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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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
why and how did this weirdly named agency get assigned those responsibilities in the first place?
You think multi-generational poverty started in the 1990s? What makes you claim that?
John Key's childhood was in a state house, so that was obviously a decent length of time. Paula Bennett's first house was with a Housing Corp loan and a welfare state handout to pay the mortgage. So we've certainly been generous with the welfare. Not to mention making the pension universal, - a "lifestyle choice handout"?
Seeing you asked the ?: my personal opinion would be the 1970s, not disconnected from the introduction of the DPB. When I met her, my first wifes family (1960s immigrants) lived in a state house in Porirua for several years in the mid/late '70s before they were able to buy their own first home. At the time you could see the mindset change amongst some neighbours.
By 'no state support' do you mean 'no direct cash transfers' from the State? Because I find it hard to imagine that there is anyone who has received no State support at all if we include things like education and healthcare (which are things you would otherwise need to pay for if the State did not provide them).
Or police, defence, border security, public infrastructure of many descriptions (roads, fresh water, sewers, flood protection...) and so on. It is amazing how much people attribute their cherished lifestyle to their own efforts and how little they credit the collective efforts of society.
Yes, getting rid of those responsibilities will be a good move.
But, the savings made from doing that (as there will be lots of redundancies) should be re-invested in house building.
So that they've paired that initiative with cutting the number of houses built is deplorable. Do they not realise if there are more than 20,000 people currently eligible for state housing - that these are not households that can afford the private rental market?
Accommodation supplements will just grow and grow.
Yes, I totally agree as I suggested in this article. And in doing so, you have to introduce regulation to ensure rents come down accordingly;
https://www.interest.co.nz/property/119377/katharine-moody-takes-look-r…
Calm yourself. KO is just not building them. Funding has been given to CHPs to procure 1500 social houses. These will presumably be the excess townhouse stock that is currently sitting on the market going cheap. Why build for $1.7M will you can buy for $700k?
https://www.bellgully.com/insights/government-changes-seek-neutrality-a…
The plan proposes selling these places to fund cheaper ones.
How much cheaper is it to build a house now and buy the land than when they were [assumed at the peak] $2m? Is this feasible? They built houses in the most expensive time in history in NZ to do so, and got rorted by the private sector tradies. The KO properties may be in negative equity for new builds, so how exactly do they think they will somehow recoup the build costs and then buy and build again somewhere that works out cheaper?
"...some of them in the wrong places,” he said.
NIMBYism again. Madness to slip back into Projects thinking, of shoving the poors into a single area while expecting different results to everywhere else.
Moreover, suggests a bit of a problem of morals here (or entitlement mentality) when they've handed out taxpayer subsidies to commercial property and to propping up private housing wealth, and now they want to cut investment in social housing supply. Different favourites for handouts/ups, obviously.
I'm glad this is happening, for years I've scratched my head wondering why KO was building social housing in the most expensive areas of cities, when they could sell the land and build twice as many houses somewhere else.
Social housing needs to be built in areas where there are jobs. There are no jobs in Strowan or Fendalton where KO has recently been building in Christchurch. There are however, plenty of factory and warehousing jobs in Hornby and Sockburn. And out in Rolleston.
Building housing in places where there are jobs for social housing tenants will also stop the big beneficiary rort of avoiding benefit sanctions by applying for jobs miles away and then claiming they dont have transport to get there.
"...wondering why KO was building social housing in the most expensive areas of cities"
That's been an unannounced social engineering policy by successive Govts. To inhibit social stigma, facilitate school zone enrollment etc "Jack's as good as his/her master".
I've wondered why apparently no one has taken a class action for damages in reduced property values - must be a law against asserting your property rights
There is unlimited land between Hornby and Rolleston - both big industrial areas with plenty of work. If it was good enough for Williams Corp to buy a massive block of land out there to build on, why not Kainga Ora?
https://www.thepress.co.nz/nz-news/350021535/williams-corporation-plans…
Plus people would better integrate into their community if they are surrounded by neighbours of a similar demographic. Social housing tenants are hardly likely to be hanging out with their multi-millionaire neighbours sipping tea in Fendalton are they?
KO if it was a proper urban developer would buy land around sites for new train stations between Hornby and Rolleston. Hornby and Lincoln and Belfast to Kaiapoi to Rangiora.
Then the KO government hand should talk to the transport government hand and get commuter rail reinstated in Greater Christchurch. The land value uplift would greatly lower the cost housing.
You're probably only the king of your own castle - not land you don't own. We also have elected to not tax people for the betterment of their land, so don't really have a cause to refund the the opposite.
Seemed like across the decades state housing was interspersed in various areas because it supported a broad swathe of Kiwis and also avoided creating British-style projects or ghettos.
