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Housing Minister Chris Bishop says Kāinga Ora was “out of control” under the previous Government, with ballooning debt, rising costs and slow delivery of new homes contributing to a growing housing crisis.
Speaking at the release of the Government’s new Housing Investment Plan, Bishop said billions had been poured into the agency while the social housing waitlist reached record levels.
“When we came into Government, KO was out of control,” he said. “Its debt rose from $2.3 billion in 2017/18 to $16.5 billion in 2023/24.”
Despite the spending, Bishop said the number of people living without shelter increased by 37 percent between 2018 and 2023, and the number of Kāinga Ora homes grew by only 6,300 over six years.
He pointed to inefficiencies driving cost blowouts, including homes being built at prices 12 percent higher than market comparisons, a staffing increase of 67 percent over three years, and Kāinga Ora funding work outside its core role, including building-sector innovation and market housing.
“For every dollar KO doesn’t manage properly, that’s a dollar that can’t go toward providing a good outcome for Kiwis in need,” he said.
The Government has already refreshed the Kāinga Ora Board and endorsed a Turnaround Plan released in February 2025, which aims to restore financial sustainability, lift tenancy management performance and reduce costs.
Bishop said early signs were promising, with higher tenancy satisfaction, lower vacancy rates and falling build costs. Kāinga Ora is also selling ageing and unsuitable homes, such as a four-bedroom 1900s villa in Ponsonby that sold earlier this year for $3.4 million. The proceeds are being reinvested into new builds, retrofits and renewals.
The agency plans to renew or replace around 2,000 homes each year, with a long-term goal of upgrading half of its 78,000 homes over 30 years.
“Kāinga Ora and its staff have done a fantastic job so far,” Bishop said. “There is more work to do, including bringing down build costs further.”
For the first round of the new Flexible Fund, Kāinga Ora will not be eligible to bid. The Minister said the agency needed to stay focused on implementing its turnaround and rebuilding financial discipline, but he expected KO to be part of future investment rounds.
Bishop stressed that the Government’s aim was not to sideline Kāinga Ora, but to ensure all providers, including community housing providers and Māori organisations, operate on a level playing field.
“I don’t care who delivers social houses as long as they get built and are well-managed,” he said.
What the Government’s new Housing Investment Plan sets out
The Government’s new Housing Investment Plan, released today, represents a major shift in how social and affordable housing will be funded and delivered.
The plan is tied to the Flexible Fund, which becomes the single contestable pool for housing investment from 1 July 2027. The Fund replaces the previous patchwork of programmes and will finance social housing and affordable rentals delivered by community housing providers, Māori providers and, in future rounds, Kāinga Ora.
It includes $41 million in operating funding over four years and $250 million in capital funding over ten years, expected to support 675-770 homes initially.
A nationwide needs analysis underpinning the plan identified the areas with the highest housing need as the Far North, South Auckland, Eastern Bay of Plenty (Whakatāne, Kawerau and Ōpōtiki), Gisborne, and Hastings. Main centres: Auckland, Hamilton, Wellington, Tauranga and Christchurch, also remain major demand areas due to the volume of applicants on the Housing Register.
The assessment found that 55 percent of people on the Housing Register require a one-bedroom home, yet only 12 percent of Kāinga Ora’s stock meets that need.
The new plan requires providers to deliver housing types that match actual demand, with a strong emphasis on one- and two-bedroom units, alongside some family housing where required.
The Government also wants to ensure competitive neutrality between community housing providers and Kāinga Ora. Earlier this year it introduced new lending tools, including Crown-backed loan guarantees and lending facilities through the Community Housing Funding Agency – which have significantly reduced borrowing costs for providers and improved long-term value for taxpayers.
Under the plan, the Government will take a more active role in purchasing specific housing types in specific locations, with transparent expectations and measurable reporting requirements. Procurement for the first round begins in early 2026, with delivery from July 2027.
Housing Minister Chris Bishop says the new approach ensures investment focuses on “the right houses, in the right places, for the right people,” providing greater transparency, accountability and alignment with actual housing need.
