Failed New Zealand scheme is cautionary tale for Carney's homebuilding agency: report
OTTAWA — Researchers with the Montreal Economic Institute (MEI) say Canada's new federal homebuilding agency is likely to overpromise and underdeliver, drawing a cautionary tale from down under.
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The free-market think tank argues in a new study that New Zealand's now-defunct homebuilding scheme KiwiBuild, a signature policy of Jacinda Ardern's Labour government, shows why government bureaucrats shouldn't try to play real estate developer.
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'New Zealand's experience highlights the limits of government intervention in the real estate market, especially in terms of resource allocation,' write co-authors Gabriel Giguère, Yassine Benabid and Renaud Brossard.
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Brossard told the National Post he was struck by the similarities between KiwiBuild and the Liberal government's Build Canada Homes.
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'If you look at government programs that have been done through out the world, this is probably the closest thing to what (Prime Minister) Mark Carney's pitching,' said Brossard.
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KiwiBuild launched in 2018 with the lofty goal of building 100,000 affordable housing units in a decade. It would never come anywhere near meeting this target, completing just 2,389 units by the end of its last full year of activity in 2024.
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The program was slammed by both politicians and pundits as a 'complete disaster', contributing to Ardern's fall from global progressive darling to her abrupt resignation in early 2023.
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By one estimate, KiwiBuild would have taken 436 years to hit the original target of 100,000 homes.
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Brossard said that one critical mistake that KiwiBuild administrators made was relying too heavily on prefabricated homes.
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'In some of the areas where they were hoping to build homes for (KiwiBuild), they found that shipping in a prefab home was actually more expensive than just building one in situ,' said Brossard.
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Carney has promised billions in subsidies to prefabricated and modular home builders, as part of his plan to double the rate of housing construction and build 500,000 new homes a year within a decade.
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Brossard and his co-authors report that KiwiBuild's prefab homes were often inferior to other housing options available to low and moderate-income families.
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