KiwiBuild problems 'more than just teething issues'
The extent of the issues that KiwiBuild has encountered have been a surprise, one economist says.
After three KiwiBuild homes were left unsold through the ballot for the Wanaka development, it was revealed that five apartments were passed up by the selected buyers for the 340 Onehunga Mall Development. They were then handed to a real estate agency to sell privately on a first-come, first-served basis (although still to qualified KiwiBuild buyers).
The scheme has also been criticised for building properties in New Plymouth that are selling for more than the median price in the suburb and for including a graduate doctor among its first buyers in South Auckland.
Cameron Bagrie, of Bagrie Economists, said the problems seemed to be more than just "of the teething variety".
"It's a big project, there are going to be issues. I guess what's been a bit of a surprise is the extent of the issues."
Gareth Kiernan, of Infometrics said there was a question around how much first-home demand there would be for the KiwiBuild apartments.
The Onehunga properties consisted of two studios and three one-bedroom apartments, priced between $380,000 and $500,000. The properties had between five and 14 people on each of their ballots.
"They would seem to me like the type of property that is bought as an investment and rented out, given that a lot of people's first-home buying decision is correlated with starting to have children – and a one-bedroom property clearly doesn't match up with those needs," Kiernan said.
"There will be some proportion of people who are ultra-keen to get on the property ladder (irrespective of their relationship or family status) and would see a one-bedroom place as a way to do that, but I suspect that one-bedroom apartments could be largely a case of the KiwiBuild policy not fully understanding the its target market or the problems it's trying to solve."
Buyers must pledge to live in a KiwiBuild house for three years.
He said there should be no shortage in the near term of demand for KiwiBuild properties in Auckland.
"At this stage, I'd be more concerned about developments in other parts of the country such as Wanaka, New Plymouth, and (to a lesser extent) Te Kauwhata. In these areas, it's not clear that the price point for KiwiBuild is that attractive to potential buyers or significantly different to what the market is already offering."
A spokesman for KiwiBuild rejected the idea there was a problem.
"It was never expected that all KiwiBuild homes would sell by ballot. Typically, in a housing development, not all the homes sell off plans. Any homes that don't sell to ballot entrants can then be sold to pre-qualified KiwiBuild buyers on a first-come, first-served basis.
"The builder of the first homes to be sold this way - studio and one=bedroom apartments in Onehunga - has reported strong interest from prospective buyers and expects them all to be sold very soon. Selling all 25 KiwiBuild apartments in that development before they are even complete will be a great result.
"Developers are telling us that working with KiwiBuild has allowed them to get building quicker and sell the homes faster. That's giving them the confidence to build more of the homes New Zealand needs to overcome the housing shortage."
He sad KiwiBuild was working with the building industry to build homes that young families needed.
"In recent years, too few starter homes have been built. The average new build was over 175 square metres and too expensive for families wanting to get in to the property market. KiwiBuild is changing that by increasing the supply of quality, starter homes.
"Prospective KiwiBuild buyers have told us they are interested in a range of home sizes, from one-bedroom to four-plus bedrooms. This data is used by KiwiBuild when we work with developers on agreements for new homes, so that we are meeting the needs of families who want to become homeowners.
"The homes we've sold or are in the process of selling are 30 per cent one-bedroom or studio, 32 per cent two-bedroom, and 38 per cent three- or four-bedroom."