Twyford admits Kiwiflop

Radio NZ reports:

More than six months into KiwiBuild, only 33 homes have been built – well short of the 1000 target for its first year of operation.
Mr Twyford told Morning Report it had been tougher to get the number of houses built than was expected.
“I can’t guarantee that [1000 built by July this year]. I think it’s going to be tough to meet that target.”

I’m not sure what he means by tougher than expected. Every person who knew anything about the industry said that their policy was flawed and would not achieve their targets. Nothing which has happened since they went into Government should be a surprise.

The 1,000 target by 1 July is only 1% of their 10 year target and they are well off even that.

In 158 days they would have to build 967 houses.

However, Mr Twyford said if “you’ve got a household income of $100,000, you can afford to buy a home of $650,000”.
“That’s a deposit of $35,000 approximately. You can get $20,000 of that through the government’s homestart subsidy.

Well that is bullshit.

$100,000 happens to be the average household income. This means we also know what the average expenditure is. First take off tax and that leaves $76,000.

Next the household expenditure survey tells us the average household spends $52,000 a year on food, transport, communications etc etc, excluding mortgage or rental costs.

That leaves $24,000 a year for mortgage payments.

A $615,000 mortgage at the maximum term of 30 years and the default assumption of 6% requires weekly repayments of $850. The $100,000 couple can probably afford $500 a week.

This is why some Kiwibuild houses are not being bid for. They are not affordable for someone on $100,000.