Cracks appear in KiwiBuild

Kiwibuild, one of Labour's primary policies, is showing signs of serious cracks.

It was sold as a helping hand to those locked out of the housing market as well as a means to scale up housing supply and do so rapidly. The perception of it at the moment is very different.

The key for KiwiBuild and Labour will be winning the public relations battle, on which KiwiBuild narratives gain traction in the coming years.

Labour will suffer if the dominant view is that it is a lottery for yo pros (young professionals) who might be able to buy houses even in expensive places such as Auckland and Queenstown Lakes anyway.

Labour will be on the back foot if KiwiBuild is seen as a windfall for the likes of the graduate doctor and her online marketing manager partner who were the poster couple for the first such houses in Auckland.

And if KiwiBuild is seen as simply rebranding houses that would be built anyway, even apparently good progress towards the 100,000 target over 10 years will be seen as just spin.

It will be detrimental, too, if the view KiwiBuild is a useful hand-up for developers through guaranteed sales becomes the norm.

Sometimes, as well, responses to ballots have been underwhelming. This was made plain by the South Island's first foray into KiwiBuild home ownership in Wanaka. So few prospective home buyers entered the ballot for 10 houses the developer asked the time to be extended by 10 days. In Auckland, the record so far has been mixed.

The difficulty is that, while many KiwiBuild houses might be bargains with the prospect of those capital gains after the three years' minimum ownership, they are still expensive. Servicing mortgages of four or five hundred thousand dollars takes some doing. So, too, does finding a deposit, even if the houses are relatively ''affordable''. It is also necessary to have loan financing in place before entering the ballot.

It is little wonder income limits were put at $180,000 for a couple and $120,000 for singles. High incomes are needed for large mortgages. Minimal take-up from lower thresholds would have been acutely embarrassing.

Labour will also be aware it wants teachers, nurses, police and the like to be able to buy houses in the most expensive places. Labour needs the support of the middle, and not just the left, to govern. The middle, as has often been pointed out, is where elections are won and lost.

Labour will emphasise KiwiBuild homes are less expensive and smaller. It seems to pay builders and developers to focus on big expensive houses. But many more cheaper houses and apartments can be built in the same time and for the same resources. Thus, KiwiBuild can increase housing supply, and that should make houses less expensive.

Labour will also want its parallel social and state houses efforts to be seen as impressive and extensive. Will that message resonate or will it be largely buried in KiwiBuild criticism?

One wonders, too, if a scheme could have been devised so that potential lottery-like capital gains were ameliorated. Could KiwiBuild have been thought through better so that those buying at a discount would also have to sell at a reduction, the difference going to the next first-home buyer. Or the initial discount on market price would be returned to the government when the houses were sold. Although this has been achieved overseas, policies such as KiwiBuild can become mired in complexity.

Labour must be hoping the issues with the shaky start to KiwiBuild can be patched over, that it really can deliver lots of new homes and ease the housing crisis.

Crucially, it must hope its narratives gain purchase and the public can be convinced the scheme is positive with wide public benefits.

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