David Hargreaves says the Government needs to regroup over the holiday period and come back with a more clearly articulated plan for its flagship housing policy

David Hargreaves says the Government needs to regroup over the holiday period and come back with a more clearly articulated plan for its flagship housing policy

By David Hargreaves

It's probably about time to start thinking (already!) about New Year's resolutions; yep, even as we are realising we didn't do enough about the ones we made apparently about five minutes ago regarding this year.

If I can make an early suggestion for this Government, it would be to get itself sat down (once the turkey and trimmings have been digested) and come up with a very clearly articulated plan for early next year on what is happening with the flagship KiwiBuild policy and where this Government is going generally on housing and shortages etc.

The situation that's sprung up in the past few days around leadership of KiwiBuild is frankly bizarre and it's not a good look for the Government that it seemingly can't do something about it.

Nobody should have expected that an undertaking as ambitious as KiwiBuild, with the stated intention of building 100,000 houses in 10 years, would be achieved without teething problems and bumps along the way.

And perhaps the boundless enthusiasm and easy manner of Housing and Urban Development Minister Phil Twyford has in some ways worked against him. That's because maybe we were at least at the start a bit swept along with his zeal for how this would be accomplished and how he perhaps had a secret for unlocking the New Zealand housing shortages that had not been identified before.

Well, Twyford's finding it tough clearly. But that doesn't mean we should, as perhaps some already are, be already writing the whole thing off as a bad idea.

We never should have expected to see houses immediately mushrooming all over the place. Readers and commenters who have traversed the bumpy path of building a house will be able to explain full and well the vagaries of house building in New Zealand.

And the best will in the world was not going to resolve the difficulties within the New Zealand landscape overnight.

We really do need to tackle what seems to have become the untouchable and uncontrollable monster that is the Resource Management Act. But we need political consensus and the RMA seems to have fallen into the same territory as superannuation. You get the impression sometimes that political parties would not ever like to reach consensus on some issues because they would then give up their ability to score political points with them. 

So, we are for now stuck with the situation we are stuck with and a Government that's - despite the vagaries of the RMA - promised to build loads of houses. And it's off to a rough start.

My concern is that the Government itself might get a bit discouraged by some of the roadblocks its seen in its way and start losing its nerve. I just sense that is already starting to happen and that maybe there's an - at this stage unspoken - moving of the goalposts going on.

I was, as I opined a couple of weeks ago, disconcerted about the announcement of the new housing and urban development authority (which remember was originally styled as a housing commission). Can I say for a start that I don't like the idea of Governments announcing very major policy decisions and initiatives on weekends. The attraction of doing so is presumably to get unfettered media coverage. But within that also is perhaps an element of the announcement not getting the kind of scrutiny it might during the cut and thrust of a working week.

And that particular announcement was worthy of more scrutiny than it got because it did clearly signal to me, I think, a very definite shift. From the 'new' authority (originally housing commission) being a completely new organisation, we suddenly have something that is instead founded around and including the 'old' Housing New Zealand. That's very different to what I thought we were getting and I don't see how it's going to function optimally in terms of getting all those houses built.

If there is some thought though that the Government is already losing its nerve, then a 'new' authority that includes all the old Housing NZ bits would be a good way of fudging the issue and perhaps, as I've already suggested, leads the way for KiwiBuild to become a gateway for a proliferation of new state housing. 

Don't get me wrong, there's always going to be a need for social housing - and I completely disagreed with the direction the last Government tried to head on this one and it all turned into a complete dog's breakfast.

Aspirationally though, we as a nation should be trying to get our young people into their own homes and being strongly incentivised to 'climb the ladder'. And that's what KiwiBuild was all about and the Government had the right idea and it should not lose it's nerve just because it ain't nearly as easy as the Government tried to convince itself it would be.

So, I think there needs to be a pretty decent sit-down by this Government over the summer period and come back with a plan. 

If targets have to be redrawn then so be it. 

The Government should not feel forced into announcements and decisions simply to be seen to be meeting targets - and in order to escape the inevitable sniping from the Opposition. 

We need to know, firstly who is running KiwiBuild - that would be nice - and then where it fits into this new-old collaboration with Housing NZ. 

