The Government’s flagship policy to deliver low-cost homes to first time buyers could be a fail on the affordability front, according to its own ministry officials.
Documents released to Newshub Nation under the Official Information Act reveal KiwiBuild apartments and houses to be priced up to $600,000 in Auckland could still be well out of reach of their target market.
The Ministry of Business, Innovation and Employment (MBIE) briefing paper ‘Implementing KiwiBuild’ is dated last November and went to both Housing Minister Phil Twyford and the Minister for Building and Construction.
It identifies price as one of the top risk factors for Labour’s so-called affordable housing strategy.
“Indicative modelling suggests there may be insufficient first home buyers willing and able to purchase a 100,000 KiwiBuild houses at the price points that are outlined in your manifesto.”
The Ministry documents estimate that a first home buyer household would need to be earning $114,000 a year in order to purchase a $500,000 KiwiBuild house. That’s compared, it says, to a median household income of $90,000.
So these will be homes for above average earners.
Mr Twyford estimated a buy-in household income of almost half that.
“You are probably going to have a household income I would guess $60,000 plus to buy a Kiwibuild property straight up,” he told Newshub Nation.
Only out by half!
Asked how many rental households in Auckland would meet the $144,000 income threshold, the Minister said: “I’d have to get advice on that… I just don’t know.”
But advice that went to the Housing Minister in November contained that information.
The MBIE papers released to Newshub Nation say an analysis of the Auckland housing market in 2015 suggested only 25,000 private rental households in paid employment in the city made enough to buy a $500,000 house.
So Labour may spend billions of dollars building houses that only current home owners can afford to buy, rather than first time buyers.