Negative impacts of current model
Briefing to the incoming minister 2023: Winton legal challenge
In October 2022 Winton Land Ltd brought legal proceedings against Kāinga Ora alleging that our organisation is engaging in anti-competitive behaviour in breach of section 36 of the Commerce Act 1986 (misuse of market power). Kāinga Ora is alleged to have done this by:
• restricting access to the Specified Development Project process – allegedly only selecting greenfield developments that advantage Kāinga Ora
• outbidding private sector developers like Winton for suitable land
• forcing private sector developers like Winton to participate only in particular aspects of a Specified
Development Project (for example, by purchasing already consented land from Kāinga Ora, constructing houses and on-selling them).
Kāinga Ora - Homes and Communities strongly rejects the claims of anti-competitive behaviour and is defending the proceedings. We continue our urban development work in increasing housing stock for all New Zealanders, providing a range of housing options to enable more people to own their own homes in locations close to jobs, transportation, education and other amenities. The focus is on creating thriving communities to benefit all New Zealanders, generally achieving over and above what the private market is able, or willing, to do.
"What we've got here is a huge cumulative effect … Fenton St, which used to be known as Rotorua's 'Golden Mile', and now it's Rotorua's 'MSD Mile'", group chair Trevor Newbrook told Newshub.
$1.2m build cost per 2 bedroom home as part of a block. Guess what the builders want to work on and supply to?
As reported by the New Zealand Herald on 13 October 2024, the agency [Kainga Ora] has faced criticism for spending, apparently, $1.2 million per apartment on its Meadowbank project, while accruing $12 billion in debt over the past five years. This raises serious concerns about the management of taxpayer funds, the agency's operational efficiency, and the overall governance of its housing programmes.
Fears construction jobs could go as Kāinga Ora pauses thousands of homes - it's unreliable
Kāinga Ora is the biggest home builder in New Zealand and currently has work underway on 5299 homes.
However, Newshub can reveal that 3001 consented homes are now under review while a new board comes up with a plan to turn around the state housing provider. That plan is due in November.
The construction industry is worried that delay will push tradies out of business.
"We're not getting enough clear signals from the Government about when that's going to change and pick up," said NZ Construction Industry Council's Tommy Honey.
First-home buyers can't outbid the Government
Newshub can reveal the Government has been buying up hundreds of houses to turn into state homes, directly competing with first-home buyers in our cooked housing market.
Since 2017, the Government has bought - rather than built - 1054 houses. Analysis by Newshub shows nearly a quarter of them were affordable homes, the type of houses the Government has been giving away free cash to get first-home buyers into.
"There might be a specific home in a specific community that is required and it does make sense to go and buy it because the house exists," Housing Minister Megan Woods told Newshub.
Newshub analysed the purchase price of every state home Kainga Ora bought since 2017, rather than built, in that time period.
We checked them against the price caps for the first-home buyer grant - the free money the Government gives to try and get people into their first home.
The analysis found that in 2018, Kainga Ora bought 55 starter homes under the first-home grant caps. It bought a further 117 in 2019, 72 in 2020 and another 10 this year. It's a total of 254, meaning nearly a quarter of the homes it's buying rather than building are affordable homes.
"The Government likes to demonise property investors for outbidding first-home buyers. It turns out the Government is one of the biggest property investors of them all," says National's housing spokesperson Nicola Willis.
The Housing Minister argues that the Government has "drastically" reduced the number of homes it's buying rather than building.
But Willis says first-home buyers can't outbid the Government.
"The Government has endless capacity to borrow and very deep pockets."
Dr Woods says she's "certainly made it clear" to Kainga Ora her expectation that it prioritises new-builds over purchases.
Wellington first-home buyers Newshub spoke to are giving up on their cooked housing market.
"Possibly in 50 years, but only if there's significant changes to housing policy," one man said, when asked if he'd ever own a home in Wellington.
"Not anytime soon," a woman added.
Harcourts Merivale owner Jamin Marshall told Newshub buyers in Auckland and Wellington are flocking to Christchurch where it's more affordable.
"The Christchurch market is probably one of the most affordable markets in New Zealand that we're seeing. What we're noticing is a number of buyers coming out of the North Island, possibly Auckland and Wellington."
The solution to our housing hellfire isn't people just buying existing houses off one another, particularly when the Government is involved, pushing first-home buyers out the way with its endless wads of cash.
The Housing Minister is right. They need to quit buying and get building - pronto.
