Housing Minister Phil Twyford has admitted his flagship KiwiBuild policy will fall well short of its first-year target.
The Government had previously said it would have 1000 KiwiBuild homes built by July this year, but Twyford told Stuff today he was now only expected to have 300 built.
"It's clear now that we won't meet our first-year target, and that's a real disappointment to me," Twyford said.
"It's been more difficult than we expected to really shift developers off their existing business model which is about getting a return on capital from small numbers of mid to high-end homes. We are wanting them to build more modest lower quartile homes."
Just before Parliament rose in December last year, Twyford said 278 KiwiBuild homes had been contracted and scheduled for completion by July 2019.
But he said many more were "under negotiation".
"We're working hard towards the targets we've set. We knew it would be hard, and we had to start from a standing start," he told the House.
Twyford told RNZ this morning that he could not guarantee KiwiBuild would hit its 1000 homes target by July 2019.
KiwiBuild's website showed just 33 homes had been completed to date with 77 being built. There had been just under 270 homes prequalified, with almost 47,000 registered expressions of interests.
National's Housing spokeswoman Judith Collins said Twyford was letting down thousands of Kiwis.
"If he can't organise the delivery of 1000 houses a year, why on earth would we believe the Minister when he says he's planning on building 10,000 houses a year."
Twyford's admission comes after a report from the NZ Initiative called KiwiBuild a "massive political and bureaucratic distraction"
It pointed out KiwiBuild would only increase the housing stock by 2.7 per cent, during a time when the population was forecast to grow by almost 11 per cent.
The First Home Buyers Club director Lesley Harris told Mike Yardley that she is not surprised by the delay.
However, she says that KiwiBuild has never been a "silver bullet". Harris says there are broader issues at play, including around lending and getting the deposit.
"I think we do forget that lending has got tougher and tougher. Even to borrow $500,000 now, you'd need an income combined of $115,000, but we're only seeing the average income in Auckland at $90,000."
Harris says that even if the houses were built and ready to go, she doesn't think that there would be enough people pre-approved to move in.
She says that data from their members shows that debt is a huge issue stopping them from moving in.
"It's one of the issues that people are overlooking."
She says there needs to be a robust strategy to tackle the wider issues.
"Throwing a whole lot of houses, even throwing home deposits at people, isn't going to solve the problem. It's a much broader strategy that needs to be looked at in order to make a significant difference."
LISTEN TO LESLEY HARRIS TALK WITH MIKE YARDLEY ABOVE