Northlanders locked out of the housing market and struggling with high rents probably don't want to know about the unsold KiwiBuild Homes in Wanaka.

The price of these six modest-sized houses ranges from $565,000 to $635,000, about $100,000 below prices of similar homes in the area.

As yet no one living in Wanaka or wishing to move to Wanaka, who meets the KiwiBuild criteria, wants them.

Which isn't surprising. Wanaka isn't the obvious choice for buying a first home and starting a family.

Advertisement

Read more: Vaughan Gunson: Art, Life and Everything: Back to the future
Vaughan Gunson: Waitangi Day brings reflection, appreciation
Vaughan Gunson: New Zealand's Jacinda Ardern meets British Prime Minister Theresa May in London

This is a telling example of where KiwiBuild has gone wrong.

Part of the problem is that it was existing developers, already building a certain type of house, who self-selected to build KiwiBuild homes in the first year.

Why not, some developers must have thought, I'll get an immediate guaranteed buyer in the form of the government.

A firm that was already building houses in Wanaka applied and was selected. But it's hard to argue this was where the need was most urgent or that a detached house on its own pocket of lakeside real estate could ever be affordable.

The undiscerning haste to be seen to be doing something backfired on Phil Twyford and Labour.

It looks, however, like lessons have been learnt. The KiwiBuild ministry is now looking at companies who construct houses offsite (more cheaply) and then truck them into place.

These houses, which are still probably at least 12 months away from being made available in any significant numbers, might better match voters' idea of affordability. Leading up to the election Labour will be hoping like mad this is the case.

Still, it won't be the solution to the housing crisis. Where it's really biting for many Northlanders is sharply rising rents.

That's where building more state houses (or more correctly state-owned apartments and townhouses) would help.

Most Housing NZ tenants pay income-related rents, which are fixed at a quarter or less of their income.

While state houses offer affordability to some of New Zealand's poorest citizens, they can also be a tool for lowering rents across the board - if there's enough in a region to reduce the demand for rental properties.

The Government has directed Housing NZ to build additional state houses (a significant policy shift from the previous government which was intent on selling them), but only 160 will be built in Northland over the next four years, adding to the 2041 already in the region.

This overall quantity is too small to dramatically reduce the numbers of people looking for rental accommodation and thus put downward pressure on rents.

The thousands of homes Housing NZ has been directed to build nationwide needs to be turned into hundreds of thousands to have any impact on the rental market.

Construction on this scale would be a far better use of public money than the $1.5 billion that will be paid in Accommodation Supplements in 2018/19 alone. This is money going straight into the pockets of landlords, without addressing the core problem of a housing shortage.

If the Coalition Government is looking at what to deliver in 2019, they would be smart to make good on their housing promises and set out on a path to massively increase the country's state housing stock.

That, however, would mean breaking the self-imposed spending and borrowing rules Labour and the Greens have straight-jacketed themselves with.