Source: New Zealand Government
Good morning, everyone.
It’s a privilege to be here today to announce our Government’s new approach to housing investment, including our first Investment Plan.
I’d like to thank Hope and the team from Emerge for hosting this event and to congratulate them on all the hard work they do to help those in housing need – including this development behind me which will be completed by February next year.
This project will provide five warm and dry social homes, with:
• one fully accessible one-bedroom home,
• two two-bedroom homes, and
• two three-bedroom townhouses.
Once these homes are complete, I’m told Emerge will be providing over 400 social homes across New Zealand.
Thank you for all you do.
It’s clear that community housing models such as Emerge work because providers understand the needs of the people they support, have a clear and meaningful purpose, and are dedicated to getting things done.
Before I get into it, I’d also like to acknowledge all of those from the community housing sector. It’s great to see you all here.
Today’s announcement
Today I’d like to provide an update on actions we have taken on social housing and other supports, including:
• Fixing Kāinga Ora (KO),
• Levelling the playing field for Community Housing Providers,
• Funding social houses and affordable rentals, and
• Establishing a Flexible Fund for housing interventions.
Then, I’d like to announce our new Housing Investment Plan – which I am really excited about.
Now, you might be thinking what exactly is a Housing Investment Plan, because quite frankly, successive governments have not taken this kind of detailed, data-driven needs-based approach.
In short, the Investment Plan outlines five key things:
• One – The Government’s investment objectives,
• Two – A detailed needs analysis that was undertaken across New Zealand to identify locations in most housing need,
• Three – our specific purchasing intentions,
• Four – our procurement approach, and
• Five – how we will monitor and report on housing outcomes.
This Plan operationalises this Government’s vision for a more effective housing investment system that delivers the right houses, in the right places, for the right people.
Let me quickly go over where we are at on the wider housing support system, then I’ll get into all the detail on the new Housing Investment Plan.
Fixing Kainga Ora
When we came into Government, KO was out of control.
The previous Government poured billions into KO, with its debt rising from $2.3 billion in 2017/18 to $16.5 billion in 2023/24.
It’s difficult to justify this when the social housing waitlist grew to over 27,000 applicants in 2022, people living without shelter grew by 37% between 2018 and 2023, and KO’s social housing only lifted by 6,300 homes from 2017 to 2023.
KO’s cost blowout was in no small part driven by:
• Inefficiencies such as building houses for 12% more than market comparisons,
• Bloating including increasing staff by 67% over a three-year period, and
• Non-core activities with KO getting into things like funding building sector innovation and delivering market housing.
The reality is that for every dollar KO doesn’t manage properly, that’s a dollar that can’t go toward providing a good outcome for kiwis in need – and that’s what we need KO to be focused on.
Last year, we started the process of getting KO back on track by refreshing the Board.
In February 2025, the KO Board released their Government-endorsed Turnaround Plan which, among other things, outlined KO’s approach to achieving financial sustainability, improving portfolio and build management, and being a good social housing landlord.
Since then, KO’s performance has been on the up. Tenancy satisfaction is higher, vacancy rates are lower, and build costs are down.
KO is also doing a better job of managing their portfolio, including by selling older properties in high-value locations. The average age of a KO home is about 50 years old.
Earlier this year, KO sold a four-bedroom 1900s villa in Ponsonby that was next to Lorde’s old place for $3.4 million.
This is just one of over 279 properties KO has sold so far this year that are no longer suitable for social housing and are typically expensive to maintain.
Proceeds from sales are being reinvested back into social housing through KO’s renewal and retrofit programmes – where KO will upgrade or replace around 2,000 homes each year, with the goal of renewing half of their 78,000-home portfolio over 30 years.
It’s common sense for KO to sell unsuitable homes and use the proceeds to build new ones that are warmer, drier, the right size, and in the right locations.
On the financials –
• KO is working towards debt of $4 billion less in FY2026/27 than it was expected to have before the Turnaround Plan.
• Similarly, KO’s operating deficit is expected to be substantially less than was expected in the Financial Year just been.
I want to acknowledge that KO and its staff have done a fantastic job so far. There is, of course, more work to do including bringing down build costs further.
Levelling the Playing Field for Community Housing Providers
Part of the story of fixing KO – and the wider social housing system – is introducing competitive neutrality.
And that’s where CHPs come in.
My ambition for the social housing system is to create a level playing field between CHPs and Kāinga Ora.
Put it this way – I don’t care who delivers social houses as long as they get built and are well-managed. And CHPs do a great job of providing homes, social support, and much more to people in need.
In some areas and for some people, CHPs are the answer. In other areas, KO is the way to go.
Introducing competitive tension is important because it incentivises everyone to sharpen their pencils, which in this context means competing to deliver more cost-effective social housing for those who need it.
To meaningfully level the playing field between KO and CHPs, the Government has taken two actions that have already started to lower borrowing costs for CHPs.
