More KiwiBuild houses fail to sell

The effectiveness of Kiwibuild is under further fire, with more houses failing to sell, this time in Canterbury. This means they mustn’t be affordable enough for the market.

This had already been a problem in Wanaka.

Interest.co.nz (September 2018): KiwiBuild houses at Wanaka to be priced between $565,000 and $650,000

Housing Minister Phil Twyford says 211 KiwiBuild homes will be built over the next two years as part of the Northlake development, a master planned development of more than 800 homes on the outskirts of Wanaka township.

“Our Government is taking a comprehensive approach to assisting first home buyers in one of our least affordable areas.”

How affordable are those prices to first home buyers?

Not very – ODT (February 2019): ‘It’s no wonder no-one wants to buy them’

As revealed by the Otago Daily Times last week, only four of the first 10 KiwiBuild houses had been sold.

Waitaki MP Jacqui Dean said yesterday she considered the houses ”not practical” and ”not functional”.

”The Government expects Wanaka families looking for a home to pay over half a million dollars for a two-bedroom townhouse that doesn’t even have a garage.

”How appealing is a two-bedroomed town house that’s attached to another property by a shared wall, with no garage, and costs upwards of $560,000?

”It’s no wonder no-one wants to buy them.”

Ms Dean said the lack of interest showed how out of touch the Government was ”when it comes to delivering suitable first homes for young Kiwi families”.

RNZ today:  Lack of sales in Christchurch adds to KiwiBuild pressure

Another KiwiBuild development backed by taxpayer money is failing to generate buyer demand – prompting more calls for Labour’s flagship programme to be dumped.

The Wanaka development has already come under scrutiny after slow sales – now KiwiBuild houses are sitting unsold in Canterbury.

Under the contracts, the developer can now either sell them on the open market at a cheaper price, with the government topping up any shortfall, or require the government to buy the properties back.

Back in February the government announced it would partner with Mike Greer Homes to build 104 houses in Auckland and Christchurch and the outer suburbs – 65 in Canterbury.

Last November, ministers were told there were 4083 people on Kiwibuild’s Register of Interest in Christchurch, with an estimated shortfall of 1000 houses.

Housing Minister Phil Twyford said in parliamentary responses to National’s Judith Collins none of the houses in the Canterbury developments had been sold; all had gone on offer on 20 February.

Mike Greer is currently marketing seven KiwiBuild homes, with prices ranging from $459,000 to $480,000.

Helen O’Sullivan took over as head of the KiwiBuild unit in February. It was surprising, but she was not “overly concerned” the houses had not sold, she said.

“They’re good quality homes, they’re warm, dry, modern and by a recognised builder.”

The focus had been on first home buyers who “take a very long time to make up their minds to purchase and it is a complicated buying process”.

It can also take prospective first home buyers to save up a despite for a half million dollar house. It can also take a long time to be earning enough to service a close to half million dollar mortgage.

Labour identified two problems – not enough houses, and houses were too expensive.

They launched into Kiwibuild by building, or paying developers to build, expensive houses.

Wouldn’t it have been better to do more to lower the cost of land and the cost of building first?

 

Leave a comment

23 Comments

  1. Blazer

     /  20th May 2019

    the lower cost approach would have slowed up the market and accelerated price falls.

    David will not be…happy.

    Reply
    • David

       /  20th May 2019

      Lower prices are a buying opportunity Blazer. Besides I live in my community and I like to see people in their own homes, I like stable prices I have enough to live well I dont need anymore.
      I wish Twyford had fulfilled his promise and opened up loads of land, reformed the RMA and forced councils to be more developer friendly and so far he has done nothing.

      Reply
      • Blazer

         /  20th May 2019

        opening up ‘loads of land’ needed the use it or lose it tax that National initially said they would implement and then as ..usual…kicked the can..down the rd.

        Reply
  2. Kiwibuild developer business plan: Buy cheap land miles from no where. Apply to Tywford for Kiwibuild status. Following negligible thought or research Tywford approves your application. Construct houses worth $400K if offered on the open market. Sell these to Twyford for $600K. Genius.

    Reply
    • Blazer

       /  20th May 2019

      be denied KB status ,because land is miles from no where’.

      Busted arse=pure artcroft genius.

      Reply
      • So why aren’t they selling then. Let me guess. John Key blah blah blah… nine long years blah blah… neo-liberalism…blah blah.

