After months of waiting, new Housing Minister Megan Woods has finally delivered the long promised KiwiBuild reset – and, on first blush, it looks like she has delivered.
The main features of her near-total rewrite of the previous policy have rendered it virtually unrecognisable – but the changes are mostly pragmatic and bring KiwiBuild more into line with the commercial and cyclical realities of the market.
Here’s my "back of a postcard" assessment of the main points of the new policy:
The scrapping of the 100,000 home target
Start your property search
This isn’t so much a change of direction as a recognition of reality. Not only was the Government never going to build 100,000 homes under the old policy – but new information strongly suggests that it doesn’t need to. Emerging data is showing that the market is more than meeting the demand for new housing without the need for Government interference, and we now know that we’ve actually built over 21,000 homes, on average, every year since 1986 and that this number didn’t just meet the number of homes required, it substantially exceeded it! For that reason, this is a smart, pragmatic, move.
Policy score: 10/10
Five percent deposits for first home buyers
For me, this is easily the most important feature of the new policy and will make more of a difference than all of the other changes, combined. The effect of the change is that those who qualify for the government-backed Welcome Home scheme will now be able to buy a house with a deposit of just five percent.
Housing Minister Megan Woods and Greens co-leader Marama Davidson announcing the KiwiBuild reset.
This matters because the single biggest barrier to buying a home, over the past 10 years, hasn’t been house prices or foreign buyers or speculators or any of the other bogeymen who have been blamed, it’s been the Reserve Banks ridiculous Loan to Value restrictions which have, single-handedly, kept thousands of first home buyers out of the market without making a jot of difference to house prices.
This new policy goes a long way toward redressing that travesty and, while first home buyers are already very active in the market (and have been since at least 2013), this policy has the potential to raise home ownership levels to numbers not seen since the early 1990s. The only weakness of the policy is that not enough banks are behind the Welcome Home Scheme – but that can be fixed relatively easily.
Policy score: 10/10
$400 million to a progressive home ownership scheme
This appears to be a sop to the Greens and, while it may prove to be a good idea, there’s simply not enough detail to see it as anything more than blatant virtue-signalling at this early stage. The little detail which has been released suggests that it could support rent-to-buy or shared equity programs – which is a bit like saying it could end up being a bicycle or a tractor, such are the quite significant differences between these two possibilities. This should suffice to inform you that little detail has been developed in this regard.
Policy score: 3/10
The rest
Changing the clawback on any capital gain made on the sale of some KiwiBuild homes within the first three years, to one year, is largely irrelevant as I suspect we won’t see too many more homes built under that banner. This is also true of changes to the amount of time a buyer is required to live in a KiwiBuild property, or the cap on assets previously imposed on KiwiBuild buyers who had previously owned a home. Likewise, changes to HomeGrant and the rules around KiwiSaver allowing for bigger grants and larger KiwiSaver withdrawals are useful and welcome – but will be largely eclipsed by the far more important changes which have been made to the Welcome Home deposit rules.
Policy score: 4/10
Overall, this is a suite of smart and welcome changes that suggest that Woods has lived up to her reputation as an effective operator and listened to those who know better than the Government. I don’t mind admitting that I’m impressed.
- Ashley Church is the former CEO of the Property Institute of New Zealand and is now a property commentator for Oneroof.co.nz. Email him at ashley@nzemail.com
