I consider my sole income of <$80k in this bracket. Housing affordability is in the $250k - $300K price range..
I wonder how many properties can be found in this price range in all of our major cities for a family of five?

The previous National led government thrived in the free market approach to housing so now we have a crisis that bolted out the gate. For a left leaning commentator, you need to front on why we as a country are in this position in the first place.

Twyford eviscerated Smith for not reigning in the bureaucrats who continue to strangle housing supply and promised to magic up additional building resources from thin air, despite expert advice that it couldn't be done. Now having failed to do either he has cynically reshaped Kiwbuild as a blatant middle NZ vote buying exercise funded by taxpayers. Very few ADDITIONAL houses will be created by Kiwibuild.

Great article describing Kiwibuild for what it really is

@Yvil .......... yes a Con job

The govt has not put enough money in its kiwibuild budget for Kiwibuild to be for the very poor. Fullstop.

It is not that hindsight is 20/20, rather, Labour supporters wilfully chose not to see the problems with Kiwibuild at the last election. Many people, myself included, argued at the time of the last election that there wasn't spare capacity in the industry. As I said previously, Governments don't build houses but rather employ people to do the building. So now we have a Government that will crowd out the private sector and in the end no more houses will be built if Kiwibuild did not exist. Until the Government focuses on the real issues, such as planning and resource consent, then we won't build anymore than we are now.

If we are at capacity then I don’t see how planning and building consent changes would help either. I think what kiwibuild does is allow people to consider training up in the industry knowing that there is 10 years of decent work out there. In the past it has been boom and bust.

If Kiwibuld was about smoothing out the boom-bust cycle then it would make far more sense for the Government not to be building right now. We are surely in the boom part of the cycle as there must be 25+ years of demand out there!

Kiwibuild is a failure from inception because it does nothing to address the issue that it allegedly set out to address, that is, price. Planning and resource consent, and such things as "character overlay" and "view-shafts", reduce the supply of dwellings in certain locations and, therefore, push up prices.

From what I have seen in the last 12 months, there is spare labour capacity now, supply of some stuff like precast is still at a premium, but that will turn when the current swathe of apartments dries up and floods the market.

And after the initial flush of hints that Prefabs were imminent.....crickets.

Sell houses to the poor and benificeries? Would have to be bloody cheap and subsidised! What would happen I wonder if you give low income people houses for say $200k while middle income people have to pay $800k? I know what I would do if I was in the middle income category and I can assure you it wouldn’t be good for the economy!

Reading the anger from Left Wing Commentators re Kiwibuild this weekend, do I detect the beginning of public disagreements over policy? Labour always implodes in this way, it's more a question of 'when ' rather than 'if'. So come 2020 - 2023 when, with any luck, it will be just them and Greens, the fun will really start. And so the political cycle continues..........................

KiwiBore was always going to be a failure and the people that believed in it were sadly misled if they thought that the minister Mr Twyford could deliver.
He has no expertise or been successful in business before, so why would you think that it would work?

An enormous bottleneck has built up over the last decade or so, and yes, it is people you might otherwise think would be a shoo in for home ownership that will end up in kiwibuild homes. I don't really see this as a problem in itself.
For the poor, we need social housing now, lots and lots of social housing, and where kiwibuild is catering to people who might otherwise have bought something a little less modest in another time, so it will be that people you might otherwise not have thought to need social housing, will now.
It is going to take a damned long time to sort the mess left by the last government, it was allowed to go one for far, far too long.

Why should the poor be able to afford a house ? Wouldn't that just disadvantage those that are smart, that are working hard, making the right decisions in life to get into the middle income bracket ? if the poor want to live in Auckland then give them a tent. What the poor need to do is get out of areas like Auckland and Queenstown so they can afford a house in the provinces. Plenty of places in NZ that has cheap houses instead of expecting yet another government handout.

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Carlos - do us a favour eh?

Garrison Kiellor used to joke about Lake Wobegone - where all the women are good-looking and all the children are above average.

The difference is that he was joking.

^^ yeah let's segregate poor people, let's make sure they can't live near where they work, hells let's call the areas we then force poor people to live in "ghetto's" cause they've worked out really well before.
#FACEPALMSOHARD

And yet, and yet... assortative mating and assortative property purchasing already have Exactly that effect.....

Can't believe you wrote that Carlos67, Im not saying you're that wrong and probably quite a few would quietly agree with you, but you cannot state that aloud in our pc world

Auckland still needs cleaners and production workers. Or are you going to be happy paying the staff that service your motel rooms $50/hour?

Very good point

You planning to join Carlos on the rubbish trucks or the street sweepers or the office cleaners or any number of jobs that don't pay enough to live on?
Thought not.

No, I'm all in favour of a mixed, integrated society made of people from different socio-economic backgrounds.

