$600,000 is cheap?

Housing Minister Phil Twyford announced what looked like a big boost to Auckland’s housing supply yesterday.

It didn’t take National’s housing spokeswoman Judith Collins to point out it was old news:

“The previous Government signed off on Unitec’s investment plans to consolidate their campus and develop the spare land for housing.

“The plan change has already been through Auckland Council. We know that because various local councillors were opposing the development.

“All that has happened here is that a land development that was owned by one part of Government is now owned by another arm of Government. A pure re-badging exercise.

“The development at Unitec has already been factored into the plans and predictions for housing development in Auckland.

“All that seems to have happened here is that Mr Twyford wants to use taxpayers’ money to subsidise the building and selling of homes that were going to happen anyway. . . 

Involving the government is likely to add to costs and delays.

It would be far better to leave building to the private sector rather than tying up taxpayers’ money with all the complications that brings.

Then there’s the cost which Corin  Dann raised on Q&A:

PHIL: So, you’re talking medium-density, as pretty much all the KiwiBuild homes in Auckland are going to be medium-density, apartments, flats and town houses, terraces. 500,000 to 600,000 is the kind of range we’re talking about.

CORIN​: So somebody is going to get a $600,000- what, two-bedroom, three-bedroom house in Mt Albert?

PHIL​: Yes. Two to three, yes.

CORIN​: That’s really cheap.

PHIL​: Sure.

Cheap? Since when has $600,000 for a two to three bedroom house been cheap?

Since demand for houses outstripped supply so badly and as Act MP David Seymour pointed out the government isn’t addressing the root cause of that problem:

. . . The Government’s own officials have said that, in Auckland, land use regulation could be responsible for up to 56 per cent, or $530,000, of the cost of an average home.

“ACT has revealed from Written Parliamentary Questions that Cabinet hasn’t even decided whether to consider reviewing the Resource Management Act – rules that determine what can be built where – after 150 days in the Beehive.

“New Zealand does not have a free market in housing. It is a market created and manipulated by government.

“The Government – whether central or local – controls the Resource Management Act, zoning, consents and other factors that influence the market.

“Our housing market isn’t a case of market failure but an example of regulatory failure. New Zealand has planning rules which mean that the market is not able to increase the supply of houses in response to increases in demand. . . 

The RMA and zoning are a big part of the housing cost problem.

So too are building regulations.

Economies of scale with bigger populations don’t explain all of the difference in the cost of building a house in Australia and New Zealand.

If the government is serious about affordable housing it needs to look at building regulations which require more expensive materials on this side of the Tasman than the other.

2 Responses to $600,000 is cheap?

  1. Interesting article! $600,000 definitely isn’t cheap for a two bedroom.

  2. adamsmith1922 says:

    Reblogged this on The Inquiring Mind and commented:
    Old wine in a new bottle.
    Frankly until the regulatory elephant is slain, it will not happen.

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