Short answer: Yes, but you must build within 12 months and prove you intend to live there.
Yes, but only if you build within 12 months of buying the land. The rules say you must intend to live in a completed home on that land. You cannot buy land and leave it empty. You need building plans and a fixed-price building contract to prove you will build.
Land Price: $250,000
Build Contract: $350,000
Total Cost: $600,000
Kiwi Saver Withdrawal: $25,000 toward land
Requirement: Build within 12 months