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?