Jacinda Ardern appears to remain confident in Labour's flagship housing programme, telling media she is focussed on "addressing this housing crisis".

The Prime Minister said her Government will "continue to build affordable homes", despite the final promise of 100,000 houses in 10 years being dropped.

"We will absolutely front when we have created a policy that hasn't met the public's expectation or ours, and we will openly acknowledge when we haven't got it right," she said on Thursday in Dunedin.

"We are not going to stop our ambition around getting first home buyers into homes, and making sure that we are building enough homes so that every Kiwi has a warm, dry place to live."

The KiwiBuild reset, announced on Wednesday, was nine months in the making.

Ardern announced in January that KiwiBuild would be "recalibrated" after she said the programme's interim target of 1000 homes by the end of the first year couldn't be met.

The promise of 100,000 houses in 10 years remained at the time, but the Prime Minister refused to stand by it in May. It's now confirmed that promise has been axed.

"I think we have to acknowledge that the target that we set ourselves was meaning that decisions were being made that weren't in the interest of those first home buyers who we were trying to help," Ardern said.

"We've got to build the right house in the right place. We are not changing our focus, however, on addressing this housing crisis."

Housing Minister Megan Woods revealed changes to KiwiBuild, including allowing groups of buyers to combine their First Home Grants to purchase a home together, and cutting deposit requirements by half.

She also announced that $400 million was set aside from the $2 billion KiwiBuild fund to support shared ownership schemes, which was part of the Greens' confidence and supply agreement with Labour.

"We know that will help a number of New Zealanders who will want to pull their funds together. And of course, we're also looking at shared equity," Ardern said.

"All of that is an acknowledgement that one of the big hurdles for first home buyers is deposits and we've seen that, we've heard it, and we're looking to fix that."

Treasury documents have revealed that former Housing Minister Phil Twyford tried to make the changes go further, by doubling the First Home Grants for new builds.

Ardern would not say whether she personally supported the proposal.

She said people have "come to us" to say deposits are the aspect of buying a first home that people in New Zealand are struggling with the most.

Dr Woods also revealed on Wednesday that KiwiBuild homes in Te Kauwhata, Canterbury and Wanaka that have failed to sell to first home buyers will be released to the open market.

Ardern blamed the failed sales on the pressure to meet the 100,000 houses target. She said money from the sales of those houses will feed back into the KiwiBuild scheme, which was designed to be recyclable.

"Moving away from the target, we think will make sure that we're building the right house, in the right place, and for first home buyers who are looking for them," Ardern said.

"It is an acknowledgement that we have a handful of areas where decisions were made to build houses, that whilst there might have been demand for those houses, there wasn't demand for first home buyers."

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