If new targets need to be set up then so be it, I say. Do the costings of the houses need to be revisited? Is there some problem with the current balloting process? Are young people losing confidence in the whole idea - is that one of the problems?

This was an ambitious plan, but it was also one on which this Government put a lot of its credibility at stake. 

I think the public will forgive the Government if it does rework the plan, starting from early next year, with some new targets. But we need a clear plan and we need to know what is happening.

And again, at risk of sounding like a scratchy old record, I would say that the Government should look at finding more money for this initiative. That's probably the heart of the problem. Yes, problems aren't simply solved by 'throwing money' at them, but equally, you need to be realistic. And $2 billion was never realistic no matter how many times you attempt to 'recycle' it.

Perhaps also, Twyford should be given more help with some designated 'KiwiBuild' associated ministers alongside him - since to me his workload is looking beyond ridiculously heavy.

I don't think there's any harm in a Government saying that something's not gone all to plan and that some changes are going to be made.

What I think is harmful is a Government that keeps pretending everything's going to plan, when demonstrably it isn't, and then tending to keep the public in the dark. 

If KiwiBuild as a concept loses the confidence of the NZ public then there's probably no way back for it. And that would be a loss for the country, I think.

So, is this a crisis?

I don't think so. But I do think a good New Year's rethink and reprioritising with some clear strategies and targets - even if they are reduced ones - would be absolutely the right thing to do.

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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52 Comments

Kiwibuild really needs a shared ownership scheme to dramatically reduced the costs for people to enter the scheme. If you could get the cost of a home down to 400K or less under this model would keep the kiwibuild dream alive.

sharing the ownership with who exactly?

We need to remember that KiwiBuild was a (spectacularly successful) election campaign platform - but that’s all.

It falls far short of the standard for effective policy development....... It’s been policy on the hoof - at best.

TTP

Kiwibuild in concept is a good idea but anyone with experience around councils and building costs/problems could see that it was nothing more than a election con that soo many fell for along Shane Jones trees ! Child poverty electioneering also seems to have vanished ?

What about capitalising some of the benefits as we used to do?

I think Kiwibuild is great. Twyford seems to be trying lots of different things - giving developers certainty of funding, prefab housing, big state builds, etc. Sure it will sometimes fail (and of course all of the opposition supporters and Mike Hosking will cry about it) - but at the end of the day I'm sure Twyford will build significantly more houses than Nick Smith did.

Hi JJ
Re: "Sure it will sometimes fail".
It is has only failed once - and that is totally.
Speaking to a small group of young potential FHB and new builds especially apartments and multi-unit housing (especially of the plan) which seems to be the emphasis is not what they want. Would prefer to settle for stand alone older home and will wait until the ideal property comes along and have all but discarded KiiwBuild.

Like how most people take their first step onto the property ladder? Indeed. I'm not sure that kiwibuild has done a lot of market research there....

Thinking about this a bit more, if the objective of kiwibuild is to get more FHB into homes, then you open up the scheme to people looking to move up the ladder and into a new build. Thus freeing up typical FHB housing stock. Unfortunately this would probably undercut the value of housing in quite a large voter block so wouldn't fly. Living here in Taranaki, I just can't get my head around the proposal for kiwibuild here. I just can't see how that's going to fly. The proposed kiwbuild homes here don't offer a solution. As in you could go and build for the same price in a more desirable location to what is being put forward here, or pay only a slight premium over kiwibuild to do so.

The problem being that not everyone can own a stand alone older home unless we invent a time machine.

As someone that is eligible for kiwibuild, the problem isn't the type of properties, there is plenty of interest for Apartments and duplexes, lots of younger couples and singles that don't plan on becoming baby factories anytime soon are quite okay with apartments. 20 out of 25 of the Onehunga apartments went in the ballot, and the other 5 all had multiple other interested applicants and would have sold if Kiwibuild had just worked down the list of applicants. Haven't heard the result of the Otahuhu apartments but I expect the same result. They are well located with good transport links and there will be strong demand (even if the prices are still a bit silly).

I expect the Wellington apartments will also sell easily, unless those prices are well above market for Wellington.

