Housing Minister Phil Twyford has revealed to the Herald the first in-depth details of the incoming Government's new $2 billion KiwiBuild scheme, explaining how 100,000 new residences will be built in the next decade.
So-far-unknown details about precisely how, when and where the much-vaunted Labour initiative is planned to become a reality have been announced, giving details of a plan to fulfil tens of thousands of New Zealanders' long-ditched home ownership dreams.
The just-announced Housing Minister told the Herald how labour, skills and land shortages in the over-stretched, under-delivering, under-resourced high-priced housing market were planned to be resolved by his regime which will change immigration laws and form public private partnerships with business like Fletcher Residential and Mike Greer Homes.
In the coming three years, KiwiBuild aims to gradually ramp up to 10,000/year high-quality affordable new residences for first-home buyers, half in Auckland, to build 100,000 residences in a decade.
Twyford said it would take about three years for the programme to kick into full-strength, starting out at a few hundred or possibly 1000 residences in the first year. Auckland's Hobsonville Point is the model the Government will use to duplicate that precinct throughout Auckland, Hamilton, Tauranga, Queenstown and potentially other areas where first-home buyers struggled, he said.
A powerful new Affordable Housing Authority would be formed to act like the Hobsonville Land Company (now called Homes. Land. Community), a Housing NZ subsidiary, building one new home a day and planning at least 4500 residences for about 11,000 people once it is finished on Auckland's north-west fringes.
Twyford outlined how there would be three ways the Government would implement KiwiBuild:
First, by stepping into already-under way schemes like Hobsonville Point and securing a large number of planned new residences there;
Second by buying off-the-plan units in planned developments like new high-rise Auckland CBD apartment blocks;
Third by creating its own development sites and bringing in group house builders, particularly on Crown-owned land.
Apartment/terraced housing developers and first-home buyers struggle to get bank funding but he said KiwiBuild could be a huge assistance, taking off-the-plan units before construction started.
"The Government will under-write or buy off-the-plan dwellings in new private developments, eg Hobsonville Point and others, by purchasing 30 to 40 per cent of the terraced and apartments that fit the KiwiBuild criteria. Buying off-the-plans is thereby guaranteeing high-quality affordable homes and we would then on-sell them to first home buyers. That would de-risk many developments, give what a problem financing has been for first home buyers and for developers.
"The rationale for KiwiBuild is that the market on its own has really struggled to deliver affordable homes. We want to be able to deliver medium-density townhouses and terraced housing for $500,000 and under and stand-alone homes, mostly on the fringes such as Auckland's north west and the south, for $600,000 but most products will not be stand-alone.
"We will be supplying KiwiBuild homes into large development projects. We'll do a stock-take of all the state housing redevelopment plans," he said, citing National's plans for about 26,000 new residences on Housing NZ Corporation land and citing Northcote, Mt Roskill and Takapuna."
Instead of allowing private developers to take two-thirds of new-build projects in redevelopments of state land, 30 to 40 per cent of new residences would be KiwiBuild, he said.
"This will be on state house land. We're looking at Hobsonville. We will have a whole fresh look at Hobsonville. There's also Crown land projects that poor old (former Building and Construction Minister) Nick Smith struggled to put together, as well as deals with iwi," he said.
"[Auckland Council's] Panuku have done a lot of scoping out for urban renewal in Henderson, Manukau, Onehunga, Avondale and Panmure, for possible regeneration on land owned by the council, Housing NZ and the Crown. So we won't just be relying on Government or public land but we're going to work with private investors and owners."
Twyford has met Fletcher Building's residential and land development chief executive Steve Evans, representatives of Mike Greer Homes and Mark Todd of Ockam Residential who he said were "absolutely bursting to be part of this work. Fletchers are keen to do more housing. They've done a lot of work on panelisation."
"We're going to do large-scale urban renewal projects around rail corridors at Avondale, New Lynn and Panmure, around town centres, taking advantage of the rail and roading network.