I've wondered why apparently no one has taken a class action for damages in reduced property values
You have no given right to the value of your property, and the value is not real or realised until sold. If your neighbour paints their house an ungodly colour it’s their right as the owner, but if you perceive it will lower the value of your own property then you simply have to eat it.
KO should be able to develop in-house for 20% less than market costs because they don't need to make a development margin and can buy product at scale. The fact that they are spectacularly failing to do this shows just how much a lack of fiscal accountability has crept into that org and that housing supply to the government has turned into an open trough.
How about this one?
https://www.nzherald.co.nz/business/affordable-housing-agency-kainga-or…
Chris Meehan, CEO of private sector developer Winton, which was outbid in the Ferncliffe sale, said taxpayers had paid "an absurd amount of money based on a valuation practice I've never witnessed in my career."
He said the government agency "significantly outbid 11 other experienced developers who submitted offers for Ferncliffe Farms in an open market sales process … Kāinga Ora's uncommercial purchasing practices, which seem aimed at driving private developers out of the market, raise serious questions taxpayers deserve answers to."
Meehan, who wrote to ministers last year to express his concerns about the purchasing process, said it "never passed the sniff test".
Can't be worse than the old management. As the KO rollout approached its peak, a builder client told me that they offered to buy his development at a premium over the market price. They told him they were unable to put a basic 3 bedroom on 500sq metres for less than million and paying in the high 3,000s per sqm floor area, while for a better product this builder was still operating at about 2k/sq m. and also making his expected margin at 750k sale price.
BTW I am civil engineer who has worked in the land development sector since the 70's. Never encountered such ignorance and arrogance before.
I agree with the opening statement as I knew some of old management (some senior, some line/department managers) personally.
Whoever above said something about yuppies urban professionals designing/building for yuppy urban professional tatses (or something similar) was spot on.
Easier said than done:
- Many of the areas are hilly and have odd shaped plots
- In some locations it makes sense for high density, others lower density
- Some are 1 bed for old people, some are 6 bed for big families
- They needed to scale up quickly, not wait until a big factory could be built
- Is prefabrication cheaper? Maybe if it is built in China it is (they are already doing that too).
We have new state houses near us, personally I think they have done a fantastic job, if it only cost 12% more than the crap developers build then that is a win. To save that 12% they are going to start building slums, hardly seems worth it.
It’s not hard at all to formulate prefabricated townhouses, and components for standard 3 storey, walk up apartments. If done with some intelligence, they can be applied across quite a range of terrains. Obviously a Wellington hillside is different. But a standard square apartment building can work across many flat to moderate slopes
the problem is KO’s urban design fetish, a desire to have unique, ‘contextual responses’. It’s a very upper middle class mindset, to a working class issue
it’s lovely idealism. The problem is it adds significant cost and time. It costs more to build bespoke housing, and it takes more time
A well executed approach with standard designs and prefabrication at scale could have seen perhaps twice as many homes built under the previous government. It also would have had less inflationary impact on the private house building sector
I estimate a *well executed*, mass prefabrication programme could save around 20% on state house building
As I have said many times before, David Shearer had some really good ideas, but I guess he wasn’t ‘charismatic’ or trendy enough, so we ended up with ‘charismatic’, but not especially smart or deep, J. Ardern.
Kiwibuild was Shearer’s idea, but it got bastardised by the absolutely clueless idiot P. Twyford. The original idea was predicated on investment in prefabrication plants to get mass house building happening at more affordable prices. 100, 000 homes in 10 years would have been realistic based on that approach.
Good point, the progress following WW2 was using standard designs and properly skilled builders, not an architect in sight!
Prefab, wasn't there a turf war between Councils where prefab was manufacured in a different local authority? Also beware of false claims, worked on one project where they delived the house components to site in a single container, alleging 22 work days from slab to locked and ready for fit out. Didn't happen!
I hope you're joking? Many of NZ's most famous architects made their fame from social housing builds that were cookie cuttered. All those quirky buildings of flats that now have heritage protection.
Near us is one of the original sets of Star Flats. It's in/famous.
I think this might be one in Welly;
https://rwwellingtoncity.co.nz/properties/residential-for-sale/wellingt…
Sold off many, many, many years ago.
Some of the developments in Mt Roskill look quite good. I don’t deny that. But they could have built a lot more ( and more cheaply) wth more standardised approaches and prefabrication.