In September this year, we established Crown lending facilities of up to $150 million for the Community Housing Funding Authority (or CHFA).
CHFA is already helping CHPs achieve much lower costs of borrowing. For many, it will mean headline interest rates reductions of 1%, lowering their annual interest bills by 15-20%.
This means providers moving to new loan terms financed by CHFA could save $75,000 on one IRRS contract alone over its 20 to 25-year average term. Extended over a portfolio of homes, these savings will be massive for providers.
There are also savings for taxpayers. For new CHP social housing, the Government could save $115k-$120k per house over the life of a 25-year IRRS contract.
On top of the this, in October the Government launched a second action to reduce CHP borrowing costs –
The CHP Loan Guarantee Scheme, where the Crown guarantees 80% of loans to providers by participating banks.
The scheme can support up to $900 million in both new lending and the refinancing of up to 50% of providers’ existing lending.
I’m really proud of these two interventions.
They are beneficial:
• for providers through cheaper lending,
• people in housing need through CHPs being able to provide more or higher quality services and homes,
• the Crown through lower-cost IRRS contracts, and
• taxpayers through better value for money.
It’s a win-win-win.
Budget 24 and 25 places and the Flexible Fund
We have also continued to back social and affordable housing.
Since coming into Government, CHPs and Kāinga Ora have delivered over 6,800 net new social homes.
We have approved $426 million for Māori-led delivery of around 1,000 homes – including papakāinga housing, affordable rentals, and owner-occupied housing.
And through Budgets 2024 and 2025 the Government built on the pipeline by funding more than 2,050 additional social homes for delivery from July 2025 to 2027.
In addition, in Budget 2025, we established a new Flexible Fund – collapsing and combining previous housing programmes.
Until recently, the status quo was a confusing alphabet soup of tightly defined, duplicative programmes where providers are forced to mould their models to rigid criteria or be left out.
We aren’t doing that anymore.
We are moving to a future state with one flexible pot of money that can be deployed to all types of interventions – including new, innovative solutions – that best meet housing need and represent good value for money.
For example, as part of this work we have made affordable rentals a permanent part of the housing support continuum.
Affordable rentals bridge the gap between high-touch supports (like social housing) and lower-touch supports (like the Accommodation Supplement).
This is important because it removes the potential steep cliff for those wanting to move to housing independence.
I’m advised many people in social housing are reluctant to improve their circumstances as they could end up financially worse off.
That’s the definition of a perverse incentive, and it traps people.
Instead of a housing system that scares people from pursuing better living standards, I want a housing investment system that incentivises and supports moving people through the housing continuum.
Affordable rentals are the first step for that.
The Flexible Fund currently consists of $41 million in operating funding over four years and $250 million in capital funding for additional houses from 1 July 2027.
This initial funding will enable to 675-770 social homes and affordable rentals.
My intention is that – over time – the Flexible Fund will use a variety of providers including CHPs, Kāinga Ora, and Māori providers to deliver a range of housing interventions.
It is also the funding pool for our approach to housing investment.
New Investment Plan
Which I think is a good segue into the new Investment Plan.
Affordable housing has been an increasing challenge in New Zealand.
That’s why this Government is fixing the fundamentals of housing and land markets by removing unnecessary planning barriers, reforming the Resource Management system, flooding the market with development opportunities, and fixing infrastructure funding and financing.
These are the actions that will make housing more affordable.
However, there will always be some kiwis that require housing support, no matter how affordable the general market is.
To help those in most need, the Government is changing how we invest in housing interventions.
Because if we are honest with ourselves, successive governments, have done a poor job at targeting interventions based on need.
The example that I typically use is that around 55% of people on the Housing Register require a one-bedroom home, but only 12% of KO’s housing stock is one-bedroom.
That’s ridiculous.
So, we are moving to an approach focused on delivering the right type of houses, in the right places, for the right people.
Today, I am happy to announce the release of our first Housing Investment Plan that uses this new approach.
The Investment Plan outlines five key components:
• One – The Government’s investment objectives,
• Two – A detailed needs analysis that was undertaken across New Zealand to identify locations in most housing need,
• Three – our specific purchasing intentions,
• Four – our procurement approach, and
• Five – how we will monitor and report on housing outcomes.
Let’s go over each of these.
Investment Objective
One – the Government’s investment objective.
Instead of having many conflicting objectives – the Plan is guided by a single investment objective:
“Enable people in high housing need to have access to stable and secure housing.”
We are focusing Government investment on where it can make the biggest difference.
A key feature of the new housing investment system is improved understanding of where and what new housing investment is most needed.
Detailed Needs Analysis
That brings us to component Two – the detailed needs analysis to identify the highest need locations.