"We're going to be as ambitious as possible. There is a $2b cash injection for KiwiBuild over 10 years and we will recycle that money over and over," he said of the state buying the properties, then on-selling to first-home buyers.
"It's not going to happen in the first week. We've always said we'll step it up over three years to hit the 10,000-a-year target. There's a bunch of projects already under way and we'll make sure there's more affordable places there, at Northcote, Mt Roskill and Hobsonville Point."
Northcote is a Housing NZ Corporation redevelopment, intensifying land around Lake Rd. Mt Roskill is the same, between May Rd and Dominion Rd and Hobsonville Point is on the waterfront off State Highway 18. HLC is running all three for Housing NZ Corp.
"We're going to legislate the new urban development agency and that will have various powers and it will hold all the Government's urban land holdings and that will give it a massive balance sheet. It will have a mandate to develop projects specifically like the [former] Hobsonville Land Company."
Half KiwiBuilds will be in Auckland "and the rest will be in places where the housing crisis is most acute. Queenstown which is really in need for urgent intervention. Queenstown is a special case, which needs a particular kind of approach and the Queenstown Lakes District Council has done some great work but it needs the Government to give it a hand. Regions like the Waikato and Bay of Plenty and in Hamilton and Tauranga are under real pressure.
"There will be other areas. We have not done precise modelling in each individual place in New Zealand but the focus will be on Auckland in the short term because that's where the shortage is most acute."
"Part of the concept of KiwiBuild is that work will be tendered to companies that can scale up and build thousands of homes a year, instead of dozens. Fletcher and Mike Greer are the two most obvious. We've had extensive conservations with GJs [Gardner] and lots of others too. So we're wanting to tender work to companies that can drive down the build cost due to economies of scale, off-site manufacturing and panellised construction."
Twyford praised PrefabNZ's chief executive Pamela Bell as "a star, an absolute hero" who he said had led extensive progress in this sector "and that area is brimming with people who have great talent".
KiwiBuild quality would be kept high because "you just have to set standards. The learnings from off-site manufacturing around the world is that you can deliver far better quality," he said, citing Mike Greer's $14m Concision joint venture factory with Spanbuild, using computer technology at Rolleston south of Christchurch, where German components were making panellised home components.
"We need half a dozen other firms that can scale up and then we get a much more competitive building industry. We're going to drive down cost through bulk procurement and accessing suppliers and materials and by giving multiple contracts that enables [companies] to invest in off-site manufacturing and the big objective is to build more competitive, innovative and productively."
Asked if state or taxpayer funds was being risked through buying off the plans, Twyford said "when you're buying land, you always have the land. There's a huge need for affordable homes, only 5 per cent of new builds have been affordable."
Statistics NZ data shows around 30,000 residences are now given consent annually on a national basis, but Twyford said: "Our goal is to ramp that up to 40,000 or 50,000 and also build more state houses. KiwiBuild homes will be a range of styles and tenures as social, state and private and a range of price brackets."
As for criticism that there won't be enough builders and trades people, Twyford said a new migrant category would be introduced.
"There will be a special KiwiBuild visa that will allow people in the construction to fast-track temporary work visas. We will reduce migrants coming in but nothing will be allowed to constrain the construction industry to get workers. We are going to work directly with the Building and Construction Industry Training Organisation and other industry organisations. We'll be really cranking up the number of construction workers. KiwiBuild requires 5000 additional jobs but the industry already has massive demand so we will ramp up apprenticeships and bring more New Zealanders back from overseas, get people trained in the sector and people who are retired, bring them back."
Labour's plans for a 20km light rail track within four years rom the Wynyard Quarter and up Queen St in Auckland's CBD to Auckland International Airport offered significant development opportunity.
"We're looking at creating an urban development company for the whole zone, an investment of billions of dollars. It will have a massive effect on the development potential alongside the lines and stations. This is how Cross Rail has been done in London. They used an urban development company to optimise opportunities around the stations to get apartments and retail," he said, also citing the Gold Coast's G:Link.