The Reserve Bank approves the estimation of KiwiBuild's impact on children in the Treasury

The Reserve Bank confirmed that KiwiBuild would produce only half of the impact the government is demanding over the next four years.

In May, Housing and Urban Development Minister Phil Twyford criticized the "Children of the Treasury" for reducing the expected impact of KiwiBuild on creating more housing.

Treasury announced that it would create $ 2.5 billion in additional residential investment between 2018 and 2022, half the previous estimate of $ 5.4 billion.

"I do not agree with Treasury figures, they have made very questionable assumptions," Twyford told the media.

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"Some of these young treasure are just out of college and they are completely out of touch with reality."

On Thursday, in front of the Parliament, the national deputies spoke about a Reserve Bank monetary policy statement for November, in which it was expected that the program would add only 7,000 to 14,000 additional homes over the next four years, a quarter or half of the estimated number. .

The projection included the assumption that KiwiBuild would contribute $ 2.5 billion to nominal residential investment by 2022, with KiwiBuild adding only to the residential investment of KiwiBuild. the year 2020.

The government plans to build 100,000 affordable housing units over 10 years, half of those in Auckland.

MPP Judith Collins said Reserve Bank figures were in line with Treasury forecasts in May, that the $ 2.5 billion figure was still valid and that the private sector's ability to continue to build homes was limited by KiwiBuild.

Collins added that this reinforced the idea that the government was affixing "KiwiBuild stickers" on homes that would have been built anyway and that KiwiBuild was not increasing the number of houses the Minister had proposed to the market. .

Twyford said he had not accepted the estimates.

He said the government had contracts with more than 3,800 KiwiBuild houses and announced that nearly 10,000 of them would come in large-scale development projects.

The government is attacking the problems it has inherited in the construction sector, he said.

Economist Gareth Kiernan, of Infometrics, expects the impact of KiwiBuild to be lower than expected by the government.

"Even if KiwiBuild begins to move away from the current goal of buying properties outside the plan or already under construction, the net positive effect on construction activity could still be very weak, the demand of the government being simply higher than the demand and the construction activities that would have appeared anyway in the private sector.

"We expect that capacity limitations will become less critical in the medium term, as net migration continues to moderate, the real estate market remains relatively weak and interest rates eventually rise. here 2021-2023, KiwiBuild will likely have more of a net positive effect on residential construction activity in the near term, however, even in this case, the Auckland policy and the likelihood of persistent demand pressures there will always limit KiwiBuild's ability to boost the overall residential construction rate. "