Government Invests $140 Million in Social Housing, Ends First Home Grant

Budget 2024 will allocate $140 million to fund 1,500 new social housing places provided by Community Housing Providers (CHPs), rather than Kāinga Ora.

The coalition government is making a significant investment in social housing for New Zealanders most in need of a warm, dry home, according to Housing Minister Chris Bishop.

Budget 2024 will allocate $140 million to fund 1,500 new social housing places provided by Community Housing Providers (CHPs), rather than Kāinga Ora. This funding shift is possible due to savings from ending the First Home Grant.

"Funding for new social housing under the previous government ends in June 2025. This is another unexpected situation the coalition government has had to address," Bishop said.

"The new investment in 1,500 social housing places will begin to be available from July 2025, offering the community housing sector much-needed certainty about the social housing pipeline and enabling them to plan and scale up their build programs."

These new social housing places will be exclusively allocated to CHPs, as a recent independent review showed Kāinga Ora is not financially sustainable in its current form. Until the government receives and approves a turnaround plan from Kāinga Ora's refreshed board, no additional funding will be allocated to the organization for new social housing places.

"Our community housing sector excels in housing people in need. CHPs currently provide over 13,000 social houses across New Zealand and are well-positioned to expand further," Bishop noted.

Funding for these new social housing places will come from ending the government's First Home Grant, which was previously delivered by Kāinga Ora.

"The government has made a deliberate choice to reprioritize low-value expenditure toward more critical policy priorities. With over 25,000 applicants on the social housing waitlist, we made the tough but necessary decision to focus support on those who need it most," Bishop explained.

The First Home Grant, which provided eligible first home buyers with a median of $5,000 towards a house deposit, has become less effective over time. In 2010, the grant covered nearly 10 percent of a standard deposit, but by April 2024, it covers just over 4 percent.

"Evidence shows the grant often brings forward home purchases but doesn't significantly impact whether someone can buy a home," Bishop said. "The solution to New Zealand's housing crisis lies in supply-side measures, as outlined in the government's Going for Housing Growth agenda."

The government will retain the First Home Loan, which supports buyers with a deposit as low as five percent, and the KiwiSaver withdrawal option for first home deposits.

Ending the First Home Grant is expected to save $245 million over the 2024-28 forecast period with minimal effect on home ownership rates. Kāinga Ora will no longer accept new applications for the grant but will process existing ones. Approved applicants can still access the grant, and pre-approvals will remain valid for six months from the approval date.