Four ways to turn KiwiBuild around

At the start of the year I predicted the Government would make major changes to KiwiBuild. That prediction has come true. Signs that major changes were imminent came a few weeks back with the announcement, by former Housing Minister Phil Twyford that there would be a reset of the KiwiBuild policy. A few days later he was removed from the role and replaced by Megan Woods, removing any doubt that big changes were coming.

However, much as I’d like to claim some special ability for picking this turn of events, the truth is it was an obvious outcome to anyone who has been watching the KiwiBuild disaster unfold over the past couple of years. But the mistakes aren’t confined to this Government. The Coalition and National before it made the mistake of believing that government intervention was the solution to the issues facing the market and both believed that only their involvement would ensure that we built the number of homes required to meet future needs and to keep prices at a level which would allow first home buyers to enter the market.

In fact, intervention wasn’t necessary. The top ten New Zealand housing companies built almost 10,000 homes in the year to March 2019 without any intervention from the state, and first home buyers are not only active in the market, we now know that they’ve actually been the dominant buyer group in almost every part of the country since 2013.

So is there still a place for a KiwiBuild program? The public certainly seems to think so. According to a recent poll, 60 per cent of Kiwis think that the Government should stick with the program, although when you drill down, few Kiwis have a clear idea of what KiwiBuild actually is, suggesting that the support is for the name rather than the specific details of the program.

The Government also seems to think KiwiBuild should continue, but if you’re wondering when the much touted reset will actually be announced, join the queue. After taking over the reins, Woods went on leave for three weeks, promising to reveal details of the reset sometime after her return.

So assuming that the reset still goes ahead once Woods returns from her vacation, what should be in it? In my view a fundamental change of direction is required, one which would refocus KiwiBuild and turn it into an agency with a clear purpose and a genuine leadership role. Under my scenario, KiwiBuild would abandon its role in the development of homes and focus on the following functions:

1. Monitoring the number of homes being built nationwide. The goal of 100,000 homes in ten years is probably still valid, but the Government shouldn’t actually be building them because the private sector is already doing that. It just needs to count them off as they happen, possibly in partnership with Stats NZ. If this had been its focus from day one, KiwiBuild could have already ticked off more than 10,000 homes in its first year of operation.

2. Acting as an enabler to help private developers overcome obstacles and roadblocks. We know that developers face a range of issues which are making construction more difficult than it needs to be. These include land supply, labour shortages, confused tax policies and infrastructure funding, but there are also day-to-day issues around council intransigence and bureaucracy which a refocused KiwiBuild Agency would be well positioned to help resolve.

3. Introducing a KiwiBuild Accreditation scheme. While the Government shouldn’t be involved in development, it could certainly introduce an Accreditation Scheme which would allow developers to promote their product as “KiwiBuild Approved” if they met certain criteria. These might be that the home was within a certain price range, that it complied with the Healthy Homes legislation, that it was energy efficient, that it was in a specific location and that the developer had been in business for more than five years.

4. Focusing on developing home ownership solutions for low-income Kiwis. This is the group needs help the most – and which is probably more aligned with the purpose for which most New Zealanders thought KiwiBuilt was designed. For that reason, KiwiBuild should be refocused on finding ways to get people with household incomes below the 2018 median of $106,000 into their own homes. This should include a particular emphasis on developing a sustainable Shared Equity program as well as working with developers to find innovative new housing models and taking a closer look at the housing policies adopted in nations, like Singapore, which have very high rates of home ownership.

There’s no doubt that there’s still a place – and public support – for a Kiwibuild program. But to be successful that program needs to look very different to the ill-considered government housing policies of the past six years.

- Ashley Church is the former CEO of the Property Institute of New Zealand and is OneRoof’s property commentator. Email him at [email protected].