Ardern’s Kiwibuild turns from social housing to “socialism for the rich”

By Leith van Onselen

I noted on Monday how the New Zealand Labour Party’s promise to “build 100,000 affordable homes across the country” was already shaping up as an epic failure due to:

  1. the government changing the program from “building” to “facilitating” the delivery of 100,000 affordable dwellings, meaning that NZ taxpayers would merely ‘underwrite’ many dwellings that would have been built anyway, thereby protecting developer margins; and
  2.  the government increasing the price threshold on a Kiwibuild 3 bedroom home to $650,000, which is unaffordable to more than half of Auckland households.

Then on Wednesday Housing Minister, Phil Twyford, announced a ridiculously high income cap of $180,000 for would-be Kiwibuild homeowners – a level that is more than twice the average household income:

Yesterday, the commentators lined up to slam Kiwibuild as “socialism for the rich”. From the NZ Herald:

If there was any excitement brewing at being able to enter a lottery to buy an affordable Kiwibuild house, it was certainly short-lived, as further details revealed that the “lottery of birth” has probably already scuttled most people’s chances. Disappointment is setting in as more people realise that the scheme is really only going to benefit the rich. This is because the houses are priced so high that few will be able to afford to even enter the final ballot for them. What’s more, many are asking why the income caps have been pitched so high that the scheme seems destined to be dominated by rich buyers who are after a good investment…

Newshub’s Jenna Lynch was highly critical: “in effect there is no real income cap. Only the top eight per cent won’t be able to buy these homes. It’s a free for all. This is not going to help those on low or middle incomes – they’ll be locked out by relatively high wage earners”…

Lynch also criticises the lack of asset-testing for Kiwibuild homebuyers: “Further there’ll be no asset checks for those buying a first home meaning so long as your income is below the caps, you could have millions locked away in assets other than housing and still be eligible to get the keys to a Kiwibuild house”…

According to Stuff journalist Henry Cooke, the “sky-high income cap”, together with any lack of “weighting for need or income like there is for state houses”, means the rich will benefit the most: “Needy families who could really use the help will be out in the cold hard private rental market while a couple of doctors making $80k each will happily move into a nice new home”…

Newsroom’s Thomas Coughlan… concludes that the Kiwibuild houses are simply going to be too expensive for most buyers, and that’s why the income cap has to be so high – so as not to exclude those most likely to buy the houses.

By design, Kiwibuild is affordable only to high income earners. So basically, no change from the status quo.

Talk about an epic failure.

[email protected]

Unconventional Economist


  1. Yes, it’s almost impossible to artificially fix the problems caused by the central pricing of money.

  2. deustchedropper

    yep, socialism is and always will be an epic failure. Sooner you grasp that the better

  3. All these handouts specifically exclude the poor. When a 3rd world nation subsidises petrol, it does nothing for those who can only afford a bicycle. When Gillard wanted a cash for clunkers program, it would have done nothing for those who can not afford a car.

    Negative gearing handouts should immediately exclude the minority that has an income over $80k/year. Ditto the first home sellers’ grant.

  4. Central government is becoming increasingly irrelevant as the locals take control, responding to public opinion and demand …

    Surge in new dwelling consents in Auckland could be the beginning of the end for the region’s housing shortage |
    Average asking price for Auckland homes down more than $82,000 (-8.3%) from its February peak – prices also down in BoP, Wellington and Canterbury |
    QV’s average property values have fallen in Auckland, Tauranga and Wellington over the last three months – vendors warned against unrealistic price expectations |

    Quotable Value is warning flattening or falling house prices mean we are now in a buyer’s market and some vendors may have unrealistic expectations about what their property is worth …

    … In Christchurch sales activity was slowing while property values were flat overall, according to QV Christchurch property consultant Hamish Collins.

    There was growing interest for new builds in and around the city centre, but an oversupply of land and developments in fringe districts and on the outskirts of the city, he said.

    These included areas such as Halswell, Wigram, Preston and the Selwyn and Waimakariri districts.

    “We are seeing some developers offering new builds or recently constructed properties at discounts as a way to free up cash for their next project,” Collins said.

    “This is having a flow on effect on the overall value of new builds or existing properties in these areas,” he said. … read more via hyperlink above …

    • UPDATE – New (IPSOS) survey reveals housing, poverty and healthcare most concern New Zealanders – NZ Herald

      (Original title) Dont touch the HAM: Its off ! … Rob Stock … Stuff / Fairfax NZ

      … Extract … Readers poll …

      What should a ‘median’ house cost?

      No more than three times median household income
      Up to four times median household income
      Five times is acceptable
      Six or more is okay in this day and age
      Not sure
      2.2k votes
      Governments housing idiocy since Christmas … Hugh Pavletich

      The focus must be on abolishing urban limits and appropriately debt financing infrastructure. Check the Ardern / Twyford section of my archival website .

