22,500 and rising
Since taking office in 2017 with big promises of solving housing, labour have managed to grow homelessness to staggering numbers.
The lack of action on solving housing has made this issue Labour’s most spectacular fail. They are of course not alone, Keys Government, Clark’s reign and as far back as the Bolger government have added to the challenges. However, none made the bold promises that Ardern’s did whilst presiding over such a dramatic escalation of the problem.
There were less than 5000 waitlisted qualifying households in the queue for state housing when labour took the reigns, this figure has escalated year on year. When questioned on this Ardern always quips that we are building more state houses than the previous administration. The reality is the Government promised an ambitious plan to build their way out of the crises. If you take the 4000 state houses and subtract the large number of KiwiBuild homes that never eventuated we are well into negative territory. Not to mention the 400 odd houses that will never be built due to the land occupation at Ihumatao.
So what could be done to resolve the issue?
Build more houses?
The obvious answer is build more. But as the Government has learned, it isn’t as easy as that. The Government isn’t the only one who has attempted to build affordable housing, and as all those who embark on the ambitious journey of providing affordable housing soon learn, the task is virtually impossible.
On top of land costs, paying compliance and infrastructure costs to local councils, you are then faced with huge building costs.
Even building a simple 2 bedroom home will see the build alone set you back a minimum of $200,000. That doesn’t even account for the earthworks and preparation required to attach the house to the land and connect it to services.
Even if you have a piece of land big enough to subdivide a section off, before you start building you will have paid at least $150,000 in fees and bringing water, power and drainage to the site.
If someone is to make even a small profit of 15 % margin on the risk of doing a build or subdivision, by the time you pay for all these costs, including a sales person and the 15% Gst on top, you have a 2 bedroom starting out home that will cost over $650,000, which is the top price for any Government assistance to help first home buyers.
The issues are threefold here. Lack of infrastructure from councils mean that any greenfield developments will be sent a huge bill from council for contributions. 8 affordable house I am building right now will see the council requiring in access of $300,000 in infrastructure fees alone. This does not count the cost of installing the sewer lines, drainage and water.
The second issue is materials, we may grow enough trees to build but the reality is our building materials mostly come from overseas where they are manufactured. It is in short supply and high demand and these all make New Zealand’s building materials the highest among compatible countries.
The third issue is getting land ready to build on.
In order to make housing affordable the Government would be wiser to spend money on solving theses issues from a grass roots level.
If you start with building costs. We have the ability to create a large proportion of building materials here. Incentives should be made to increase productivity of suitable building materials. Money spent on R and D of efficient ways of using locally created materials to build houses with, could go a long way. Remember the $3 billion provincial fund?That could have been used here.
Next is investment in infrastructure. The council collects billions in rates, for every house that is created an annual fee goes to council. Use some of that money to create infrastructure to support the new houses. The councils are sponges that suck up so much money in a multitude of less important pet projects. Rather than loading up new housing projects with all the infrastructure costs, including contributions to other pet projects, make infrastructure a priority.
Look at better use of rain water rather than it being an expensive item to remove to only re deliver it in an increasly costly way, is another idea to consider.
The infrastructure cost of removing and delivering water is over $30,000 for a new titled piece of land alone.
And lastly land. The government was happy to fork out $30 million to buy back some occupied land that was going to have 400 houses on it. Why not buy bigger blocks of land, invest in infrastructure and then offer the land for sale and use the ongoing income of rates and the sale of the land to fund the process.
If you could buy a section with the infrastructure in place and just needed to use locally (better priced) building materials to get the build cost down to say $1000 per meter, discounted the GST to 10% you could build a 120 m2 house for as low as $400,000
Surely in 4 or 5 years with some money in R and D we could work out how to use locally made materials to build with at better pricing.
But this is only my humble opinion of being in the housing game now for 20 years.
Surely it’s worth a crack? Because nothing that has been done so far is doing one ounce of help to families looking for a home