Old hat terminology but whether you like it not there is such a thing as a poverty trap. And the people that dwell there are the same as those that have done the same, all over the world, for as long as time has been recorded. It is a fact of life. It is a fact of society. The romans called them plebs and the british, the hoi polloi. On the other hand, at the other end of the scale, you could say that Donald Trump made his first million, by being born.

No such thing as a poverty trap! Good grief, sounds like you need to get out more. Be interesting to see how you might cope born into a dysfunctional family, with no money, no education, no job and no hope. You just might feel a little trapped you think? Nn

agreed Rastus, there is such a thing as a poverty trap, do believe that’s what I said.

It wont be long and you can include Hamilton on the list .... I know it's probably funny right now but secondhand housing is going to be repriced probably in the next 12 months. Haha stupid council ... taking a leaf out of auckland and thinking they can slap massive, massive fees on to new housing. The new scale for dev cons, and it really is a con, is way over the top, and we all know what happens and the downstream effects on existing homes. They are place to invest right now if you are hunting gains.

Said almost as if previous generations did not benefit tremendously from affordable housing initiatives that went into NZ's once high home ownership rate. Hah.

Mysteriously, this 'why should they be able to afford' narrative seems to fall by the way when the discussion shifts to land rates and the idea that people who grew up in X or Y should be able to afford to live there for the rest of their life without significant income, and rates need to be kept low and funded elsewhere in order to protect this right.

Plenty of provinces out there that pensioners could move to rather than expecting yet another government handout eh.

This is one of the dumbest comments I've heard on this site.

I'm sorry, but we need to add Carlos to the notorious group of comentators constantly competing for the revered title of village idiot.
Carlos, you are in esteemed company. TM2, TTP, ecobird, boatman, BLSH - watchout, there's a new kid on the block.

Carlos shoots and misses - the poor can't afford to move and have little motivation to do so. But the people "that are smart, that are working hard, making the right decisions in life to get into the middle income bracket" - are motivated and can afford to move.

So here are the questions for Carlos - why will those motivated people stay in Auckland and what happens to Auckland if they leave?

Chris is absolutely right.

Kiwibuild is middleclass welfare and should not be happening.

The key issue the government should be addressing is the poor living in garages etc. (Kiwibuild is a trickle down mechanism. By expanding the housing supply it will eventually grow enough that the poor can rent something - the key word is eventually. The kiwibuild policy is not addressing the key issue, nor addressing it now. It might be part of a solution but its not enough on its own.)

I don't have a solution for instantly housing the poor living in garages etc, but it probably needs well designed temporary housing & crown/community land.

Otherwise:

1) The immigration rate needs to be cranked down as quickly as possible to a sustainable rate without crashing the economy. This is the cause of the excess demand. About 40% of immigrants stay in Auckland and this is where the main issue is.

2) Low interest rates pushing up asset prices - there is little we can do except the LVR or debt to income ratios to limit leverage.

3) Land prices are too high due to 1) & 4)

4) RMA – its theoretically great legislation but the implementation is a dogs breakfast.
The RMA is meant to be effects based, not zoning based. Urban planners get to write pages and pages of rules at no cost to themselves and huge cost to the elasticity & thus price of the land market (& also transport costs & the ability to implement affordable housing etc).

The government should legislate to require:
– Every single rule in district & regional plans to be sunsetted, say over 10 years
– All new rules replacing them have to be a nationwide application (effectively national rule statements)
– Each new rule is required to have a regulatory impact statement showing that the rule is beneficial before it can be implemented (the meer fact of having to prove net benefits will reduce the number of rules to a handful)

5) Remove the requirement for ratepayers to fund the transport system and up the fuel excise tax (we need to go carbon neutral anyway)

6) Remove the developer contributions (front loads capital cost of housing) & fund it through general/targeted rates (its the user that demands the services not the developer)

7) Force, via legislation, the requirement for local government to spend on essential infrastructure first and then only on vanity projects that are backed by business cases.

8) Amalgamate the local government areas which are economically too small to fund the infrastructure needs.

9) Building supplies duopoly - amend the ComCom legislation to require it to put more weight on the HHI index when considering markets. Breakup the building supplies duopoly.

It isn’t welfare if it isn’t subsidised. Next you will tell me kiwibank is welfare too.
Regardless of whether we need more state housing or whatever else for the poor, we also need the reasonable possibility of home ownership for the middle class - otherwise they will all leave. The average Auckland house price is $1mil - at what level do you think the government needs to step in?

Why is it 'middle class welfare'? It's not subsidised, developers need to meet the price points without subsidies. The big benefit is that developers can proceed with much greater certainty.
There's big economic benefits to this too, by helping smooth out boom/bust cycles in development. I am of the opinion that without Kiwibuild, we would be seeing a big downturn in the construction sector in the next 1-2 years.

