Kāinga Ora will stop growing the stock of state homes under a ‘turnaround plan’ aimed at cutting the agency’s fiscal costs, announced by Housing Minister Chris Bishop on Tuesday.
A Cabinet paper released alongside the plan shows the agency will be expected to build or buy 1500 new homes, fully offset by demolishing 700 and selling another 800. This contrasts with a net increase of 3,600 homes in the year ending June 2024, and 8,600 over a six-year period.
Bishop said the rapid pace of construction under the Labour Government had driven up costs and led to poor decisions on where and what to build. The push to build more houses had also coincided with rapid construction inflation and higher interest rates.
“Over the last five years, Kāinga Ora was given huge amounts of money and asked to go on a building spree. That did produce quite a lot of houses, of that there is no doubt, but many of them at a high cost and some of them in the wrong places,” he said.
For example, around 50% of those on the social housing waitlist required one-bedroom homes, but only 12% of Kāinga Ora’s stock consisted of these units. It also owns about 200 houses worth more than $2 million each, which is double the median house price in Auckland. The plan proposes selling these places to fund cheaper ones.
The new board chair, Simon Moutter, and chief executive, Matt Crockett, claimed that project costs were 12% higher than the market rate due to inefficient designs and unnecessary “bells and whistles”.
Bishop and his Cabinet colleagues are pushing Kāinga Ora to build fewer, more affordable homes to ease the burden on government fiscal indicators like OBEGAL (operating balance before gains and losses) and net Core Crown debt.
The ‘turnaround plan’ aims to cut Kāinga Ora’s operating deficit by $190 million this year and $354 million by 2028, lowering debt levels by $1.8 billion and stabilising them at approximately $21 billion.
It will also simplify Kāinga Ora’s mandate, removing its responsibilities for urban development, infrastructure fund management, and building affordable housing for first-time buyers.
‘Thousands’ of houses needed
Kieran McAnulty, the Labour Party’s housing spokesperson, said the Government should build public houses to make up for the downturn in private construction. Stats NZ figures released today show home consents were down almost 10% in 2024.
“It’s simple, build more public houses so that people have somewhere to live. Housing is the bare minimum that a person needs to live, and to help turn their life around,” McAnulty said.
“If the best that he can come up with is the number of overall homes won’t go backwards, then it shows their priority is cutting spending, not housing people.”
Data from the Minstry of Social Development shows there were 20,300 eligible applicants waiting to be matched with a suitable property in December 2024. That number was down from a peak of 23,600 in March 2022.
Tamatha Paul, the Green Party housing spokesperson, said the Coalition had given up on growing the public housing stock, despite "overwhelming evidence" more affordable homes are needed to solve the housing crisis.
The Government should be building thousands of additional homes to reduce inequality and prevent private landlords from exploiting housing insecurity.
“Public housing is a crucial part of ensuring we don’t have gentrified, segregated communities, and that our neighbourhoods reflect the make-up of our wider society, culturally and economically,” she said in a press release.
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