With everything else going on, KiwiBuild didn’t get the attention that it should have. But there was still a range of reaction in the media. RNZ had a mixed review:
Critics doubt Labour housing plan will solve crisis
[Labour] says under the scheme, first-home buyers will be able to buy a modest house for about $300,000. …
However Hugh Pavelitch, co-author of the annual Demographia International Housing Affordability Survey, says that is still more than five times the average New Zealand salary, so is not affordable by international measures. Mr Pavelitch says Labour is ignoring the two main drivers of the housing affordability crisis – land supply and lack of infrastructure investment. …
The Registered Master Builders Federation says despite losing thousands of skilled workers, it could train new staff and gear up over several years. The federation says it is currently building about 30% to 40% fewer homes than its long-term average. Chief executive Warwick Quinn says a programme such as the one Labour is proposing would give builders much-needed confidence in the market. Mr Quinn says providing growth increased over several years, the industry would be able to bring through apprentices to help build significantly more homes. ….
The Salvation Army has welcomed the policy, saying it has previously called for a large-scale approach to build housing. The national director of its social policy unit, Major Campbell Roberts, says more detail is needed, especially on the ability to build that many additional homes.
Of course it isn’t going to “solve the crisis” no one ever claimed it would. But it is going to help. Economist Peter Lyons writes in the ODT:
Shearer’s building plan has merit
Labour leader David Shearer has painted a bold vision. His KiwiBuild announcement is big picture stuff. He has announced Labour’s intention to build 100,000 affordable houses for first-home buyers over the next decade in a public-private arrangement.
My main reservation is where is the land coming from? This appears to be the main problem of housing affordability in certain areas at present.
The reason I like the announcement is that average houses in New Zealand are way overvalued. Our houses are generally nothing spectacular as dwellings but we are paying premium dollars for them.
This is an aspect of our economy which we have control over. We can’t control international oil or dairy prices and the productivity of our farms is limited by technology. We do have the ability to control the prices we pay for our houses, if we choose to exercise it as a nation. …
Mr Shearer has pointed to the big advantage a government-sponsored building programme has. It is economics of scale. This should ensure a fall in construction costs for first homes but it doesn’t overcome the issue of land costs in key areas. …
I applaud Mr Shearer’s big picture approach. He has identified the major area of our economy over which we have control if we choose to exercise it. He will be criticised by market zealots who abhor any form of government intervention. He also needs to confront the land affordability issue.
But as an avenue to economic prosperity the plan has merit. It will create jobs and skills and reduce the price of the main financial transaction in most peoples’ lives. It is far superior to relying on monetary policy and low interest rates, which serves to further inflate house prices and indebtedness. Unless we solve this housing affordability issue we will continue our economic stagnation and relative decline. We can fix it if we choose to.
An anonymous editorial in The Herald is likewise supportive:
Kiwi build solid base for future at last
The previous Labour Government bequeathed the country KiwiSaver, Kiwibank and KiwiRail. The next one proposes to establish “KiwiBuild”, a construction programme that could help many young couples afford their first home. …
If Labour is wrong, its project would divert a great deal of the country’s building industry into activity of little value and the economy would suffer. But if it is right, many young first-home seekers would reap the benefit. For the moment, the party has a concrete policy to clarify its political character and offer voters something distinctive at the election two years from now.
By far the best coverage came from Brian Rudman:
It’s bold, but Labour housing scheme looks do able
Whatever the eventual outcome of Labour’s leadership struggles, let’s hope the brave and adventurous Kiwibuild housing project announced by leader David Shearer at last weekend’s party conference, doesn’t get lost in the melee. Any young Aucklander seeking to buy a first home, knows from bitter experience that the sainted “market” is failing to deliver homes they can afford to buy. …
Instead of waiting for the market, Labour’s plan is to build 100,000 affordable entry-level homes to buy over a ten year period, with two-thirds of the houses built in the first five years located in Auckland.
Mr Shearer said they could be built for less than $300,000 each, and housing spokesman Annette King followed up in a television interview, suggesting a breakdown of around $250,000 for the house, and $50,000 for the land.
Despite scepticism from political opponents, industry sources confirm that even in Auckland, this $300,000 benchmark is achievable, able to produce a one or two bedroom, 90 sq metre, two-storey terrace house, all wired and piped and ready for occupation. That’s based on a conservative costing of $1,000 a sq metre for 120 sq m of land, and a 90 sq m home, costing $2,000 a sq m to build. …
We’ll have to wait and see whether Labour’s solution for the rental crisis is equally brave.
There are certainly hurdles to clear for KiwiBuild to be successful, and no it isn’t on its own going to solve the housing crisis. But on the whole the policy has been well received. It will have a significant impact on housing supply, it will create jobs and economic stimulus, it is the most ambitious state building program in over 50 years. I’m sticking with my first reaction, this is a historic policy.
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