Kiwibuild is broken - so how can we fix it?

Friday, 28 June 2019

Phil Twyford is the latest victim of a housing affordability crisis that's broken successive housing ministers; his dumping from the portfolio is an admission from the Government that its flagship Kiwibuild policy is not fit for purpose. But Kiwibuild is only the latest failed attempt at fixing a seemingly intractable problem with the housing market.

It's not just an Auckland problem any more either. The ripples of the housing crisis are spreading to regional New Zealand as well. So Stuff asked experts what their fix would be to correct course on Kiwibuild.

Several of our contributors highlight the overlooked pre-fab solution, a technology that has been around for at least a hundred years and is only getting more high-tech with each passing year.

KiwiRent and KiwiBuy are offered up as alternatives, and the question of whether planning is or isn't the problem gets an airing.

**READ MORE:

* Bold ideas to transform New Zealand

* Kiwibuild could 'underwrite rental and social housing'

* Six KiwiBuild homes contracted 'off the plans' in November already mostly built in September**

Kay Saville-Smith, research director, CRESA

Let's stop pretending that planning is the primary barrier to meeting our housing needs - the regime of the 1960s was more onerous than the current RMA scheme and 60 per cent of the new-builds were for low income or modest income families. Besides, the Special Housing Areas policy of the previous government removed many planning constraints and still failed to deliver more affordable housing.

KiwiBuild got caught in trying to stimulate supply but not applying critical elements to meeting the real housing gap: proper price pointing for affordable homes, identifying and targeting households in need, creating certainty around lending and a robust retention policy.

We need to produce affordable housing and housing affordable to key workers - like teachers and nurses. Research shows government investment beyond state housing is important. Disincentivise landbanking, use some of the value from increasing land prices to get a secure funding stream for new builds and, introduce inclusionary zoning, and address private covenants that drive prices higher.

Jarrod Kerr, chief economist, Kiwibank

There's a shortage of around 100,000 homes. We have more than enough land. But we either zone the land as lower density, or we struggle to access the land with woeful infrastructure. It's a result of poor planning, and poor investment.

The Government's efforts to underwrite property development is perhaps better suited to increasing and improving the stock of social housing. Affordable, decent, and stable rental accommodation is vital, particularly for low income households.

NZ stands out with prohibitively expensive construction costs. The construction industry is running at full capacity. To ask it to do more, more labour is needed.

Tricia Austin, senior lecturer in architecture and planning, University of Auckland

If we want more good quality, affordable dwellings for those unable to compete in the housing market, and more stable and resilient communities, Auckland's current housing programme should prioritise minimising the disruption to the lives of our most vulnerable families.

Redevelopment disrupts the lives of these families for eight years or more, dislocating them from jobs, social support networks and local schools. A better policy would be based on Housing New Zealand's tenants having to move only once to a new home in the same neighbourhood and community housing organisations providing the dwellings currently earmarked for KiwiBuild.

Major Campbell Roberts, Salvation Army network manager housing

It's time for a new approach. KiwiBuy, an initiative by Habitat for Humanity, Community Housing Aotearoa and the Salvation Army. Shared equity and rent-to-buy are both part of it.

Home ownership could be dramatically lifted when a buyer purchases a 65 to 90 per cent share in a house, while the provider retains the balance. Over time the household buy's the remaining shares from the provider.

Similarly, by providing a house that the buyer makes rental payments on, with a portion of the rent accumulating as equity until the buyer has enough investment to fund a mortgage and buy the house outright.

KiwiBuy would also provide houses on leasehold land, retaining ownership of the property but giving households the right to occupy at the cost of house construction. The tenants would then pay annual rent on a 100 year lease. This would be set well below market value and only ever increase yearly with inflation. The costs remain affordable for the family in perpetuity.

Michael Sly, entrepreneur and founder of Pourakino Lifestyle Sections

It would make sense for KiwiBuild to underwrite a number of well designed homes that focus on cost efficiency. It could do this by utilising the effective use of materials, size and energy efficiency to create long term community assets.