        Reply
  3. Duker

     /  20th May 2019

    From the nature of the dosclosures we can see its other ‘name’ builders who have their noses out of joint over Mike Greer Homes deal with Kiwibuild…see this only other stories , its always ‘news’ about a Mike Greer project. Its major competitor is GJ Gardiner – which is a nationwide franchise. More homes built by MG gives them more buying power against the largest group GJG

    Reply
    • David

       /  20th May 2019

      Because the Mike Greer spec houses in Marshland for example have been for sale for over 12 months and no interest and now the taxpayer are buying them. There is no shortage in Christchurch in fact the opposite and in Kaiapoi !
      I have a 3 bedroom 15 year old house for sale 170sqm double garage etc etc for 50k less than one of Greers tiny boxes just around the corner.

      Reply
      • Kitty Catkin

         /  20th May 2019

        The KB ones sound like Coronation St houses.

        No garage ? Dream on. Imagine a car outside all winter in Wanaka.

        Reply
        • Duker

           /  20th May 2019

          Would still be cheapest new houses in Wanaka. The ‘other’ sort with backyards and insulated garages could $850k plus

          This one is brand new $879k

          Reply
          • Kitty Catkin

             /  20th May 2019

            I’d be buying a section and putting a transportable house on it rather than living in a semi.

            Either that or I wouldn’t live in Wanaka unless I could afford to.

            Reply
          • David

             /  20th May 2019

            Wanaka has some of the strictest building design codes in the country, its a wealthy persons enclave and they want to keep it that way. Its not as if there is a shortage of land there just a shortage of how much gets released..all designed to keep the riff raff out.

            Reply
  4. Zedd

     /  20th May 2019

    The main problem with KB & other building projects.. they have to now.. mostly rely upon the ‘private sector’ to build them,… who are mainly concerned about their bottom line/profits.. Thx to the Natl parties; ‘privatise or sell everything in sight’ agenda

    They need to restart the ‘Public works’ dept.; to train & employ ‘Govt. builders’, then they could cut the ‘private profit margins’ from the equation/final cost of KB houses 🙂

    Reply
    • David

       /  20th May 2019

      You are kidding surely. With finite tax dollars what would happen when the government builders go on strike with MBIE, Teachers, Doctors etc etc demanding 17% pay rises ?
      This government has now done 10,000 fewer elective surgeries, they cant afford to build Dunedin Hospital, they cant afford to rebuild a serviceable mental health facility in Christchurch amongst other things…but the teachers are getting a great pay rise so thats fine.

      Reply
      • Duker

         /  20th May 2019

        Dont believe everything Simon says – hes a proven fudge the facts man.
        The Dunedin Hospital is going ahead, the builders wanting to tender have said because of labour supply you will need to do the two large blocks as two stages. Thats efficiency coming in and continuity of work.

        nationals housing plans over their 9 years never came to fruition – never seemed to hurt. Evenutally they just said ‘ no housing crisis’ and had no single minister. Mad Nick Smith would rush around making noises. It took labour to give its new ministry the power to issue building consents and do in 2 days what the council would take ’20 days’ and then some.

        Reply
        • David

           /  20th May 2019

          There is a record amount of consents being issued and houses being built at the moment and that was from the reforms, albeit slow ones, put in place by National. Take a drive round Auckland its crazy, Labour havent changed a single thing and cant take any credit whatsoever despite all the ribbon cutting Twyford puts his energies into.

          Surely you cant possibly believe that Dunedin spin, good lord.

          Reply
          • Duker

             /  20th May 2019

            National did next to nothing for new construction ( and the numbers show it), and left a big gap at the bottom end of the market- which is why they need KB.
            More houses were built in years under Clark than with Key, inspite of the interest rates set by the RB back then.

            Reply
            • alloytoo

               /  20th May 2019

              It’s apparent from the sales numbers that the country doesn’t need Kiwibuild.

              Labour may need Kiwibuild, the rest of us….not so much.

          • Duker

             /  20th May 2019

            Record numbers?

            just looked up the Stats data since 1966, some selected peaks of dwellings consented
            1966 24,168
            1973 39,766
            2004 31,423
            2009 14,425
            2012 16,929
            2015 27,132
            2017 31,087
            2018 32,996

            As we can see . Nationals peak -2017, was exceeded by 2004 ( labour) and 1973 (Labour). Those were days when we had the labour force

            Even 2014 only slightly bested 1966 !
            The numbers show the 9 years of national had ‘no records’ of consents

            https://www.stats.govt.nz/information-releases/building-consents-issued-december-2018

            Reply
            • Duker

               /  20th May 2019

              The numbers since 2012 would be boosted by Christchurch rebuild as well. peak year 2014 with 7308, and since fallen back as expected to 4769 last year.

      • Zedd

         /  20th May 2019

        yea.. Im jokin :/

        go figure

        Reply

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