He just has amnesia when it comes to NZ being a tax haven for land bankers, just about every building material being monopolised enabled by our small island population and pseudo-tariff building standards resulting from BRANZ etc telling us fairy tails about "unique conditions". What about our ridiculous building code that deems aluminium window frames acceptable. And apparently it's okay for kiwis to pay out the *$$ for GIB because it provides a few dozen jobs never mind the main ingredient is imported from off-shore and the factory is highly automated.

Phil will only succeed if he writes one set of rules for kiwibuild while everyone else is battling paying up the waazoo for the usual rorts. The whole lot of regulations needs to be overhauled.

All these protectionist standards to protect kiwis from those awful foreign materials. Yet Labour don't have a problem with foreign things if those things happen to be tens of thousands of chefs, taxi drivers and fake students.

Affordable = small box made of soft young pine needles and tin, 1 hour commute, in a soon to be ghetto 'hood for the mere price of $650k.

Phil Twyfool = Nick Smith 2.0

He needs continuous pressure on him to deliver, I'd reckon.

Yes exactly. No real effort being put into freeing up the vast quantities of land that is required to break the strangled hold of the vested interests and their council mates. Nor the Duopoly/monopoly building material supply. Poor little Fletchers they can't make a profit so we can't possibly throw them to the wolves of true and honest competition. The reason that they are so absolutely hopeless is because they don't know how to run a business when they are not protected by a monopoly situation. Plenty of government hand ringing over other uncompedative situations, but a deafening silence over the things that have real impact on peoples lives.

The main issue seems to be what to do when they have satisfied demand at the current price level, which may not need all that many houses. Do they continue building, or not? Do they put any unsold houses onto the rental market or do they lower the price to bring in the next group of buyers? The gross wastage of The Shane Jones Patronage Foundation could subsidise 10,000 houses a year to the tune of $100,000 each, so they have plenty of dosh. Seems a good thing to do for the regions.

If they do satisfy demand at current price levels I reckon you will see building costs miraculously come down with lack of demand. Then they can adjust the price levels down.

The way to bring prices down is to overbuild, for sure. We are used to seeing this in agriculture (think kiwifruit, grapes, apples) as unsatisfied demand causes higher prices which cause more productive capacity, with a lag, of course. Eventually new productive capacity overwhelms demand, usually with a big overshoot as new half built capacity continues to come onstream.

This does happen in commercial building in New Zealand. For instance, here is Nelson, in the last Labour boom they put in a big new retail complex called Fashion Island and now no-one can understand why there are a lot of two dollar stores and empty spaces on Trafalgar Street. Adding a big dollop of extra retail space to a small city centre with an excess of existing retail space will do that. Of course the landlords of the empty spaces are blamed as people seem to stop thinking once they have found someone, anyone will do, to blame. Fashion Island is now owned by ACC, and full of shops with very few customers. The better shops are moving back to Trafalgar Street, the traditional retail heart of the city , as their Fashion Island leases expire. Classic case of big Auckland money overestimating the market size of provincial New Zealand and finding a gullible government agency to flog it to.

Will overbuilding solve New Zealand's housing problems? Somehow I think they will just bring in more people to fill them. So expect Labour to repeat National's mistakes but with Labour characteristics, just as National repeated Labour's mistakes but with National characteristics.

Jimbo-Jones, you have to be kidding?
KiwiBuild has not had a single house built that wasn’t already in the pipeline!
The people that registered online did so on the basis that they didn’t miss out on something that they couldn’t even see!
There is next to no demand for the so-called KiwiBuild studio apartments and TeKauwhata and Wanaka As these are the wrong areas for a start.
Twyford is under so much pressure to perform and he certainly has not shown that he is up to it from day one!
KiwiBuild is now KiwiJoke!!!!!

Its only been a year. Given that National did not achieve anything in 9 years (after being elected on a promise of bringing house prices down), I think your expectations of Twyford magically building a crap load of houses in a year is crazy.

Twyford isn't building them, he's buying them off builders and slapping a logo on. He never needed to build them anyway. He needed to address the reasons why land and building is so expensive: RMA, lack of property/land tax, council inspections, BRANZ/MBIE rules blocking global competition, health and safety drama. Put a land tax on and see sections up for sale. Allow in Polish kitset houses and see how the rats at Fletchers etc cope.

