Housing Minister Phil Twyford says those already living in the area of a KiwiBuild development could get first dibs on the houses to try to avoid "state-backed gentrification".

The Government is proposing to run a ballot system where demand for the new affordable homes is high, but Twyford said people already living in those communities could go to the top of the queue.

He said that was one way to ensure developments in the KiwiBuild programme did not result in "state-backed gentrification" by pushing up land values, making areas unaffordable to live in.

"What we don't want is to essentially for it to be state-backed gentrification, which pushes up land values and pushes those people who have been living there out to the fringes of town because they can no longer afford to live there.


"You can imagine how people would feel, they've lived in a community for two or three generations, this big development comes in, builds all these fancy new houses and they can no longer afford to live there."

He said that was not the plan for a Northcote redevelopment which will include 400 KiwiBuild homes among the 1200 planned, but could happen in other major developments.

He said developments were intended in areas where there was a large concentration of state housing, such as Porirua, Mangere and Mt Roskill. The Government has also bought Unitec land in Mt Albert for a new development.

Cabinet was expected to sign off on the criteria to be eligible for a KiwiBuild house next week.

That would include deciding whether income testing would apply.

National's Housing Spokeswoman Judith Collins said it was astonishing that the rules of eligibility still had not been sorted given it was years since Labour developed the policy and eight months into the new government.

She said the Government should also consider residency requirements, including whether New Zealanders returning from overseas should be allowed a KiwiBuild home if they had not paid tax in New Zealand for years.

"People who have lived and paid taxes in New Zealand should be given preference over those who have not."


She said KiwiBuild relied on private developments that were happening anyway.

However, Twyford said the homes would be onsold at cost to buyers – which was something the Government could offer that private developers did not.

"The whole idea of the scheme is basically for the Government to use its capability, we are using our balance sheet to finance these homes and then selling them at cost to first-home buyers. And we want to drive down prices."

Twyford was also reprimanded by Speaker Trevor Mallard in Parliament on Thursday for fobbing off National MP Judith Collins' written questions to him about KiwiBuild with smart remarks.

Mallard described it as showing "contempt for the accountability" the minister had, and ordered him to answer in a more informative way.

The questions that raised his ire included Twyford's response to Collins' question about how many "sleeps" were left before the eligibility criteria would be developed, given in May Twyford had said there were only "a few sleeps to go".

Twyford had replied that it depended how frequently Collins slept.

The first houses under the KiwiBuild programme are expected to be ready in October at a development in Papakura and Twyford this week announced 400 of the 1200 homes at a Northcote development will be tagged as KiwiBuild homes and will be ready from 2019.

Overall, the policy is supposed to deliver 100,000 affordable homes over 10 years, starting with 1000 houses in the first year building up to 12,000 a year from 2022 until 2028.