Prime Minister Christopher Luxon has stood by the coalition's decision to scrap the First Home Grants scheme.
Housing Minister Chris Bishop announced the move on Wednesday.
"We have to make some tough choices and the choice that we've made is we want 1500 .... social housing places."
"That's the choice that we made, I fully understand there'll be some people that will be disappointed by that but the reality is we think that, as we've said, we'll stop some programmes, and we'll power up some other programmes."
He said New Zealand was facing a housing crisis.
"We've been talking about it for over a decade now," he said.
"This is a government that's going to do something about it. And I just say to you that we know this is a supply-side problem, not a demand-side problem."
"We live in a country the same size of Britain and Japan, with a lot less people, and yet we have very expensive housing crisis and it's very hard to get hold of housing in New Zealand."
Kāinga Ora has been an "abysmally badly run organisation," he said, and the review of it had been done exceptionally well and quickly "at a very reasonable cost".
"We've got a new chair, a refreshed board, a turnaround plan coming in November, and importantly we're going to make sure it's got a sustainable basis."
It comes after a visit to Metco Engineering in Lower Hutt.
New Zealand is just one week away from Budget Day where Finance Minister Nicola Willis will reveal how much money the government has, where it plans to find more, and where it plans to spend it.
