A Lower Hutt property developer and a collective of Māori-owned businesses are sacrificing millions of dollars in profits to help first-home buyers.
Photo: 123RF
When the government launched its flagship KiwiBuild scheme - with the lofty aim of building 100,000 affordable homes in 10 years - Koru Homes founder Adrian Chooi was quick to see the potential.
He and his partners met with the local Labour MP Ginny Andersen to discuss how to meet the government's specifications and got building consent from Hutt City Council.
However, building costs suddenly shot up 30 percent, rendering the project uneconomic and they faced a dilemma.
"We were thinking, 'well, we're going to build expensive homes and make more money!'. But we've got friends around us, and at church, who said 'no, no, no - these people affected by the housing crisis are people like you and me. They can't get into houses now for $800,000 or $900,000'."
Chooi has spent the last couple of decades managing multi-billion dollar projects in New Zealand and overseas - but knows what it is like to worry about putting a roof over your head.
He grew up poor in Malaysia, first moving to Wainuiomata 30 years ago, at a time when factory closures were dumping thousands of locals onto the dole.
His first job was working in a petrol station, before training as an accountant.
He knows his way around a balance sheet - but believes profit isn't everything.
Koru Kāinga will include 51 three-bedroom homes, 41 of which will be set aside for first-home buyers at a fixed price of $650,000, well below the market rate.
The other 10 will be put out for tender, to cover the expected cost escalation.
Chooi did not want to say exactly how much profit he was giving up - but with the median house price in Wainuiomata now more than $740,000, it was likely to add up to millions.
"We don't want to make that public because people have been telling us we are insane, 'why you want to sell them for that much ... you're going to go bankrupt soon!' But that's not going to happen because we are working with people who are well established in this industry."
Koru Homes has arranged with a supplier to pre-purchase materials for the whole project to avoid unexpected cost blow-outs.
Priority will be given to first-home buyers who qualify for Kāinga Ora's First Home Grant or loan and to Te Āti Awa uri, many of whom missed out on a previous papakāinga development.
The firm has partnered with a collective of Te Āti Awa-owned businesses called WaiWorx to help build the houses and market them.
WaiWorx member Anania Randall, the listing agent for CK&Co Realty, doubts many other developers are likely to follow their example.
"It's pretty cut-throat, to be honest.
"A lot of developers are uninterested in the social component of their business, they're interested in making profit for their company.
"This is slightly different in that we've come together as a community group to start with to help first home-buyers get on the ladder."
He wants to see more Te Āti Awa uri in their own homes - and he hopes the Waiworx group will come up with solutions for that.
"We are not really interested in doing the same things over and over again. I think for things to change, you have to think differently. That's the way forward.
Randall said the group also aimed to foster a new generation of Māori tradies, by taking on apprentices.
"You can go and work for money, but if you can't value and do the things that help your community, I think it's a wee bit hollow."
Hutt South MP Ginny Andersen said Chooi and his partners deserved full credit for their commitment to providing affordable housing.
"It would be great to see more developers having a big heart and forgoing a bit of profit in order to bring affordable homes to the market. We need all hands on deck to fix the crisis."
She said it was "tricky" to bring KiwiBuild to the market in Wainuiomata previously because there were still cheaper houses available - but that could be changing.
"The fact that property prices have increased quite a lot, it actually makes it possible to be qualifying for KiwiBuild in places that previously weren't."
Building on the Wainuiomata development is scheduled to start in March 2022, with the first homes possibly completed by June or July.
