Jacinda Ardern is adamant Labour's KiwiBuild programme won't have a major impact on the value of existing homes.
Speaking to The Nation in her first sit-down interview since becoming Prime Minister-elect, Ms Ardern sought to ease the fears of homeowners afraid of losing equity in their homes.
"There will be a cooling in the existing market," she told host Lisa Owen.
"But our view that we absolutely maintain is that we are bringing on-stream a section of the housing market that is undersupplied, and we don't expect to see a dramatic drop in people's housing values."
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Under KiwiBuild, Labour has promised to build 100,000 affordable homes in a decade. It'll take a while to ramp up, with 20,000 expected to be built in its first three-year term.
"Auckland is just not building affordable houses," said Ms Ardern. "The average house that's being built in Auckland... are houses that are closer to 200sqm than 100sqm."
By focusing on smaller homes, Ms Ardern says KiwiBuild won't dramatically impact the value of larger homes, because they serve a different market.
"We can make sure we bring on-stream affordable housing without having the effect of dropping significantly the value out of people's existing homes. It's all about the nature of the stock we are building and the fact we are underproducing the houses we need the most."
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While KiwiBuild tackles the supply side, Labour's proposed immigration cuts might help ease the demand. While Labour's coalition partner NZ First proposed cutting annual immigration from 70,000 to only 10,000, it is Labour's softer cuts of around 30,000 which will become Government policy.
Ms Ardern said high immigration is putting stress on infrastructure, and National refused to take tougher action because it was making the Government's economic record look good.
"There is undoubtedly strain based on the fact that we have had a Government that's entire growth agenda has been based on population growth, rather than focusing on making sure we move to a productive economy."
Ms Ardern officially becomes Prime Minister on Thursday morning during a ceremony at Government House.