Selling below market value (if they are, which i very much doubt) is not teh same as subsidised. Selling at cost is not subsidised.
You'll have to provide evidence that the govt paid more for the houses than they sold them for to prove a subsidy was in fact paid.

Some corelogic analyst trying to compare other homes in Papakura to the kiwibuild homes isn't going to cut it.. what other homes in papakura were built anything like the KB ones. ie, very basic dogboxes with no land, no garage etc.

A subsidy doesn't require the sale to be below cost. The government is foregoing revenue by selling below market price.

"Indirect subsidies are those that do not hold a predetermined monetary value or involve actual cash outlays. They can include activities such as price reductions for required goods or services that can be government-supported. This allows the needed items to be purchased below the current market rate, resulting in a savings for those the subsidy is designed to help."

Read more: Subsidy Definition | Investopedia https://www.investopedia.com/terms/s/subsidy.asp#ixzz5VsTXFStf
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Nope, i'll go with the normal dictionary definition. https://en.oxforddictionaries.com/definition/subsidy

And AFAIK, the buyer signs the agreement to purchase off the developer, the govt isn't the seller, so it can't forgo revenue if it doesn't actually sell anything. The govt backstops the development, so if they can't drum up a buyer the govt will buy it.. but only if it can't be sold via kiwibuild.

In my opinion Kiwibuild is an excellent initiative. It is taking time to gather momentum but it should be humming within 9-12 months.

Another Dreamer

As much as I wish KB was the answer, the signs are that it is a flop. They updated the stats page over the weekend, 214 couples/groups have completed pre-qualification as of the 1st November.

From a stuff article dated Sep 10

About 3500 people are in the middle of the arduous process of pre-qualifying for a KiwiBuild home right now, but just 43 have finished the process.

On Sep 10 I think there was only the 18 Papakura homes announced for balloting, but since then the ballots for Onehunga (25), Wanaka (10), Mt Albert (18), Te Kauwhata (10), Otahuhu (10) have all been announced, and in the case of Onehunga that ballot has closed.

There is seriously poor interest (at least of those that are able to get across the line with financing). 3500 started and 214 so far have completed it.

It could have worked if, as was originally planned in their policy, Labour concurrently reduced costs. But because Phil Twyford is a complete politician, he has not kept his campaign promise. So here we are, subsidising housing developers.

Yep, the one thing that may turn it around is if they get this other consenting agency up and running and tell the council to stuff their costs up their whatzit and they can raise rates to cover the needed infrastructure.

Either that, or if the economy goes into free-fall and it gets used as a make work scheme as a form of stimulus, but would probably need to be tied to a rent-to-own scheme or some actual subsidies for buyers.

I work closely with the development sector and I can tell you there is a lot of interest in Kiwibuild. It's going to be successful, although I think it's success will struggle to match the government's very ambitious targets.

interest from the developers.. or from buyers that can raise finance?

Yes, developers. And quite a few. Many will lower their profit expectations in return for the certainty Kiwibuild offers.

So there is interest on the supply side, not surprising.. salesmen want to sell, builders want to build. Are they able to lower their profit expectations enough to get the houses down to a price that they can find buyers at?

As per the kiwibuild website, there doesn't appear to be much on the demand side.. at least of those that can get finance. Of the 3500 that had started the pre-qualifying procedure back in earlier September, only 214 have completed it as of a few days ago.
And there are 499 contracted and announced houses, plus another 2858 unannounced but contracted according to the website.

Seems we are already 3000 qualified buyers short, better hope they can get the prices down to the point people can afford and want to buy them.

I took a trip to Auckland over the weekend. There is no housing shortage, while I felt for the homeless, there are hundreds and hundreds of empty homes that can never be sold because the debt to purchase land and develop is so high that many of the 'one off' developers will depart and leave the wreckage with our banks.

There is nothing other than a major housing crash on the horizon. Sorry to be the bearer of such bad news on a Sunday evening, but it's going to be horrific. I'm signing off interest.co.nz now for a few weeks so hope everyone has a good Christmas.

p.s. The first 'two little pigs' build better quality houses than are currently sitting empty and unsold all over Auckland.

A final post before Christmas (which will be described as the reason for the slow down in all housing sales from next week - or Labour will be blamed rather than credit excess (kiwi and Chinese)....

Auckland is now an armpit, there is no space to breathe in an armpit..... There are unsavoury things evident across the city and after 8pm when the bus shelters turn into covered housing for the wrongly misplaced it changes form. The strong stench of urban degeneration is not an attractive 'let's buy' signal to the emigrating wealth of the world... Ignore the credit bubble for a moment, that's gone... Why would you want to bring a family up there if you had any money? Singapore, Sydney, London, Vancouver reek of far less ' bank induced' poverty and dislocation! And we know they're all going through their own crisis.... Time for the media to tell it as it is without the bullshit? Including the last two articles I've commented on today?

