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The Northlake Kiwibuild deal and those like it were not "in the best interest of first home buyers", Prime Minister Jacinda Ardern says.
As part of a restart of the Government's failed Kiwibuid scheme Housing Minister Megan Woods yesterday lifted restrictions on who could buy unsold houses in Wanaka's Northlake subdivision and Te Kauwhata in Canterbury.
It moved away from its goal of 100,000 houses, saying it was "overly ambitious".
Last October then-housing minister Phil Twyford announced 211 Kiwibuild houses would be built in Northlake in the next two years.
Ten have been completed and another 20 terrace houses are under construction.
As of last month none of the 20 had been sold.
It is unclear when the houses will be available for sale on the open market.
The Government was still working to fix the "housing crisis", she said.
"Moving away from the target we think will make sure that we're building the right house in the right place and for first home buyers that were looking for them.
"We're now making sure that we're getting back our capital so that it can be recycled back through the Kiwibuild scheme."
The reset was an acknowledgement there were a "handful of areas" where decisions were made to build houses that "while there might have been demand for those houses, there wasn't demand from first-home buyers".
"I think we have to acknowledge the target that we set ourselves was meaning that decisions were being made that weren't in the best interests of those first home buyers that we were trying to help.
"We've got to build the right houses in the right place."