uk_kiwi said “According to your theory, the market should have provided without the need for “red tape”. But it failed, dismally, which proved the absolute necessity of a solid building code and a strong enforcement of it.”

I don’t recall advancing this theory. Less kack-handed regulation does not equal no regulation. Like bitter old chippy Spoff, I can recall the old carpentering days, when you worked in the rain with metal-cased electrical tools (no double insulation then), wet native timber for framing, ladders for heights, and boys like me plus apprentices to do the gofer-ing. As Stewart Brand (of Whole Earth Catalogue fame ) has said, the good old stuff is mostly crap.

The point is that the Gummints – national and local – have altered incentives (see vto’s first, excellent post for a primer on this). And people always, always react to incentives. So what are the incentives in operation at present?

- build for the top half of the market. More demands but more certain profit.
- avoid delays because time=money, and money is increasingly expensive.
- avoid liability by suitable choice of company structures etc
- avoid employing people – too much hassle. Sole traders.
- cash is king (always was) so cashies are always acceptable.
- avoid costs – go cordless (no inspections), use a lock-up container (secure storage, no fencing cost), cut corners on materials that won’t or can’t be inspected.
- avoid bad-news Councils – there’s always an easier choice over the boundary line, and news gets around fast in the trade.
- avoid untested methods and materials. Once bitten, twice shy. This may be good for leaky buildings but is bad for innovation.
- avoid the industry, in the last resort. There are easier ways to make a bundle, and certainly ways that leave you with your knees intact at 50.

And so on. By now, if you’re thinking, hell, that’s no way to run a long-term housing industry, you’re probably right. But that industry is only, as always, reacting to the set of incentives in place.

Change the incentives, change the behaviour.

And as old Rees-Mogg said over at the Times, if you manage to strangle supply against a fixed demand, then tip in lots of easy credit, a’bubbling you will go.

To be sure, our knows-best elites are not the only culprits in this whole sorry mess. They aren’t responsible for the wave of cheap money that has characterised the aughties.

But they are responsible for crimping supply in the housing market, doing stoopid things like guaranteeing NINJA loans (first $100K) and then wondering why all house prices start at $120K overnight, and altering incentives via Holidays Act, a host of regulations, licensing schemes and the like.

Because the Demographia materials (see the submission to the Select Committee last year ) do note that there are simply less houses being built than there should be.

As other commenters aver, there may well be a roof over every head. But no-one’s claiming that said roof belongs to a well-built, well-insulated dwelling. There’s a need for housing stock upgrading. Just as we are beginning not to tolerate old clunker cars on the autobahns of Auckland, we should be looking sideways at a lot of the present housing stock.

But given the present set of incentives, who ya gonna call?

The graph shows the annual increase in building cost. If you add the annual percentages you’ll find I’m correct. Also, I doubt that the data includes compliance cost which was in my estimate.

“why do you say so many experienced people left?”
The sixties and seventies threw up a lot of uncertified tradesmen for various reasons which I won’t go into now. Many worked in the smaller towns in one and two man gangs. They comprised 60% of the workforce. Next year they will be faced with a choice of working for someone else or quitting. As many are in their late fifties they are getting out. Not one leaky building has been attributed to such a crew.

No4 of 20 is that the capital gains tax free status of a personal home is the best deal yet in long term wealth accumulation.

Followed closely by Australian Superannuation…..but you guys aren’t allowed to have that….the socialists don’t like people who become independent of their control.

And Spoff, your Carters Remedy list re the leaky home solution is also spot on.

My conclusion re all of the above postings: Very very little will change.

No, according to the Dept of building and housing costs page (second graph down):

http://www.dbh.govt.nz/prices-and-costs

Costs seem to only be increasing marginally above the rate of inflation, 4.8% for 2007, although it did spike up immediately after the 2004 Act was passed.

But it is interesting to hear your side of this story- why do you say so many experienced people left?

Personal accountability is the best guarantee

The Canadian White Paper on the subject that Carter was supposed to study opens with this statement:
“Residential construction, during the past 15 years, has become an industry dependent more upon business finesse and marketing techniques than on down to earth building basics.”

Carter’s remedy (dictated by corporate interests and paper builders) :

1. Rewrite the code to include very expensive pieces of plastic, sticky tape and cartons of goop, none of which were used in the thousands of sound homes built last century.

2. Triple the number of inspections (ignoring the fact that the problem buildings had all been thoroughly inspected).

3. Invoke a loony licensing scheme copied from and now abhorred in the State of Victoria which immediately eliminated 60% of the most experienced workforce .

4. Impose penalties 200 times what a drunk driver faces on a homeowner who builds his own deck.

I may be a bitter old chippy but I can’t see anything basic about that.

