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By Daniel Horrobin

Auckland needs 13,000 new homes a year to keep up with growing demand, according to the Labour Government’s own statistics. KiwiBuild is the proposed solution, a policy that aims to build 100,000 affordable homes over the next ten years.

This programme certainly holds promise, but is it enough to solve Auckland’s housing problem?


The details of KiwiBuild look great on paper. 5,000 affordable homes are to be built in Auckland each year for the next decade, a number which Labour claims is ten times higher than the current build rate of 500.

The remaining 50,000 KiwiBuild homes will be built throughout New Zealand over the next decade, in areas such as:

  • Hutt Valley: 400 affordable homes
  • Hamilton: 200 affordable homes
  • Queenstown: 1,000 affordable homes
  • Palmerston North: 149 affordable homes
  • Napier and Hastings: 240 affordable homes

Standalone KiwiBuild properties in Auckland will be priced at roughly $600,000, while terraced houses and apartments will go for under $500,000.


Standalone KiwiBuild properties in Auckland will be priced at roughly $600,000.

These properties will only be sold to first home buyers, who will be required to hand back any capital gains made if they sell within five years. Housing minister Phil Twyford recently forecasted that the first KiwiBuild home will be completed in mid-2018.

Newly constructed standalone homes and apartments at the above price levels are extremely rare in Auckland. If Labour executes their plan well, these properties will help thousands of new home buyers enter the property market, in quality housing, priced at a reasonable level (which may be below market).

Despite the plan’s promise, it has its detractors. Economist Shamubeel Eaqub spoke to NewsHub on February 26, saying the policy may not go far enough:

“Six hundred grand is not affordable, it is an extraordinarily large sum of money. Trying to force people into ownership with really stretched finances is not a good idea.”

Official analysis from the Ministry of Business, Innovation and Employment (MBIE) voiced similar concerns, noting that there may not be sufficient demand to purchase these properties. Their research found that a first home buyer in Auckland would have to be earning $114,000 to buy a KiwiBuild property priced at $500,000 (assuming a 25 year mortgage, and repayments at no more than 30 per cent of total income).

The same report also suggests that KiwiBuild will not succeed in meeting housing demand in Auckland. In fact, demand is expected to exceed supply by at least:

  • 2,100 dwellings in 2018
  • 1,200 dwellings in 2019
  • 900 dwellings in 2020
  • 1,500 dwellings in 2021
  • 1,600 dwellings in 2022

KiwiBuild is not a quick fix for New Zealand’s housing unaffordability problem, nor will it instantly level the scales of demand and supply. The fact is property values and the costs of construction have increased too much over the last decade for such a policy to instantly remedy these issues.

A first home buyer in Auckland would have to be earning $114,000 to buy a KiwiBuild property priced at $500,000.

However, if Labour does deliver as promised, these builds will at least help hundreds, or thousands of first home buyers get into the market every year. That’s an impressive and worthy achievement in itself.


Housing supply is the core issue in Auckland and around New Zealand – we simply do not have enough properties to meet demand. The key to fixing this issue is to build more homes, a solution that appears straightforward, but is actually incredibly challenging.

The construction industry is currently stretched beyond its capacity and MBIE reporting suggests KiwiBuild will worsen this shortfall. It is expected that in 2018 there will be a shortage of 38,500 construction workers relative to demand, increasing to 45,000 in 2019 and 46,200 in 2020.

This has led construction companies to increase their salary offerings, and even cancel planned works – all of which places upwards pressure on the cost of new housing.

Housing affordability is a complex issue, the market is driven by countless factors and one policy will never single-handedly fix the problem. What is needed is a comprehensive approach to policy making, addressing the drivers of housing unaffordability, from supply shortages to tax loopholes for investors.

Labour has a promising platform to start addressing these issues, and more change is likely after the completion of the proposed ‘tax working group’. Until then, let’s wait to see the results of Labour’s current programme and hope that they help mould to a fairer, more affordable housing market.

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