Nic Johnson. - do come back soon. Your comments are always much more informative than the article itself.

Off for an incarceration holiday, nic?

Wow, quite a piece of [something] aren't you.

Oh I meant overseas holiday ahaha

The Trump method of borrow too big to fail, plus spread it around this dumb World is stupidity personified.
Look in the mirror. Banks luv you.
nuff said

Lets not get carried away here .............. This Government has not, and is never going to "build " a single dwelling for anyone .

Just like National government did , they are going to rely on the private sector to build cheap houses .

I doubt the Government even owns a single nail-gun , and they are not going to build anything.

Quite simply they are trying to get the private sector to build cheap and nasty little houses for $650,000 in Auckland , and those builders and property developers are still going to squeeze a nice healthy profit from each house .

The first 18 houses are a disgrace , nothing more than a large wendyhouse on a small plot of land .

Hell Boatman don't tell it like it really is, there are far too many Labour supporters on this site that are going to get angry.

This comments section has revealed a large number of commentators that would vote Labour no matter what. In defending this obvious sham, the main argument seems to be "oh well they had to try something because of the inaction of the last govt". Can you hear yourselves?
We all gave Nick Smith a good bashing over his refusal to identify the housing problem, and rightly so. The same people now defend this sham? Are you kidding? Nick Smith basically did nothing, but at least he didn't create a state-funded lottery, available only to those with a huge deposit.
Imagine if National had done this... the comments section would be a lot different!
And Ardern had the gaul to compare herself to Savage... for shame.

You're probably including me in that comment.. but FYI i didn't vote labour, and right now if it came to a vote I wouldn't vote for them now either. They are marginally better than the useless lot we had, who are busy self-destructing at the moment. Neither come anywhere near the level of adequate IMO.

Given MMP, maybe I should have said "Left" instead of Labour.
If this were a Right government, what would be your comments about this policy and the resulting lottery that it has created for the wealthy?
By the way, do we really have a middle class in NZ that is able to a afford a $650k house by saving a deposit via one income and servicing the mortgage over 25 years with that one income? I find that hard to believe.

Its not a lottery, A lottery implies winning something, other than a half-million dollar mortgage on a shoebox in Papakura.

I'd say the same thing about the policy, its well intentioned, but poorly executed, and so far having SFA effect.

So these people don't want to win the house? It's something they are trying to avoid? What are we arguing about then? Just scrap the whole thing. Nobody wants these houses according to Pragmatist.
You really should hear yourself.
Good intentions do not ensure good policy. The fact that it is poorly executed is no defence of it either.

On the plus side, I should email your comment to Tui Breweries: "It's not a lottery". Good one.

There was very little interest for a city that supposedly has a huge housing shortage. <200 applicants.

Oh, look, they've actually updated the kiwbuild stats page, still only 214 people/couples have completed pre-qualification.. And that is for the over 60homes/apartments that ballots are open for. Not exactly huge demand is it?

What is your argument?
Your comments don't give any argument against the fact that it is a lottery. In fact you just highlight how small is the exclusive club that gets a chance at the lottery. A poor turnout to buy Lotto tickets doesn't mean it's not a lottery.
And at the same time, you seem to be arguing that the policy doesn't even address the demand for housing.
I think you are actually on National's side on this one.

Not sure exactly what Nationals side is. they are too busy imploding at the moment for me to care what they think about much at all. Gotta get your head out of tribal thinking.

Kiwibuild is a flop, but it is not subsidised homes, just more unaffordable homes. Its not a lottery win.. it could rapidly turn into a lottery with a booby prize.

"Gotta get your head out of tribal thinking." You are too much Pragmatist. This is exactly my point; I guess it went over your head, as this is what I am accusing you of.
Great argument btw against the fact that it is a lottery: "It's not a lottery win". Okay. Getting chosen at random from a bunch of people. I must go check the definition of lottery.
I guess I should be happy that you have gone so far as to say that it is a flop. Whatever that means.

You were clearly implying that getting a kiwibuild house was equivalent to winning the lottery. Its not, you pay full price for the house.

I'm not sure how else to put it. There are not enough spots available to all those who want a KB house, so they ration it by lottery. The win is the ability to take part in the KB scheme.
Did you seriously think that people thought they won a free house?

Your language was quite cleary trying to imply that getting selected for the chance to buy a KB house was winning the lottery, ie a huge financial gain.

"So these people don't want to win the house?"
" A poor turnout to buy Lotto tickets doesn't mean it's not a lottery."

It was just a use of emotive language to try to bash the govt & their supporters, else you would have used less loaded words.. Ballot, random selection, draw.

When someone says "I won the lottery", everyone thinks a large windfall, not that they got chosen first to have their flu jab.