Shearer admits policy will only deliver small homes

Labour leader David Shearer has conceded his party's affordable housing policy will only be able to deliver small apartments or terraced housing in Auckland for the $300,000 price tag - while standalone family homes are more likely to cost up to $550,000.

Labour's policy to deliver 100,000 affordable homes over 10 years was the centrepiece of Mr Shearer's State of the Nation address yesterday, aimed at setting out his new "hands-on" approach and priorities for the year.

When he announced the KiwiBuild policy last year, Mr Shearer said the aim was to put "Kiwi families" into their first homes at a cost of less than $300,000. Labour has repeatedly defended that figure despite National's attempts to say it was dishonest because it promised the impossible.

After his speech yesterday Mr Shearer said the $300,000 figure Labour had quoted was the average price of KiwiBuild homes nationwide rather than applying to every house under the scheme. "In some places it will be more."

He said it was possible to build small homes for $300,000 in Auckland, including in Massey, Papakura and Manurewa.

"They are apartments, they are terraced houses. For a three- or four-bedroom standalone house it will be more."

He said three- and four-bedroom standalone homes were "of a different ilk" and a lot of the homes built in Auckland would be two-bedroom apartments or terraced housing.

He said those larger homes would still be under the $550,000 average price of a four-bedroom home. Construction companies had advised that the costs would be dramatically lower than the usual home because of the scale of the project.

The policy has proved popular - in a recent Herald-DigiPoll survey there was more than 70 per cent support for it.

Yesterday Deputy Prime Minister Bill English said Labour's policy was heading the same way as its last building project: state houses. "They'll be the wrong size in the wrong places and the price is going up already. It was $300,000 two months ago, and now they're talking about $550,000, which will be a revelation to the public."

In his speech, Mr Shearer said Labour was determined to start building houses under the scheme as soon it got into office - it will set up a conference of experts on housing, including architects, builders and draftsmen to ensure the policy was ready to go from the first day if Labour wins the election next year.

Mr Shearer's speech was delivered in Labour's blue-collar heartland of Wainuiomata at the local rugby club where Young Labour had gathered over the weekend.

Prime Minister John Key this morning told Radio New Zealand that new Housing Minister Nick Smith would produce a housing plan which kept "that kiwi dream alive of buying their own home".

Mr Key said National's housing plan, which has yet to be announced, would try to work with local councils, but if they stood in the way of speeding up the process he was not ruling out the Government having a greater say.

Dr Smith would look right across the sector to see where improvements could be made.

There was two key factors in making housing affordable, he said.

"It's fundamentally keeping interest rates low, that's one thing that stops consumers being able to afford their mortgages who buy houses, and the second thing is really around land supply in my view."

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