      Kiwibuild is just an embarrassing and unnecessarily costly distraction.

      • A few further lessons from Greater Christchurch … (The GREATS are the smaller and functional Selwyn and Waimakariri Councils) …

        Lincoln (South Christchurch): From mill town to boom town … John McCrone … The Press

        It was supposed to be a post-quake phenomenon, yet there is little sign of it slowing. Why are rural fringe towns like Lincoln still growing so fast? JOHN McCRONE reports.

        The contrast is striking. In central Christchurch, Fletcher Living is taking forever to get going on its East Frame townhouse and apartment block development.

        Government and council have agreed that denser inner city housing is vital to making a success of the earthquake rebuild. Yet despite inking a deal with Fletcher to build nearly 1000 homes back in 2015, the first 20 properties won’t be finished until late this year.

        The buyers just don’t seem to be there for them. And so the East Frame development has been uphill all the way.

        However, take the road half an hour out of town to Lincoln and the story is the opposite. This once sleepy village has exploded with subdivisions. Its residential footprint is now 10 times what it was 20 years ago.

        READ MORE:
        * Rolleston: Time to take it seriously
        * Christchurch’s $600 million motorways
        * Christchurch’s next problem: bringing residents back into the CBD
        * Government ‘locked in’ to contract for delay-riddled east frame
        … Access latest building consent numbers … THE BIG SURGE …
        More than half of Auckland households unable to buy ‘affordable’ (Kiwibuild) $650k home, council says – NZ Herald

      • The Kiwibuild free for all | Kiwiblog

        Jenna Lynch writes:

        KiwiBuild promised to deliver 100,000 affordable houses to help first-home buyers realise the Kiwi dream.

        It promised to help average Kiwis into their first home.

        But the income test is anything but average. The income caps are so high they may as well not exist.

        A solo buyer can earn up to $120,000 a year. A couple can earn up to $180,000.

        Well over twice the median income. … read more via hyperlink above …

      • From: Hugh Pavletich [mailto:[email protected]]
        Sent: Sunday, 8 July 2018 10:32 a.m.
        To: ‘[email protected]

        To Stacey Kirk … Senior Political Reporter … Stuff / Fairfax NZ …

        Good morning Stacey …

        Govt injects oversupply of hope into undersupplied housing market … Stacey Kirk … Stuff NZ

        I’m rather surprised you made no mention of the May building consent numbers / trends … and the actual and looming supply situation now in many local areas.

        Do consider how the bureaucratic Kiwibuild will perform, within this broad ramped up market production … importantly … controlled and driven locally.

        Will Kiwibuild perform any better than EQC ?

        Have you spoken with Christchurch people about their experiences with EQC ?

        Are you aware of the sorry British bureaucratic building history ? …

        Inquiry. The Great British Housing Disaster (Adam Curtis, 1984) – YouTube

        There may be some morsels within the below of interest / assistance.

        This communication has been bcced to others.

        Best regards,

        Hugh Pavletich
        Co-author Annual Demographia International Housing Affordability Survey (recently updated)

  5. But on the bright side! The market is grinding to a grid-locked halt.
    It’s shades of the UK in the early 90’s – chains of buyers all dependent upon ‘subject to sale of my place first’ falling over, taking the whole lot with them. The buyers are there all right, but they are trapped with what they already have. Debt-to-Income (of 5 times?) may not be official policy, but it’s there alright!

    • Not quite, the UK never had the levels of immigration that NZ does… therefore the outcome will be entirely different. Not disagreeing prices stagnant, but buyers will be new Kiwis. Domestics will be locked out of he market for a generation due to MP polices.

      Its ironic really, when debt was being deregulated in the 1980’s, not sure if it was Keating, talked about the “Democratisation of Debt it suddenly opened up a whole section of society to own their own homes… funny how that never really happened.

      Thinking of what I saw the other day about hierarchical societies (, to attribute value, hierarchies inevitable follow. Its a circular argument. It seems the poor will always be with us…

  6. Jumping jack flash

    location, location, location!

    Oops! It looks like they located these cheap houses too close to the houses that had massive piles of debt already attached to them.
    It would never work if that was the case. (I’m not entirely sure where these houses were meant to be built)

    Only 2 things can happen to “affordable” houses due to the fantastic property valuation system:
    1) the affordable houses rise in price and become unaffordable
    2) the expensive houses fall in price.

    option 2 is off the table because there’s simply too much debt attached to the expensive houses for them to be allowed to fall in price, especially due to some ridiculous government policy for poor people! I mean, really! Come on, now.

    They should have built these affordable houses in the crater of a volcano, or somewhere else far away from the existing houses that have all the debt attached to them, if they wanted them to be affordable, and remain that way for any amount of time.