I would take more housing for those in desperate need, at lower cost, over aesthetics every day of the week.
and btw, standardisation need not mean ugly. Some quite smart looking prefab housing is done in places like Scandanavia. And ex state houses in NZ are sought after now, right? They were standard designs…
Agreed I think some of the developments do look very nice, and people tend to gloss over the above extra needs that KO often has to cater to, such as special adaptations in bathrooms etc. I temped at KO in the peak of boom time - alot of very talented and hard working people I met there - and actually asked why don't we just ship in lots of prefabs. A project manager simply said "We don't want to put all the builders out of work" (I don't think that was an official KO line or even where their thinking was at, but just one opinion I heard in my time there).
housing is like every market ... always just a cyclical economic boom and bust - its to do with human nature and trying to manipulate it in any way will just make it worse (as per the reserve banks dropping interest rates too far to extend recent boom). Humans forget history prett quick and follow each other over the greed cliff like lemmings - its important to have a bust to remind them (esp the construction industry which is pretty nuts anyway)
best thing is to implement a beneficiary system that makes it more attractive for beneficiaries to get work and chart their way out of social housing than stay in the system. Mind you the rapid advancement of Ai taking away low paid work wont help with that plan - but sooner or later we gotta talk about the elephants in the middle of the overloaded benefits budget.
People need work and prospects to grow self esteem.... be interesting to analyse the common factors in people who manage to leave the social housing system.. why / how /when etc..
Don't borrow at sovereign rates to build housing on crown-owned land that can be rented at an affordable level for the next 50 years. Borrow money to give those same tenants an accommodation supplement so they can rent a house from one of Nationals toady mates and that money can go towards paying off the toadies mortgage instead.
Housing NZ a financial mis-mangement nightmare. Parody - Previous Housing NZ CEO asking Labour minister for more funds. We need Xmil to provide Y houses. Labour Minister you can have the cheque by lunchtime and that's it, few or no questions asked. Similarly for the ferries and the Dunedin hospital.
TV news snippet about 1/2h ago. Minister Chris Bishop indicating of the ~21k on social housing waiting list, ~10k need one bed roomed accommodation. One bed roomed! I'd suggest that is a luxury. A studio apartment would be quite adequate for a number of those. A "free" roof over your head, bespoke designed from what I've seen completed during 2024 in New Plymouth and no doubt well outfitted.
I'm astounded at the financial mis-mangement by Labour.
So why haven't these new appointments decided to prove they can do successfully what the Labour government could not?
Instead they have taken a (virtual) "do nothing" approach.
All the while we still have state houses out there that are virtually uninhabitable (many of which people are still living in), that cannot/do not pass the Healthy Homes test.
I seem to recall Labour requiring private landlords to meet the healthy homes criteria within a set period but gave a free pass to Housing NZ for quite a few years later. Don't recall the number of years.
I don't see too much virtual signalling from National. Selling house worth say $300-400k, excl land cost. There could be a single storey new build on land worth $1mil upwards, on a like for like replacement. Unfortunately the devil is in the detail so difficult to analyse much further regarding density suitability.
Any multi storey need not be a bespoke design and architecturally top notch. I don't expect post WW2 Soviet style grey concrete apartments either. The German plattenbau in its more recent form, suitably designed for earth quakes would be more than adequate.
I'd also say that National are aware of the lack of capability of Housing NZ, both financial and in property development so are turning to a different solution which I feel is superior to Labours opening the money taps and hands free approach. Only time will tell.
But it's not a solution - it's a holding pattern. They/NZ need to land the plane on housing. Otherwise, the accommodation supplement is going to sink us all. $2+ billion a year and growing. Last time I researched it - it was;
Accommodation Assistance was $2,411,065,000 (yes, billion) in 2021/22.
That's a huge single budget line item that needs to be dealt with.
And yes, "only time will tell" whether that rises to $3 billion per annum by the end of this year.
Incomes of the existing tenants are reviewed annually - and thoroughly - as rent is set at 25% of the household income and reviewed annually.
Hence, if they no longer qualify, they will be given notice and in the meantime while they find accommodation in the private sector - they pay a full market rent at he state property they are renting in.
It made no sensense whatsoever for KO to build on a complex of 6 units on a highly desirable street in Strowan (replacing an isolated pair of semidetached 40s state houses) when they owned dozens of sites just 200-400m away in what streets that are still pretty much solid 1940s state housing streets and not particularly desirable in Bryndwr.
The Strowan site could have been sold for more than double the price of those in the less desirable streets probably freeing up an extra $750k.
Same thing happening in Fendalton North. Just madness and they could never recoup that potential vacant land value plus what they spent with the horrible units they have built (if they did decide to sell now).
And where, pray tell, will more houses be built?
Yes, in the special areas where those with need get to be segregated
Cannot include in general areas because council has ballooned the connection costs sneakily precluding anyone in need of affordable choices
Clever social engineering
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