The Ministry of Housing and Urban Development believes the Government could help increase the supply of housing by underwriting private developments.
The Ministry’s deputy chief executive, Brad Ward, on Wednesday told Parliament’s Social Services and Community Committee the finer details of an underwrite programme - beyond KiwiBuild - were still being worked through.
Housing Minister Megan Woods in August secured funding for a ‘Residential Development Response Fund’. The plan was for the Government to start underwriting and directly investing in developments at risk of not getting off the ground in November. But this never came into fruition.
Woods in December told interest.co.nz there was less urgency around getting the Fund up and running as the housing market was buoyant and fears of a credit crunch were dissipating.
“We’re not putting it on hold. What we’re doing is continuing to work through to make sure the criteria fit the current circumstances that we’re facing,” Woods said.
Ward on Wednesday told the Committee: “It is still very much an important tool that we think will continue to encourage the sector to build and also encourage the sector to do more in the affordable housing space.”
Asked by National’s housing spokesperson Nicola Willis why the Residential Development Response Fund hadn’t been launched yet, Ward said it was important the Fund’s design took account of “whatever else the Government chooses to announce, or do, in the demand and supply space in the future”.
Woods on Wednesday told interest.co.nz officials were “reworking” how to best use the $350 million allocated towards the Fund - $250 million of this being redirected from KiwiBuild and $100 million from the COVID-19 Response and Recovery Fund
“We certainly still need to do a lot of observation of exactly what the impact of the current set of circumstances will be on construction,” Woods said.
While KiwiBuild sees the Government underwrite houses that meet a set criterion, the aim of the Fund is to assist in the development of a broader range of housing types.
As at December, a net 42% of construction businesses had a negative outlook when it came to ease of securing credit, according to the latest ANZ Business Outlook Survey. This was a worse result than the months prior.
Woods said an underwrite would form part of a “package” of measures to boost housing supply, but wouldn’t say when this package would be launched.
The Government previously said it would announce policies to boost housing supply at the Budget. A date for the delivery of the Budget hasn’t been announced. Last year the Budget was delivered in May.
Separately, Finance Minister Grant Robertson committed to announcing a set of measures to address the demand-side of housing before the end of next week.
His announcements were to follow consultation with Treasury and the Reserve Bank, including around whether to change the Reserve Bank’s remit, give it debt-to-income tools and possibly extend the bright-line test.
However Robertson on Tuesday told interest.co.nz there is a possibility the announcement might be delayed, as he’s been tied up with COVID-19.