While over 25,000 people languish on the state housing waiting list — with some living in motels and garages — development has stalled on hundreds of community and government homes.

The state house building agency Kāinga Ora has confirmed to 1News that it had put a stop to at least three projects.

It comes as the agency highlights concerns around rising costs and uncertainty around future funding.

While 25,000 people remain on the state housing waiting list, Kāinga Ora’s defending its performance.

And community housing providers have revealed they too have had to immediately stop work on planned house builds because government agencies have been unable to confirm funding for those.

1News started asking Kāinga Ora questions about planned developments being stopped over a month ago.

The agency said it has “not permanently stopped any projects”. But a number that were in the planning stages have been canned because they were no longer “financially viable”. Those were a mixed housing development in Ohakune (44 homes), a project in Millwater, north of Auckland (37 homes), and on two sites in Nelson (175 homes).

In a statement posted on the agency’s website late last week, Kāinga Ora’s chief executive confirmed some of the issues it was facing.

“With price and inflationary pressures making development and building homes more expensive, Kāinga Ora is reassessing a small number of its developments to ensure they are cost-effective while continuing to deliver more social housing,” Andrew McKenzie said.

Over the last three years, the cost of building a home using traditional processes has risen dramatically, he said, with material and labour costs increasing by nearly 40%.

A Salvation Army site in Chapel Road in Auckland's Flatbush

For that reason, a “small portion” of homes in the planning phase would not proceed. “We put a significant amount of work into the planning, design and consenting stage of a new housing development to ensure that it is of a high quality, meets local regulatory requirements, and fits well within the neighbourhood. That work can be time-consuming and market conditions can change as we work through that process.”

That planning process was years in the making. Construction work may not have started but substantial funds may already have been spent.

1News has requested further information about the cost of cancelling the planned projects, including selling the land.

Greg  Foster of the Salvation Army

There were currently around 6300 Kāinga Ora homes under construction or contract around the country and another 2000 were in the planning phase.

Kāinga Ora owned more than $50 billion of homes and land, and had debt of $15 billion. A review into Kāinga Ora was being undertaken by former prime minister Bill English.

Community housing providers were also feeling those pressures. The Salvation Army said close to 100 homes were in limbo because the Ministry of Housing and Urban Development have been unable to confirm funding for them.

Greg Foster told 1News that the delay in building those homes left people homeless or living in unstable conditions for even longer. Community housing providers were paid income related rent subsidies to house people directly from the social housing list.

Foster said other providers were feeling the same uncertainty and they had no confidence in being able to plan for new homes.

The uncertainty and the time it took to build houses meant the pressure would be even greater in two to three years time.

Housing Minister responds

Housing Minister Chris Bishop said issues with projects will crop up.

“Kāinga Ora is a $45 billion company, they won’t around 78,000 houses, so at any one time they have a range of projects underway, some will be paused, some will be built, some will be going back to the drawing board,” he told 1News.

“That’s not unusual.”

Funding decisions would be revealed in next month’s Budget.