Housing and building industry figures have lauded Budget measures to build more state housing and affordable homes, but urged the Government to ensure the homes are built fast and to high standards.

The Government announced in today's Budget it would build 6400 new state houses over the next four years.

The commitment would cost more than $4 billion and be partly funded by making Housing NZ borrow from third parties.

Housing Minister Phil Twyford says it will result in around 1600 state houses being built a year.


"The single most important thing the Government can do to solve the housing crisis is to build more affordable homes," he said.

"The best way to tackle homelessness is to build more public housing."

Housing New Zealand would borrow up to $2.9b from third parties and invest $900m from its own operations for the new properties. It would also get an additional $234m in operating funding.

The Salvation Army welcomed the promise of 1600 new public houses per year, but said the number was short of the 2000 new state homes Twyford had hoped to deliver.

"[The] 2018 Budget is an important step in the right direction but further investment is needed," the support group said.

NZ Green Building Council chief executive Andrew Eagles described the funding as a great "step up from the previous Government's ambition".

But he urged the Government to not cut corners during the build.

"There's now a real risk KiwiBuild becomes KiwiChilled as it delivers thousands of cold, damp homes," he said.

"If KiwiBuild homes are built to be quality, warm places, then first-home owners could save over $100m every year in reduced household bills, plus there would be huge benefits across the board, from health to education."


There are currently 7890 people on the waiting list for a state house, and that is likely to grow because Prime Minister Jacinda Ardern has urged people in insecure housing to apply.

The total state housing stock is 61,338 houses. The new funding will lift that total by more than 10 per cent by 2022.

It is significantly more state houses than the previous Government had committed to, though National had placed more emphasis on growing the community housing sector.

The National-led Government had planned to build 13,500 new state houses over 10 years.

But that would have been done by replacing or demolishing 8300 existing properties, for a net gain of 5200 in 10 years.

That means the Labour-led Government will be building nearly 1100 more state houses a year than the previous Government.

The number of emergency housing places will be lifted by 200, to 2155 places, at a cost of $69m in capital funding in the next year and $101m in operating funding over four years.


As previously announced, the Government will put $100m towards homelessness initiatives, including ongoing funding for the Housing First programme and an expansion of the programme beyond urban areas.

Lifewise support group chief executive Moira Lawler was pleased with the boost.

"Our belief is that Housing First will need to grow in the future as an evidence-based approach to supporting people into permanent homes," she said.

Another $2b was committed in a mini-Budget in December to fund the construction of 100,000 affordably priced homes over 10 years.

Real Estate Institute of NZ chief executive Bindi Norwell has welcomed extra funding but also called for measures to be introduced to speed up the construction process.

This included lessening the red tape councils and developers deal with and including "high quality, prefabricated homes and building processes as part of the KiwiBuild programme".

"For example, the use of prefabricated building techniques can save significant time on a building site as many of the components are built off site - in some cases this has been as high as 60 per cent," she said.


Norwell also welcomed another $142m being set aside over four years to extend a scheme giving homeowners grants to insulate their homes.

The programme is slightly more than allocated by the previous Government, which had planned to spend $34m over the next year on insulation grants.

The new funding comes after the passage of the Health Homes Guarantee Bill, which will require landlords to upgrade their insulation to modern standards.

Energy Minister Megan Woods said too many New Zealand homes were cold and damp, and around 42,000 children were hospitalised a year with infectious or respiratory conditions caused by poorly insulated and heated homes.

However, NZ Green Building Council's Eagles said the funding was "woefully short of what is needed" because it would only help improve insulation in 50,000 homes over four years.

"Over 830,000 homes are uninsulated or under-insulated," he said.

"New Zealand has one of the highest rate of respiratory disease in the Western world. Improving less than 10,000 homes per year is laughable."

Children's Commissioner Judge Andrew Becroft said he was pleased with overall Budget measures to increase and improve housing options for families.

"Coupled with commitments to address homelessness, add new state housing and contribute to winter energy costs, these initiatives will go some way to improving the lives of many New Zealand children whose wellbeing is presently at risk," he said.