I walked out of a meeting of the Certified Builders Association when the chairman gleefully told the members to expect charge-out rates rivalling that of Lawyers.
Despite the fact that I could be making more money than I ever dreamed a tradesman could, I hung up my nail-bag because the new code forces me to build in a manner I consider unsound.

I am sorry for anyone building a house today. They are paying 40% more for an inferior product while the manufacturers are laughing their tits off.

Expect similar results in Education now Carter is at the helm.

Unfortunately, the market establishes the price of your skills you like it or not. It’s called supply and demand. Maybe you should’ve studied something different.

“Why should I spend my life enslaved to parasitic foreign bankers and speculators?”

You shouldn’t. The moment you take your life in your own hands and do whatever its necessary to forge ahead you will be on your way to success.

It’s easy to blames others, but you need to harden up and own your life.
Envy is not going to take you anywhere.

Hint for smurfs: It’s all about tax.

This argument is like school zoning, are the people who paid $50000 to $80000 to prepared to lose that value so outsiders could go to the local school.

NZ like Aussie, US and England have such convoluted tax and subsidy structures that unwinding would cause pain for certain groups that have political clout.

I think the heart of the affordability problem is at your #3. Councils saw the decreased reg environment as a means of increasing the efficiency of user pays – continue charging cost plus and deliver non-existent inspection services.

Having been involved, like yourself, in the building industry at odd times over the last 35 years, I cannot believe the total charges a council imposes for what I still call the ‘Universal’ 3brm 1000sq ft ‘box’. Construction methods haven’t changed, except a little more flashing here and there, materials have gone up in line with inflation.

Council cost plus charges to feed the rose-tinted bureaucracy like the eco-terrorists at Waitakere are a different matter though. Their increased costs to build the same box show no relevance to the build. They also hold no responsibility or give no guarantees that the outcome like a leaky home is their worry.

Try taking a council on to prove liability. See how far you get and watch the cost.

Further back you questioned how a reduction in regulation could improve ‘leaky home syndrome’ when it mostly occurred due to earlier de-regulation.

That is not quite right. The leaky homes occurred due to the coming together of a number of factors;

1. Architectural style of the time, namely mediterranean (sp?) with internal gutters and the monolithic plaster style.

2. Builders (and developers) through the 90s were really struggling to make a dollar and some shortcuts and poor workmanship was involved.

3. Some deregulation and lack of checking by Councils of new materials and their installation and new building styles.

In the past you could get a very well built house (think e.g. something built in the 50s to 70s) with a simple set of say 4 sheets of A3 plans which showed the most basic of details. So, uk_kiwi a lack of regulation in the 90s is a simplistic answer and not correct.

Increased regulation = increased cost plus.

Example; “with millionaires on one side supported by all sorts of tax breaks and handouts,” Please name what those tax breaks and handouts are Ropata, because I have no idea and would appreciate knowing.

Example – “vto and his mates in the construction business are doing very nicely thankyou very much” Oh right. Me and my family face oblivion actually and quite frankly over the years I would have been better off sticking money in the bank. Ropata how do you know we are “doing very nicely”? Back yourself and explain.

Example – “vto, I am a hard working wage earner who has been priced out of the market by his fellow kiwis. Thanks a lot mate”. Again Ropata, please explain how fellow kiwis have done you in and what you would rather have had them do.

Ropata, you have not made any post with any substance. Try substantiating some of your claims with facts.

“Why should I spend my life enslaved to parasitic foreign bankers and speculators??” Well then, Ropata, DONT! Its your life, get on with it you whinger.

You spent 6 years at uni and then the rest of the time working for someone else. Perhaps that is why you have such a tiny understanding of how business and in fact the world works. Wise up.

Time is still your best friend.

The economic boom times that you bemoan missing out on were just smoke and mirrors . We can only fool ourselves for so long that rising house prices are true wealth creation. Wealth creation actually requires the production of some goods or skill that you can sell to someone else for a profit.

Your attitude calls for less talk and more work
It’s pretty clear there is a cultural divide in NZ with millionaires on one side supported by all sorts of tax breaks and handouts, and productive, hard working suckers on the other who have missed out on all the supposed gains of the glorious economic boom times. Why should I spend my life enslaved to parasitic foreign bankers and speculators??

You surely are a bitter and twisted individual. What’s your problem with wealth if people have accumulated it after years of hard work (baby boomers)? What do you have against those investing in property, which wasn’t hot in the 90s? What against foreign investors whose capital help our country?

Are you one of those paper socilalists who claim every person deserves the same, regardless of ability, intellect or effort/dedication?

Your attitude calls for less talk and more work.

PhilBest:1700, couldn’t agree with you more. A very good 500K pdf on the same matter in Portland Oregeon. (Link whoring here on the same topic).

Ropata:1647 – A caution, when you get to Oz, remember everything that moves over does bite and is venomous. Probably could include the recently voted in.