And if you can't do any of the supply side stuff there is always the easy option; turn off the immigration tap of chefs, students and other people that are a net detriment to NZ because they cost more in infrastructure spending than they pay in taxes.

I'm by no means a National voting property spruiker either but you have to admit the Labour party are pathetic. Working group this and inquiry that. When will they actually DO anything...

There's also a real lack of leadership around KB. Twyford's trying on his own but as you say he needs some help, and my suggestion would be from above to begin with. But there's nothing there. The cupboard is bare. This is where social democracy comes unstuck every time. No leadership. Why? Because they don't believe in hierarchy therefore don't believe in leadership. But that's exactly what it needs right now. There are other problems with KB as well. It's not doing what everyone (including themselves) thought it was going to do, and even now, those who might be the target market are a little gun-shy as the rules keep changing from week to week. All in all, it's the Labour Party's 9 years in opposition, being handsomely paid, by the way, and what have they achieved? What have they planned for our future? Precisely nothing. And it's showing!
I'm A Voter Get Me Out Of Here.

Not only have Labour has made this there flagship policy, they have argued so strongly and continually as to KiwiBuild's success both during question time in the House and in numerous press statements.
Given that it has become increasingly apparent that KiwiBuild is not the success claimed, Labour now firstly needs to acknowledge that before any review can take place. That would seem an almost too bitter a pill to swallow especially by Phil Twyford.
While Jacinda has made a few comments raising concerns - such as "it has become apparent that first home buyers want to purchase immediately rather than buy of the plans" - it is going to take a far more considerable admission for that review to take place. Phi Twyford who has argued strongly and confidently when challenged in question time is not politically in a position to acknowledge the shortfalls of the scheme; so any realistic and meaningful review will make his position as Minister untenable.
While the intent of KiwiBuild was much needed, in practice it has been an unmitigated failure in addressing the housing issue.
Labour has put so much on KiiwBuild, and as this will be an on-going failure it will be continue to be remembered well after their family package and other achievements have been long been forgotten.

I can’t imagine Labour MPs regrouping over the holiday period to work. The only regrouping by them will be at Ponsonby parties quaffing chardonnay darling.

*chuckle*. Things are getting so bad they've taken off the "pre-qualified buyers" count on the kiwibuild progress page. https://www.hud.govt.nz/residential-housing/kiwibuild/follow-our-progress/

Not a surprise, most banks have conditions that prevent many FHB going down this route.

Gosh, have they really only completed 33? Says something about how hard it is to get anything done. Just like the Christchurch rebuild really.

Takes a fair bit of time to build a house, particularly with all the councils paperwork so that's not really a surprise.

But the complete lack of interest from the target market is pretty damning. And it's not entirely because of the off the plans thing, they had multiple entries on every unit in the Onehunga apartments, so when they are well located there is still reasonable interest. But Wanaka and Te Kauwhata.. no-ones wants to live there, at least no-one that can qualify.

Makes sense in them removing it, as homes will now only be offered on completion...

So you will see the contracted and building numbers move, but homeowners will be static, until md next year..

I'd rather not see the contracted numbers increase until they can actually figure out that they are spending a fortune buying houses no-one wants in places that don't need more supply. Te Kauwhata? Marfell?
Where next? Maybe Eketahuna or Bluff?

Also, just more transparency from the most transparent govt ever.

Is it just me or are govt website becoming more and more difficult to extract useful information from?

And a quick count says that the home owners numbers doesn't work either. 40 home owners.
The 18 original Papakura homes
20 Onehunga apartments
4 at Wanaka.

That's 42 by my count, and shouldn't there be the Otahuhu apartments and the Mt Albert apartments getting signed off by now?

No, many are conditional on completion. So they can't be counted as bought.

Then why isn't the number 18 as they are the only ones complete?

I think you're making things up to blindly defend your articles of faith.

Again you go mamma's boy. . Read my statement aloud and hopefully it will make sense this time. Don't go to mamma crying.

If you still didn't get it, I used the word MANY. .. not ALL...