To do this we looked at two primary datasets at the territorial authority level (and local board level in Auckland):
1. Applicants on the Housing Register, and
2. Populations experiencing Severe Housing Deprivation (Stats NZ 2023 Census data).
We also asked the Ministry of Housing and Urban Development (HUD) to engage with communities and providers to get an ‘on the ground’ perspective of local housing need.
Through a combination of data analysis and local insights the Ministry identified a list of high housing need locations that were considered for investment.
To guide how the funding should be distributed between the high need locations we then:
• Estimated the number of homes required to reduce the prevalence of housing need in these locations to a national benchmark – which, for this Plan, is set at the 75th percentile for Housing Register or severe housing deprivation prevalence across the country.
• Then, we added the forecast rate of household growth.
• Then – lastly – we subtracted the funded pipeline of social houses that will be delivered soon, which will help close the ‘need’ gap in that location.
Overall, the analysis shows that ‘Target Locations’ with the highest housing need are:
• Far North,
• South Auckland (which includes Mangere-Ōtāhuhu, Otara-Papatoetoe, Manurewa local area boards),
• Eastern Bay of Plenty (which includes the districts of Whakatane, Kawerau and Ōpōtiki),
• Gisborne, and
• Hastings.
There are also locations, like our main centres – Auckland, Hamilton, Wellington, Christchurch, and Tauranga – that have large absolute numbers of Housing Register applicants.
So, for this Plan, we propose focusing investment in Target Locations and main centres.
I recognise that some locations may feel like they have been left out. And I want to be clear – everywhere in New Zealand has housing need, just to a greater or lesser degree.
But this analysis helps distinguish which locations have a higher prevalence and overall volume of need so that we can target our investment to make the biggest difference.
As new funding comes in, it is my expectation that the needs analysis and ‘locations’ for investment will be updated.
This is not a one-off exercise; it’s a new way of doing things – understand where the need is to deliver the right homes in the right places.
Purchasing Intentions
Now moving onto Three – our specific purchasing intentions.
The Government is going to take a much more active role in purchasing, which means we will be far more specific in terms of the location, type of house, and type of delivery model we want to buy.
Let’s take South Auckland as an example.
The Investment Plan outlines that we plan to invest in 170-190 homes, majority one- to two-bedroom homes, with some three- plus-bedroom homes. In terms of delivery model, we are interested in new builds, or purchase/lease from the market.
Our cohorts of interest across all locations are sole parent households with dependent children, older people, whanau Māori, disabled people, and – specific to South Auckland – pacifica peoples.
Across all locations, we are also placing a huge focus on investing is more one- and two-bedroom units.
For example, in Hamilton, Tauranga, Wellington, and Christchurch we are intending to only purchase small homes.
In the remaining locations, we intend to purchase majority small homes with some family homes.
The data is clear – one- and two-bedroom units are the typology that most people on the Housing Register need. So, that’s what we will invest in.
Being specific on what we want has two benefits.
The first is that we invest in the housing solutions that people actually need, and the second is that it provides more certainty to providers on what’s in the pipeline.
Procurement Approach
Now let’s talk about Four – our procurement approach.
We want to partner with providers to deliver homes that:
• reduce the long-term cost of housing to the Crown,
• maximise the number of people able to be housed, and
• are aligned with local housing needs and plans.
This includes considering how we enable effective use of whenua Māori and work with iwi Māori.
The Ministry will run a competitive procurement process in each investment location to identify partners that best align with our purchasing intentions.
We will take a two-stage procurement approach beginning in late February 2026, with contracting intended to be in place by the end of 2026, with housing delivery starting from July 2027.
For this round of investment, funding will not be available for KO as they are focused on getting their books back in order. However, they are on the right track, and I fully expect that they will be in the mix for future rounds.
Monitoring and Reporting
Lastly, let’s go over component Five – monitoring and reporting.
The Ministry has developed a monitoring framework which includes a range of indicators and measures that they (and providers) will be expected to report on.
This is an unsexy but absolutely critical component of our new housing investment approach.
Overtime, I want decision makers to have a rich data set on the performance of different providers and effectiveness of different housing interventions to help them make better choices.
We want innovative ideas
I know that’s a lot to take in. But I am really excited about our new approach to housing investment.
Of course, Government can’t do it alone – we will continue to work closely with community groups who have ‘on the ground’ knowledge of what specific locations or cohorts need.
We also want providers’ ideas on new or innovative models. The whole point of setting up the Flexible Fund is so that we can invest to best respond to need.
The Government does not have a monopoly on good ideas, and I encourage others to bring their ideas forward.
Conclusion
To finish, I’d like to say thank you again for hosting me to share the Government’s new Housing Investment Plan.
This is a new approach, but one that I really believe will make a meaningful and lasting difference to helping those in need.
It’s hard, but it’s the right thing to do.
I look forward to continuing to work with the sector on solving New Zealand’s housing crisis.
Thank you.