It should underwrite the cost of the build, removing risk contingency from the process and reducing the cost of the build for the end consumer. It would also allow for bulk orders of materials from suppliers.

Set underwritten home designs would enable the smaller team infrastructure that already makes up the real building industry to adopt the KwiBuild concept. The programme then would have thousands of people who could use the building system on any available land or for any client.

Creating 'KiwiRent' by building exceptional long-term rental stock would put less pressure on people who feel they have to buy in order to be safe and stable, by using the same cost reduction strategies.

Shamubeel Eaqub, economist at Eaqub & Eaqub

Most of the housing stress is among renters, who face significant insecurity of tenure and high rental costs.

To encourage the build-to-rent sector, KiwiBuild can be the long term procurer. It can set the groundwork for the quality of homes, which should be high, and commit to long term arrangements to encourage prefabrication like Sweden's million homes programme in the1960s.

KiwiBuild could underwrite some risk to get investors on board. This shouldn't be hard as the government is on the hook for unspecified amounts through the accommodation supplement.

Exempt existing overseas institutional landlords from the foreign investor ban to create long term, high quality land leases to reduce the upfront cost of homes, and set high quality rental contract terms.

The real work will be in fixing our planning rules to allow sufficient housing supply of the right size in the right location, as well as funding the necessary infrastructure.

If councils remain on the hook for dodgy buildings because of our joint and several liability regime, then they will continue to be risk averse and keep slowing things down.

Mike O'Donnell, professional director, writer and advisor

My old political philosophy lecturer described anarchism in a colourful way. He said anarchism was the opposite of sex, because anarchism was fun in theory but tedious in practice.

The same is true of KiwiBuild. When Labour was in opposition, the idea of Kiwibuild and delivering 100,000 houses in 10 years seemed a hell of a good idea in theory and resonated with a young electorate. But now they are in government KiwiBuild has turned into a disaster in practice, with more holes than Swiss cheese.

Prefabricated, mass produced, assembled on site houses seem to have been overlooked. Families are able to get 100 square metre pre fab houses built and serviced for $200,000. What's more they only take seven weeks to build.

That's less than 50 per cent of the price of an Auckland house in about 60 per cent of the normal time. I'm sure the anarchists would approve.

Martin Luff and Danny Squires, Space Craft Systems and WikiHouse

KiwiBuild isn't broken. It's symptomatic of a wider broken system that can't adapt to our evolving, urgent needs. First we need a holistic approach, much broader and joined up than our 19th Century models provide. There are lots of motivated people working within the system that feel disempowered by these models, and want to implement good ideas.

If you want to change one thing, you need to change everything. Who builds our houses is important. We have developed a procurement model that taps the 'Citizen Sector'. Lower the barriers to entry for people to build houses and increase the quality of our built environment by using tools and processes that allow people to be active participants. No need to bring in 50,000 workers to build more houses - where would they live?

Gareth Kiernan, Infometrics chief forecaster

Without the government's help, the private sector is already rapidly boosting the housing supply – new home construction is at a 45-year high. Over time, this additional supply should curb house price growth and start to improve affordability. But the extent of this effect will be limited, because land and associated infrastructure costs still make up too big a share of total housing costs.

Last year, land prices were 46 per cent of the average house price, compared to just 24 per cent in 1961. Paying top dollar for land means people build a larger house so they don't undercapitalise their investment.

Urban Development Minister Phil Twyford has talked about addressing land supply and infrastructure issues, including measures to discourage land banking, cut through local government bureaucracy, and develop new ways to fund infrastructure connections. Real change in these areas has the potential to bring down land costs, which is the most important step towards improving housing affordability.

Once that change occurs, the private sector has already shown it is far better equipped than the government and its irreparable KiwiBuild programme to supply the type of housing New Zealanders want and need. Free up the land, and the private sector will build on it.

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