You exhibit less maturity than many 6 year olds.

When dealing with someone with your intellectuality.. someone who lacks the ability to comprehend a basic statement and then accuses the other

So you did end up crying

Sigh, not worth engaging with a twit like you that is going to resort to throwing school yard insults around everytime somebody challenges you.

You're the young socialist equivalent of TM2. No logical arguments, just wild bilthering idiotic statements of faith

Clearly shows who goes about swearing at others.. just your frustration that you have a low IQ.. sorry mammas boy

I feel offended by that comment Pragmatist!
Every single statement of The Man is sound and reasoned by way of experience and commonsense!

not sure why you feel offended, when Pragmatis is the scumbag on this site

No, I can't agree with that. But you do provide some entertainment value. You'd be missed around here. :)

I have to agree with THE MAN 2 here. We have put every one of his comments through our Real Estate Digital Integrity Analyzer here at the DGZ-ZS RE Research Laboratory and have not detected a single error. His strategy can be boiled down to simply, 'Buy houses below market value that yield positive returns'.

And of course KB could do with a visible, functioning CEO.... not much in evidence at the minute.

Perhaps all that's actually gonna happen over the recess period, is a polishing up of the optics, a lotta Polling to get the messaging a bit more targeted, and SFA else.

“I don't think there's any harm in a Government saying that something's not gone all to plan and that some changes are going to be made.”

Yes, I’m sure Judith will be most understanding and simply let this one just float by….

Somebody should send Twyford some KY.. it might make dislodging Collin's foot from his backside a bit easier.

Tough job – I think that foot has become quite comfortable in there…and in fact is rather enjoying itself from the look of its owner.

It could mean surgery...

These politicians blatantly lied and misled the voting public with these outrageous promises , to such an extent that a 12 year old with grade 7 arithmetic could have told you was simply not do-able .

We dont have the wherewithal to simply build 100,000 ADDITIONAL houses in 10 years .

Does the housing minister even have a concept of the sheer size of the number 100,000 ?

We dont have the serviced land in terms of new subdivisions

We dont have the builders to do the work

The RMA is broken

The market in builders materials is rigged by the 3 players and its disgraceful that is has got so bad

This is not 1946, we dont have hundreds of thousands of demobbed soldiers to put down their guns and pick up nail-guns .

The State does not have the money to be landlord of last resort

The Government has , unwittingly , just set the floor price for absolutely ANY new build at $650,000 , and this is going to create massive market distortions .

Kiwibuild is such a farce that we now have developers doing a cook- and -push job of bringing to the market all sorts of rubbish including tiny units priced at $13,000 per square , when the cost of building is under $2,000 per square metre .

Any FBH "winning" the ballot and taking up these "offers" is being led to the slaughterhouse .

Little wonder that the ballot winners are saying no thanks ...............

I live in Taranaki. 109k people in the whole region and 47k houses at the last census. So more than double that to appear in 10 years. I despair at how long it takes a roading crew to simply re-chip an already formed stretch of road these days. It just doesn't pass the sniff test that in this country there is the resource to deliver 100k additional houses. The government is really snookering itself too when they talk about the ramp up in construction because they've given themselves the target of 6k in 2 years, so 94k to deliver in 8 years.

I think people need to get something out of KiwiBuild that is not available anywhere else. Otherwise it doesn't make sense as government assisted housing. The government could take the risk out of the purchase either through a government low interest loan set at around 2% or a buy back guarantee. The worst case scenario is that an owner will always get back any capital paid into the mortgage.

I know this will be anathema for many but security is a very important aspect of well being. Most comfortably well off people strive to achieve financial security and often go over the top in this regard so they should understand how important this is.

Definitely needs fine tuning. My impressions are that the landbankers stand firmly in the way and are holding the price of land up to eye watering heights in doing so. Its time for Twyford to utter the two words that will surely terrify them 'compulsary accquisition' or four words 'use it or lose it'

Its time for Twyford to utter the two words that will surely terrify them....

Land Tax ?

Just for the record. Core Logic estimate 99.56% of CV as at 9/12/18. It appears to be updated weekly. Previously 97.8% as at 2/12/18.