Former KiwiBuild boss Stephen Barclay's resignation and ongoing employment dispute is being labelled as the moment the programme "fell apart" by a property expert.
The head of the KiwiBuild unit resigned with immediate effect on January 18.
Barclay, only who began in the role in May last year, had not been working in the position since early November, according to a spokeswoman.
NZ Herald property editor, Anne Gibson, told Mike Hosking KiwiBuild has been plagued with issues since its start but Barclay's resignation was the final straw.
"It's clear that he was in a dispute with the new incoming head of Phil Twyford's new ministry."
"So what happened here, is it was a transfer of the KiwiBuild unit from MBIE to the new Ministry of Housing and Urban Development - that's headed by CEO Andrew Crisp and it appears to me that's when things fell apart."
Gibson said it is still unknown what sparked the tensions between the two men.
"Who has got the lawyers, is it that new ministry or is it Barclay? We still don't know but there appears to have been a clash between those two people."
She said it is unlikely the details will ever be made public.
"You would expect that a new ministry wouldn't go that to go to court, so a payout."
Gibson said KiwiBuild's progress is well behind what it needs to be.
"Its own monitoring show's we've only got 33 homes so that leaves 967 to be built by July one, is that doable?"
Yesterday, Housing Minister Phil Twyford admitted KiwiBuild would fall well short of its first-year target.
He said he remains confident the Government would still achieve its 100,000 homes over 10 years promise.
The Government had previously said it would have 1000 KiwiBuild homes built by July this year but Twyford admitted today he was now only expected to have 300 built by then.
He said the Government was now in the process of refining and looking at how to improve KiwiBuild.
Earlier Twyford defended KiwiBuild after a damning report slammed the government programme as a "bewildered beast".
The New Zealand Initiative released the report which claims KiwiBuild has little hope of delivering on its goals and is just a distraction from the real housing solutions.
Speaking with Mike Hosking on Wednesday morning, Twyford said while the first few months have been tougher than expected, overall it's been a success.
"We are six months in, we have got 47 homes completed, several hundred under construction, 4000 under contract and another 10,000 on top of that planned for the large scale urban development projects that we are in the process of setting up."
However, Hosking wasn't convinced, listing multiple issues he saw with the programme.
"Let me give you some of the issues I've come up with in the last six months," he said.
"You promised houses for people, in your words, who were 'locked out of the market' that turns out not to be the case."
"These are not people locked out of the market, these are people with $650,000 to spend [only] one-third of people on incomes have that money to spend, two-thirds don't."
"You've got ballots with no demand. You've got prices in places like New Plymouth which are actually higher than the average price. Houses off the plan don't sell."
"Houses that don't sell are now on the open market and now you've got Stephen Barclay. What part of that is good?".
Twyford hit back at the claims, addressing the KiwiBuild prices first.
"First you of all, your point about the houses in New Plymouth being higher than the average."
"They are only higher than the average price in the suburb where they are being built, which has basically been a bombed out, derelict neighbourhood that used to be a state housing area which was mostly demolished."
"The New Plymouth KiwiBuild houses are significantly lower than the average price in New Plymouth as a whole."
However, Hosking wasn't convinced, saying that "simply not true".
"I looked at the houses for sale, there were 26 for sale, they all looked perfectly respectable and they were cheaper than yours."
The Housing Minister disagreed, saying the suburb is in "dire straights".
"We are putting in modest affordable houses that are below the New Plymouth average," Twyford said.
"You say the houses aren't affordable for people, in fact, more than half the KiwiBuild houses that have been built and sold have gone to people who were on household incomes of less than $100,000."
"In our most expensive housing markets, there are young couples who might have a household income pre-tax of let's say $150,000, they cannot find anything affordable in places like Auckland and Queenstown."
However, the Newstalk ZB host wasn't impressed, saying Twyford was operating on theory not facts.
"If you've got $650,000 to spend, which is what you're paying for one of your houses, one, Treasury and the Reserve Bank both confirm that only one-third of people earn the income to be able to service the mortgage, further there are hundreds if not thousands of houses already on the private market at that price," Hosking said.
Twyford said that isn't true for large cities like Auckland where people find it very hard to find anything of "decent quality" that is under $600,000.
In terms of houses that have been balloted but not sold, he said a lot of them hadn't been built at the time.
"What we've found is most first home buyers, they want to look and see and feel the house before they buy it."
However, Twyford said they working directly with the private market to incentivise them to build affordable homes.
"We've started from a standing start, no one said it would be easy, but we are determinded to turn around the market failure that has seen less than five per cent of new builds in this country in the bottom 25 per cent of the price bracket."
He reiterated the government's commitment to building "affordable homes for first home buyers".
"We are building affordable houses and I expect that almost all of them will sell and if they don't sell, we will sell them on the open market and that's still putting affordable houses into the supply."
"We are also doing a lot of other things other than KiwiBuild that are about addressing the housing crisis...KiwiBuild is part of a big comprehensive programme to fix the housing crisis."
When asked about the head of KiwiBuild Stephen Barclay's resignation, Twyford said it is an employment dispute that he won't wade into publically.
"I'm going to allow that dispute to be resolved in a proper way. I'm not going to comment on the detail, it would be inappropriate and unhelpful for me to do that."
However, he said he stands by KiwiBuild and its commitment to build affordable houses for New Zealanders.
"We are going to build affordable houses for first home buyers. We will refine and improve this programme as we go until we get it right but this is a 10-year programme."
The KiwiBuild programme has been plagued with issues from its start, with Housing Minister Phil Twyford yesterday, admitting it wouldn't meet its target of building 10,000 homes in the first year.