New Zealand launched KiwiBuild in 2018, setting out to build 100,000 affordable homes in 10 years. By the time the program wound down last year, just 2,389 housing units were completed.David Gray/Reuters
New Zealand has been a pioneer in working to alleviate the housing crisis affecting much of the Western world.
Some of their measures have worked, others have been an abject failure. But in introducing some of the braver measures designed to increase supply and bring down prices, they have also provided policy makers with some cautionary tales.
In 2020, the New Zealand Labour Party government of then-prime minister Jacinda Ardern brought in a bill that forced municipalities to “up-zone” residential areas in the country’s major cities. It required population centres to raise building-height limits around mass-rapid-transit stops in urban areas.
It also introduced the Medium Density Residential Standards, which allowed for buildings of up to three storeys and three dwellings on all existing residential parcels of land in the country. This did not go over especially well, in part because the government kept the bill a secret until the last minute. City councils felt blindsided. The bill would eventually pass into law, but not without significant political damage being incurred.
Moral of the story? Don’t be dishonest or sneaky about your intentions. Have the courage of your convictions.
The pushback seen in New Zealand against allowing multifamily dwellings on previously single-family lots has also cropped up elsewhere when governments have looked to replicate the measure, including here in Canada. Yet most people, I think, have now accepted that this is the way of the future. We need to find a way to house people, especially if populations are continuing to grow.
When it comes to New Zealand, less talked about is the government’s efforts to get into the home-building business. KiwiBuild was a highly-touted endeavour of Ms. Ardern’s administration. Launched in 2018, the government set out to build 100,000 affordable homes in 10 years. By the time the program wound down last year, just 2,389 housing units were completed.
The federal Liberal government in Canada has promised to double the rate of housing construction over the next decade, to nearly 500,000 units a year.Christinne Muschi/The Canadian Press
A new study by the Montreal Economic Institute indicates that KiwiBuild was a disaster and warns the Canadian government, which has similar ambitions, to hold fire and let the private sector do the job. Easier said than done.
Why was KiwiBuild such a failure? The authors of the MEI study suggest it was partly because of the government’s overreliance on prefabricated homes. The study found that shipping in a prefab home in some instances was far more expensive than just building on-site.
The federal Liberal government in Canada has promised to double the rate of housing construction over the next decade, to nearly 500,000 units a year. As part of its Build Canada Homes initiative, the government will act as a developer and lender in some cases. And it’s making $25-billion in financing available to build prefab homes.
Is it destined to be the failure that New Zealand’s home-building program was? Not necessarily. And I certainly wouldn’t discount prefab homes as an option, just because of the MEI analysis of the government’s failures down under.
It should be noted, New Zealand has not turned its back on the prefab home business. In fact, it is making it easier to build prefab homes in the country by streamlining and simplifying the approval process for such structures. The government says it believes prefab and off-site manufacturing “are the future of construction, as they help produce high-quality buildings more quickly than traditional building approaches.” In Sweden, an estimated 84 per cent of homes incorporate some prefab elements. Japan, Germany and several other nations have high percentages of prefab housing.
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In Canada, too often we see the word “prefab” and conjure the image of a school portable or something found in a trailer park. In fact, prefab housing has come a long way and can look like traditional housing.
That said, Canada should certainly check into what went wrong with the KiwiBuild program and investigate what New Zealand is doing now in its stead. Certainly, fast-tracking the approval process for home builds is one thing every government can do to build more houses, and build them quickly.
It’s easier said than done here in Canada, where municipal councils still wield enormous authority. City bureaucrats can stall the breathless ambitions of federal politicians quite easily, and with the blessing of local leaders and folks who don’t like change.
In theory, making prefab the foundation of any program designed to build homes at scale, and at speeds rarely seen before, should be welcomed. A lack of affordable housing is a crisis for which there is no perfect solution.
But there are ways of helping to ensure the measures we use to address the problem have a good chance of succeeding. We must take heed.