The government is also exploring opportunities with offsite manufacturing companies as a means of ramping up the country’s building and construction capacity
Market reacts to KiwiBuild reset – By Iain MacIntyre
Housing Minister Megan Woods fronted media at the beginning of September with the frank admission that the 100,000 houses over 10 years target originally set for KiwiBuild had been “overly ambitious”.
Although claiming a “good start” had been made, the minister confirmed the scrapping of a target which had “led to contracts being signed in places where
there was little first-home buyer demand”, and announced a reset entailing the following key elements:
- • New ways for people to become home-owners, such as shared-ownership schemes
- • Boosting supply by building more homes where evidence shows they are needed
- • Letting friends and family join their $10,000 deposit assistance together
- • Reducing from 10% to 5% the deposit required for a government-backed mortgage
- • Reducing the amount developers receive for triggering the government underwrite rather than selling to KiwiBuild buyers.
Ms Woods advised that unsold homes in Te Kauwhata, Canterbury and Wanaka would be released to the open market, “allowing us to reuse the government capital to get more developments underway where there is clear demand”.
At the time of writing, the ‘dashboard’ of housing statistics – which is to be updated on a monthly basis in lieu of pursuing the previous overall target – revealed 9910 homes contracted and committed to build, 286 completed and 251 sold.
Among key stakeholders approached for comment a month after the reset, BNZ external communications consultant Sam Durbin expressed positivity. He says the BNZ is looking forward to working with the government as “KiwiBuild evolves to help get more people into their first homes”.
“Our ambition is to help as many New Zealanders onto and up the property ladder as we can, and we’re supportive of any initiative that can help make that a reality for more people,” he says. “We continue to support KiwiBuild by making it simpler and easier for our customers to purchase through the scheme with longer conditional approval periods of up to 12 months.
“We’ll also offer up to 95% loan-to-value (LVR) loans, subject to our normal lending criteria, which has been available to both KiwiBuild and non-KiwiBuild customers alike. And we’re encouraged by the mention of a shared ownership scheme, which BNZ currently offers lending against, through our partnership with YouOwn.”
A coordinated approach
New Zealand Construction Industry Council (CIC) chairperson Graham Burke says his members particularly endorse the function to be provided by the newly-created urban development authority, Kainga Ora – Homes and Communities.
“The coordinated approach proposed by Kainga Ora, with its focus on producing a mix of public housing, market-priced homes and KiwiBuild homes, is sensible and logical,” he says.
“Through Kainga Ora, the CIC would like to work collaboratively with the government. We see a shared role in how we increase the capacity and capability of the construction sector to achieve the quality affordable homes that are required, as well as the necessary infrastructure to support the development of thriving new communities.”
Immediately following the early-September reset announcement, Real Estate Institute of New Zealand chief executive Bindi Norwell embraced a number of the initiatives, including the progressive home ownership model with lowered government-backed deposits.
“This will significantly help a number of first-home buyers, as saving for that initial deposit is often the biggest hurdle to getting on the property ladder,” says Ms Norwell. “The 5% deposit for government-backed deposits means that Queenstown Lakes is now the only area in the country where the deposit required to purchase a median-priced home would be in excess of $50,000.”
Ms Norwell says it is “fantastic” the government has considered a number of new options, including allowing family and friends to combine their $10,000 First Home Grants and their KiwiSaver to purchase a home together. “Purchasing a home with friends and family appears to be becoming a more common option for individuals who cannot viably do it alone,” she notes.
Real Estate Institute of New Zealand chief executive Bindi Norwell: “For the new houses built under the scheme, we would love to see some innovative building methods and really good use of spatial planning and urban design”
“For the new houses built under the scheme, we would love to see some innovative building methods and really good use of spatial planning and urban design. We would also like to see properties built close to existing infrastructure, such as public transport or amenities such as shops and cafés.”
However, Ms Norwell emphasises the need to address red tape issues, speed up the consents and build process, use modern prefabrication building methodology and reduce the cost of build where possible to “underpin the whole process”.
“We look forward to further announcements in due course on shared equity models which could provide further opportunities to get people into housing more quickly,” she says.
New customer enquiries
Another to react positively to the reset is Kiwibank borrowing and investments general manager Chris Greig, who confirmed the bank’s mortgage managers began receiving new customer enquiries immediately following the announcement.
“Provided customers meet First Home Grant eligibility criteria and our affordability requirements, we will be able to support customers with a 5% deposit from 1 October 2019,” he states. “This change should provide a good boost for those working towards the goal of home ownership. Kiwibank is committed to making Kiwis better off and helping as many first-home buyers as possible. As a responsible lender we will continue to ensure that customers are able to afford proposed lending, despite lower deposit requirements.”
Economist Shamubeel Eaqub has reportedly welcomed the government’s commitment to exploring rent-to-buy and shared equity schemes, as well as describing as “wise” the move to drop the minimum deposit. However, while reportedly feeling the reset was “a pragmatic pull-back from a very ambitious programme”, he predicted little widespread impact on the market and called for more to be done.
In a recent announcement, Minister Woods advised that the government is also exploring opportunities with offsite manufacturing companies as a means of ramping up the country’s building and construction capacity.
“Offsite manufacturing has the potential to transform the building sector and drive innovative ways to build homes at lower cost and in faster timeframes,” Ms Woods says. “It can significantly change the way we build homes because builders won’t have to contend with external elements like the weather. Housing New Zealand has found that by using offsite manufacturing, new builds can be delivered in half the time as conventional building techniques.”
Furthermore, the minister notes that the demand generated by the KiwiBuild programme, in complement with other elements of the government’s build programme, should encourage those in the sector to “make confident investments in their people and new technology”.
“Under this government we’re building the most homes since the 1970s, with a record $13 billion of residential construction in the last year, but we need to do even more to tackle the housing shortage,” Ms Woods concludes.
Iain MacIntyre is an award-winning journalist who specialises in transport and infrastructure issues within New Zealand