Kāinga Ora is underwriting most of a controversial housing development in Te Kauwhata that will effectively almost triple the size of the north Waikato town.

But residents in the rural town of 1900 are concerned the development - dubbed Hobsonville Pt of the south - will totally change the character of the town and make it too big too quickly.

In October 2018, Kāinga Ora - formerly Housing New Zealand - opened a ballot for 10 KiwiBuild houses in Lakeside, with no uptake.

Now it has confirmed it will buy 1303 of the 1600 lots in the new development from developer Winton over the next seven to eight years. The value of the contract was commercially sensitive, but "worth millions" according to Kāinga Ora. The lots would be on-sold to building firms and put on the open market.

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Lakeside is situated south of Te Kauwhata's existing main street. The town is situated off SH1 between Hamilton and Auckland.

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Kāinga Ora deputy chief executive of urban development delivery Caroline McDowall, said the development would deliver a range of homes including three to four-bedroom homes consistent with affordable price points and master-planned community outcomes in the development.

It was buying the build-ready lots which were serviced, so roading, water and power, for example, were ready to be connected, and there would also be a number of affordable homes priced from $480,000 - the same price as the developer was selling them for. The first homes had already been completed.

"Lakeside is another opportunity for Kāinga Ora to boost its portfolio to provide more of the right types of house in the right places to meet current and future demand.

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McDowall said there was no intention to put state housing in this development because there was existing state housing and state housing development proposals elsewhere in the region.

Winton chief executive Chris Meehan said the agreement would enable it to continue with the work at a faster pace.

So far 65 sections had been sold to buyers such as those moving from Auckland and Hamilton, downsizers wanting a rural setting with a low maintenance section and first home buyers and there were a further 80 homes either under construction or completed.

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Lakeside's master plan includes a school and community amenities such as a cafe, childcare centre, cycleways and wetlands. A footpath cycleway has been constructed to connect with the Te Kauwhata township.

Waikato MP Tim van de Molen, who is also the National spokesman for building and construction, said while more houses were needed it wasn't about taking over private developers and underpinning their developments.

"That's not actually increasing the supply."

There was already a debate whether that type of development was right for the town and that the Government had been unable to sell 10 of the planned 175 KiwiBuild units.

"I haven't seen on the back of this that there would be enough interest in it. And I think the public have a little bit of suspicion when the Government starts getting involved in large scale projects like this."

There have already been 65 houses completed in the proposed 1600 housing development in Te Kauwhata. Photo / Winton
There have already been 65 houses completed in the proposed 1600 housing development in Te Kauwhata. Photo / Winton

Te Kauwhata resident Rochelle Hulme was extremely worried about the nearby development and had a lot of unanswered questions.

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"How are Kāinga Ora going to help? It seems like a cop-out to me. They are not selling so they've got someone to help them through it and are they just going to end being state housing when they still don't sell."

Hulme said the sections were too small for families and there were no jobs in the town so questioned who they would sell them to.

"A housing development can either make or break a town and I think they've done our town a huge disservice."

Te Kauwhata resident Robyn McGuire said she wanted to move because the land was far too small for the number of houses being jammed in and the thoroughfare road could not safely handle the number of cars.

"By going with this idea and flooding the market with these tiny homes, they are doing the opposite of everything they proposed."

Whangamarino ward councillor Jan Sedgwick said the announcement was a bolt out of the blue.

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"Fair to say it wasn't something that was welcomed by the community as a whole, but over the last few years Te Kauwhata residents had come to accept the proposal, and its measured growth."

Waikato mayor Allan Sanson only learned about the agreement last week, but said he had been reassured by Kāinga Ora that it would be about providing affordable housing that it would onsell.

Waikato District mayor Allan Sanson said Te Kauwhata was always going to grow. Photo / File
Waikato District mayor Allan Sanson said Te Kauwhata was always going to grow. Photo / File

Sanson said Te Kauwhata was always going to grow and in the past 10 years land had been rezoned for about 3600 new houses.

He said Te Kauwhata was a dormitory site where residents would commute to neighbouring areas such as South Auckland, Huntly or Hamilton to work.

There were also now job opportunities in Pokeno and the potential of another 1100 jobs in Ohinewai if the Comfort Group moved there, which could be a similar time frame to when the houses would be built.

Corinthian Properties director Bob Brereton, who has always been critical of the development labelling it a white elephant, said it now looked like they were trying to save face.

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He said there was a high chance the houses would be repurposed as state housing if Kāinga Ora found there was no demand for them.