Housing: Is Kāinga Ora squeezing private developers out of the market?

Housing Minister Megan Woods with Associate Ministers Poto Williams (right), Marama Davidson and Peeni Henare (left) at select committee this morning. Photo / Derek Cheng

Kāinga Ora is rejecting claims that it is pushing up land prices by "waving around the taxpayers' chequebook".

Chief executive Andrew McKenzie appeared this morning before Parliament's social services and community select committee, alongside Housing Minister Megan Woods, and Associate Housing Ministers Poto Williams, Peeni Henare and Marama Davidson.

A $2 billion fund has been set aside for Kāinga Ora to buy land for housing, and National's housing spokeswoman Nicola Willis asked Woods about a land purchase in Auckland at 686 Swanson Rd.

"I am told that Kāinga Ora entered a tender for that piece of land. Ten private sectors developers also bid for that land, and the Kāinga Ora tender blew every single private developer out of the water," Willis said.

She said that proper processes weren't followed, and Kāinga Ora was "waving around the taxpayers' cheque book" with a bid that was $10 million higher than the next highest bid.

McKenzie rejected Willis' numbers, but said the Crown agency had a bid that was $2m higher than the bid that eventually won.

Kāinga Ora's bid was subject to due diligence and later withdrawn due to issues with the land's water infrastructure, he said.

"There was no market pressure that forced us to stop buying that land. There isn't this enmity with the development community."

Woods was also asked about Treasury's forecasts for house prices, which predicts only 0.9 per cent growth next year.

She said she had "faith" in Treasury's forecasts, which was reinforced by similar predictions of a cooling in the housing market by the Reserve Bank.

But she warned that there was still a lot of uncertainty due to the global pandemic.

"I was sitting here last year and we all thought we were going to see a collapse in the housing market."

House prices have risen 24 per cent in the year to March, which Woods said was unsustainable.

She said the Government's $3.8 billion housing acceleration fund for the necessary infrastructure to enable new housing was a response to "market failure".

"Just leaving it to the market hasn't worked."

National Party housing spokeswoman Nicola Willis. Photo / Mark Mitchell

Asked about income-related rent subsidies, Woods said the Government was looking into it alongside local councils.

The cost of such a programme would see the Government pay councils between $200m and $300m, she said, but the preference was to build new stock rather than "shifting the deck chairs".

Willis also questioned Woods about KiwiBuild, the Government's failed flagship programme to build 100,000 affordable houses.

Woods said that 934 KiwiBuild homes have been built, 897 were under construction, and 1761 had been sold.

The $675m set aside for urban development would either be used to buy homes off the plan or to land to build new homes, she said.

Willis: "You can't even tell me how many houses you're going to build. Is it time to give up on KiwiBuild and release those funds for another purpose?"

Woods: "KiwiBuild hasn't performed in the way we initially set out. One of the hardest things to do in politics is pull back and say, 'We haven't got this quite right, but we're not giving up on the principle'."

Willis became agitated at different times during the hearing, and she objected to a line of questioning from Labour MP Terisa Ngobi that effectively asked ministers what the previous government had done wrong.

Willis said she would be asking Speaker Trevor Mallard to review the committee's session.