Crown forced to buy 109 new Auckland, Wellington KiwiBuild homes: trying to sell $77.3m of properties

Homes are for sale in this complex on Bader Drive at Māngere.

A group of 109 never-lived-in new homes in Auckland and Wellington are for sale from the Crown, which was contracted to buy them from private developers, who failed to sell their stock in a tough market.

The housing schemes all have an underwrite via KiwiBuild because previous Governments backed new schemes to boost supply by agreeing to bail developers out if they couldn’t sell.

Housing Minister Chris Bishop said the 109 properties were part of the last Government’s KiwiBuild programme, built by private developers to sell at a capped price to mostly first-home buyers.

“The developers were unable to sell the homes and as a result they exercised KiwiBuild’s underwrite option. This meant the Crown through Kāinga Ora was obliged to purchase the homes. Kāinga Ora is now attempting to minimise losses to the Crown by selling the homes as a portfolio package,” Bishop said.

“This is a black hole,” said one property development specialist of the Crown’s chances of recouping what it had paid for all the homes.

Even though this Government is winding down KiwiBuild for a replacement underwrite scheme, the legacy of the programme is exhibiting itself.

Experienced group developers and house builders working at scale got that Crown underwrite and it is five of those that the Crown bought the 109 homes from.

Lines indicate units for sale at Henderson's Corban Park.

Advertising said the portfolio of 109 units had a CV of $77.3 million and a total floor area of 7954sq m.

Homes built by New Zealand’s busiest franchised group house builder, G.J. Gardner are in the 109 places: 33 units are at Corban Park, Henderson.

Mike Greer, Oaks Living, ZoomLiving Developments and Jennian Homes developed the other places.

All homes have code compliance certification and a 10-year Master Build Guarantee.

Homes outlined in red are for sale on Hinau St in Tawa, Wellington.

In a campaign headed “portfolio opportunity”, Bayleys in association with Knight Frank advertised Auckland units:

• Corban Park, Henderson: 33 two-bedroom, one-bathroom terraced homes plus one car park each;

• Hillcrest Heights, Manurewa: 14 two-bedroom, one-bathroom terraced homes, 12 with one car park each.

• Bader Drive, Māngere: three three-bedroom/one-bathroom, nine two-bedroom/one-bathroom terraced homes and eight one-bedroom one-bathroom walk-up apartments. Fifteen have a single car park.

• Coronation Rise, Māngere Bridge: 10 three-bedroom, 1.5-bathroom terraced homes with a single car park. • The Green, Glen Eden: four three-bedroom, 1.5 bathroom and five two-bedroom, 1.5-bathroom terraced homes with a single car park each.

Wellington and Kāpiti Coast units advertised for sale are:

• Hinau Street, Tawa: 11 two-bedroom, one-bathroom terraced homes with a single car park each.

• Ara Hereke, Waikanae, Kāpiti Coast: 12 two-bedroom, 1.5-bathroom terraced homes with a single car park.

Advertising says: “The properties are owned by the Crown and the portfolio was amalgamated through a Crown underwrite programme, which acquired the properties at a predetermined underwrite value if they had not been sold to private buyers by the respective developers within a specified timeframe.”

Of the 109 homes, 86 are in Auckland, 11 in Wellington and 12 on the Kāpiti Coast.

Housing Minister Chris Bishop. Photo / Mark Mitchell

Mark Fraser, Kāinga Ora urban development and delivery general manager, said the places being sold were not social or state homes.

“They were built by private developers and intended for the private market.”

Developers who built the 109 homes had triggered the underwrite and the Crown had subsequently bought the homes.

“This is an expected possible outcome of any underwrite programme,” Fraser said.

Mark Fraser. Photo / Supplied

KiwiBuild was a scheme from last decade when then-Housing Minister Phil Twyford introduced the underwrite in 2018. Developers would build and sell KiwiBuild homes at an agreed price in return for those homes being underwritten by the Government.

The former Government later broadened the underwrite, taking it beyond KiwiBuild developments.

In 2019, Judith Collins, then in Opposition, described KiwiBuild as “a potential financial black hole for the Government”.

Simon Moutter was appointed to head Kāinga Ora last year.

The buybacks were not a good situation because all the homes built under the scheme should sell readily yet the Crown was being lumbered with the expense through being forced to buy unsold homes all around New Zealand, she said at the time.

Revelations of the 109 homes for sale come at the same time as Kāinga Ora announced it would sell high-value properties and cut new-build costs in its financial turnaround attempt.

Bishop said this month Kāinga Ora was being refocused on its core role as a social housing landlord.

Board chairman Simon Moutter was appointed last May after a critical Sir Bill English review of the agency.

One KiwiBuild sceptic asked about the latest 109 sales: “If those group house builders can’t sell the places, what makes the Government think they can? It’s still the same market. This won’t end well.”

A spokeswoman for Bishop’s office said before the homes were bought by the Crown, all were assessed for suitability as social housing.

“However, in most cases they do not meet social housing guidelines or are not located in priority areas under the current social housing funding allocation framework,” the spokeswoman said.

Anne Gibson has been the Herald’s property editor for 25 years, written books and covered property extensively here and overseas.