Prime Minister Jacinda Ardern says KiwiBuild remains the “biggest lever” the Government can pull to improve housing affordability.
Treasury in July advised Housing Minister Megan Woods against making KiwiBuild her priority.
Asked by interest.co.nz in a post-Cabinet press conference on Monday whether [in the absence of a capital gains tax and the version of KiwiBuild Labour campaigned on] the Government needed to take more drastic action to lower house prices, Ardern said: “It [KiwiBuild] is our biggest lever on the affordability front.
“The goal of KiwiBuild continues to be to use the scale of the state to increase supply, and also try and bring down - by building en masse - the price of housing.
“It is not a subsidised programme though, so it does experience some of those costs that actually warrant us considering whether or not they’re fair, like the cost of building materials.
“But also, it warrants us looking at whether or not there are other opportunities to bring down the costs, like prefabrication.
“Those are all areas of work we know we actually need to continue to look at. In the meantime, we will continue to use the size and the scale that we have as the government to build en masse to make housing more affordable in New Zealand.”
Treasury told Woods: "Without supply reforms, building programmes will be expensive, inflationary, and slow to deliver.
“Even with substantial increases in budgets, housing assistance cannot address housing need across the spectrum in the current housing environment.”
Treasury suggested the new Crown entity responsible for housing, Kāinga Ora, needed to be specifically focused on “lowering the price of housing”.
Asked whether she agreed with this, Ardern didn’t provide a straight answer.
“We have had a longstanding focus on affordability," she said.
“One of the issues however alongside affordability has been whether or not deposits have also acted as a barrier to first-home-buyers. And that’s some of the feedback that we had coming through strongly as we were working on the KiwiBuild reset. And you will see from the reset that that’s where the focus has been.
“But we know affordability is an issue and that’s why KiwiBuild exists in the first place.”
Treasury advised the Government against doing what it’s doing by committing to lowering the deposit first-home-buyers eligible for a government-backed mortgage need, from 10% to 5%, and removing the cap on the amount groups of first-home-buyers buying houses together can receive via the Government’s HomeStart grant.
“Demand-side assistance such as rental assistance and home ownership assistance will struggle to increase supply given the constrained environment,” Treasury said.
“In fact, financial support is likely to increase prices when supply is constrained. The Accommodation Supplement and HomeStart grants are examples of demand side assistance.”