It is not just existing dwellings. Take into account the consents issued for new builds - looking like about a third of all consents are for multi unit dwellings (March 2020). It is clear that some developments are falling over, most will be lack of financing (probably fewer sales off the plan than expected) because Minister Woods is tipping hundreds of millions into those failing projects. Ask yourself who are important buyers of higher density developments and what the impact on the rental market might be if those buyers don't step up. Obviously some are not hence all that taxpayer money.
Next question, if the developments do proceed who will buy them? Perhaps Minister Woods has consulted the Kiwibuild experts, but more likely the deep pockets of Kainga Ora.