The Government has dropped its target to construct 100,000 KiwiBuild homes in 10 years, admitting the goal was "overly ambitious" and meant houses were being built in places with little demand.
Instead, the Government plans to build as many homes as it can, as fast as it's able to – measuring its success on a housing dashboard.
It has also launched a new "progressive homeownership" initiative, where $400 million of reallocated KiwiBuild funding could support up to 4000 households into homeownership, through a rent-to-buy or shared equity scheme.
Housing Minister Megan Woods this afternoon released the much-anticipated KiwiBuild reset, after seven months of developing the policy.
Both she and Prime Minister Jacinda Ardern have admitted the policy failed to fire and has fallen well short of its targets.
"We will be dropping the target of 100,000 houses over 10 years. It was overly ambitious and led to contracts being signed in places where there was little first-home buyer demand," Woods said.
"When policies aren't working we are honest about that and fix them."
Woods told reporters this afternoon that one component of Kiwi build that wasn't working the way the Government wanted to.
That was the 100,000 target.
"There is no silver bullet when it comes to housing," Woods said, adding there was no simple solution to solve the housing crisis.
The pressure to meet targets meant the Government was forced to build homes in areas where there was little or no demand, Woods said.
"We are clearing the decks of what hasn't worked."
Woods said she will be judged on the progress of the KiwiBuild policy, now measure on a KiwiBuild dashboard.
Woods said New Zealand's rate of homeownership needs to turn around.
Woods said New Zealand needed new, and emerging ways of helping people onto the housing ladder – she said the Government's "progressive homeownership" scheme was one way to do that.
The new rules are about the Government returning to its historic role, of helping people own their own home, Woods said.
Woods said the policy can still be called KiwiBuild, despite the fact the 100,000 homes target was scrapped.
She said the name was one of the "less material" parts of the policy she has been thinking about
Woods was looking to take the progressive homeownership scheme to cabinet before the end of this year.
Asked why the reset took so long, Woods said the Government wanted to take the time to get the policy right.
KiwiBuild is a leaver, not an outcome, Woods said.
Greens co-leader Marama Davidson said today's announcement was an "absolute delivery" on its supply and confidence agreement with Labour.
Davidson said today was a "political highlight" for her.
Today's reset includes a number of new housing initiatives which will make it easier for first-home buyers to get government assistance.
This includes reducing the required deposit for a government-based mortgage from 10 per cent, to 5 per cent.
Also, the new rules mean that from October 1 this year, family and friends will be able to pool their respective $10,000 First Home Grant and KiwiSaver to buy their first home.
Under the current rules, if a family with a combined income of $130,000 – three working full time and one part-time – is looking to buy a $700,000 home, they would only be able to get two First Home grants of $20,000.
But, under the new scheme, they would get a $40,000 grant and withdraw $70,000 from their KiwiSaver.
"Taken together, these changes will help more people access, new support to buy a home and help people who have been locked out of the market," Woods said.
The new "progressive homeownership" programme has been has allocated $400 million from its overall $2 billion KiwiBuild budget.
A rent-to-own scheme is when a would-be homeowner is given discounted rent to enable them to save to buy the home.
These could be provided by community housing programmes, Iwis or the Government. But further details are still being developed by the Government.
A shared equity scheme, where people can own part of a house, is also being considered.
Greens co-leader Marama Davidson welcomed today's changes and said it would help those who are locked out of homeownership by factors such as high rents and low wages.
The progressive ownership scheme could support between 2500 and 4000 households getting into homeownership, the Government said.
One of the major problems with the previous KiwiBuild scheme was a lack of demand for houses in many areas.
Woods said these homes, in Te Kauwhata, Canterbury and Wanaka, will put back on the open market, allowing the Government to use that money to build houses in places with more demand.
The Government is also making changes when to comes to Government underwriting, which aims to incentivise underwriters to be more vigorous when it comes to selling homes.
"This means developers will be incentivised to sell to KiwiBuild first home buyers instead of triggering the underwrite, which may be at a lower level," Woods said.
Other KiwiBuild changes:
-Buys of a studio and one-bedroom homes can commit to living there for one year; previous rules mean they had to stay for three years
-A max of 10 per cent of KiwiBuild homes are able to be over the price cap if they are four or more bedrooms; previously there was a blanket price cap on all homes
-People who have previously owned a home no longer have an asset limit when looking to buy a KiwiBuild home; previously they were not allowed to have assets worth more than 20 per cent of the First Home Grant price cap.