Mike Hosking: Phil Twyford's house of cards - 18 done, 99,982 to go

COMMENT:

I noticed as the first of the KiwiBuild homes were open for the media over the weekend that, in general, reportage of the sort I once might have expected was missing.

It was more open home sort of coverage. Shots of the kitchen, a bedroom, the neighbourhood.

I was waiting for Mike Pero to come in and say, "try us you'll like us."

The Government has pledged to build 100,000 homes over a decade, which averages out at 10,000 per year.

The KiwiBuild plan includes 1000 homes in the first year.

So far we're only at 18, quite a few short of that promised 1000.

But what no-one is pointing out here, and it needs to be because this is the Government's biggest noise and they've promised to fix the housing market with this piece of snake oil, is that the 982 that are missing out of year one go into year two.

Which then means into election year they'll likely be hundreds short - and they'll be busy promising more smoke and mirrors if only you re-elect them.

It is possible they'll have another 12 ready by Christmas, but even at 30 in one year it's a pretty pathetic start to what is supposed to be one of the biggest infrastructure programmes this country has ever seen.

No wonder Housing Minister Phil Twyford is bulldozing the Unitary Plan in Auckland and taking it over himself. But an even more important aspect that was missed, and one mentioned in passing once, was the developer - who doesn't know whether he'll break even on the project.

And in that is the time bomb.

These homes, 12 at $579,000 and six at $649,000, are at the upper end of the so-called affordable range the Government has invented.

We all know, of course, given we have seen the numbers, they're not affordable and a very small percentage of people who are new to the market have the deposit or the income to actually afford them.

But if the developer is not breaking even you know what happens next. Either he's not back for more, or the price of the so-called affordable house is going up. And it's already gone up $50,000 in the time it took to announce the policy and actually produce the first houses.

And if he's not back that's a supply issue, in an industry we are already critically short in.
And if he is back but the cost rises, and let's be honest we all know the cost is rising, because we have seen those numbers too.

Labour costs are up because this Government is handing out pay rises left, right, and centre. And building costs rise because the market on product is broken, if not stacked.

So 18 homes in ... just 99,982 to go over the next decade.

And already we have signs of what a house of cards this whole thing really is.

* An earlier version of this column stated that the KiwiBuild scheme planned to build 10,000 houses in its first year. The Government has pledged to build 1000 homes in the first year.