A way to reduce housing costs

October 24th, 2013 at 7:00 am by David Farrar

The Government is keen to reduce housing costs. Eric Crampton has a way they can do this:

Donal Curtin pointed to some less-than-helpful government action that helps increase construction costs. New Zealand initiated anti-dumping action against Chinese wire nails, Malaysian galvanised wire, and Thai plasterboard, among other things. And so we have a specific tariff helping to keep prices up for plasterboard. While we’re trying to rebuild after an earthquake.

So one part of central government is all mad about excessive construction costs. Another part of central government penalises foreigners for selling us construction materials cheaply.

It’s a fair point. If foreigners want to dump cheap materials on us, let’s take advantage of it!

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19 Responses to “A way to reduce housing costs”

  1. duggledog (1,589 comments) says:

    Shitty low grade materials aren’t necessarily a great idea especially when building something that should last for 100 years and is one’s biggest asset.

    Buy cheap, buy twice.

    It’s the council costs that are the problem. Central govt still haven’t done much about that

    Seen the cheap imported Asian fish at the supermarket? It’s fricken wrong!

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  2. Adolf Fiinkensein (2,923 comments) says:

    Duggledog

    Can you taste the difference between barramundi from Thailand and barramundi from Darwin??

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  3. Scott Chris (6,177 comments) says:

    If foreigners want to dump cheap materials on us, let’s take advantage of it!

    No. Dumping is an anti-competitive practice that needs to be regulated against to protect small businesses. On the other hand I see nothing wrong with importing cheap goods that are manufactured efficiently and sustainably.

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  4. peterwn (3,311 comments) says:

    duggledog – Agreed quality has to be watched. That is why there are international standards and accredited testing facilities. Many third world manufacturers meet these standards, the TV etc industry being a prime example. While there are shoddy third world products in $2 shops etc, most mainstream products are up to scratch.

    ‘Dumping’ is defined as a manufacturer selling goods on an export market for less than the equivalent domestic market. Applying this can be difficult – suppose the goods are solely for export. Perhaps there are some left leaning control freaks in MBIE who apply dumping rules far to aggressively.

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  5. Sector 7g (242 comments) says:

    Kiwis- Protest any industry that increases wages. Protest any company that supplies cheap goods. Protest against low wages. Protest the high cost of living.

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  6. Maggy Wassilieff (450 comments) says:

    @ duggledog… Unless I’m mistaken… I think the Building Act 2004 only concerns buildings lasting for 50 years. No building codes for houses intended to last longer than this. My 110 yr old place is obviously overbuilt.

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  7. Alan (1,087 comments) says:

    Anti dumping laws are there for a reason. Selling below the cost of production due to subsidies is harmful to everyone.

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  8. ciaron (1,441 comments) says:

    @ Maggy:
    A design life of 50 years does not mean that the materials will only function for fifty years. It is an indication of the severity of events (earthquake, wind, snow etc.) that a building is likely to face in its use, which is used do derive the load combinations that the building will be designed to meet.

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  9. RRM (10,031 comments) says:

    We’ve worked with builders/developers who’ve used the “Elephant” board instead of gib but they had a herculean task getting the council happy with it.

    At least with plasterboard bracing elements there is a straightforward specified load test that any importer can arrange to prove the capacity of their product. I don’t know about nails made of unknown muck metal though…

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  10. freethinker (694 comments) says:

    Plasterboard is a third of the price in Texas as NZ, doubtful the yanks are using substandard stuff, Thermally Broken Double Glazed windows with Low E glass and Argon filled are cheaper ex China than standard units in NZ but the costs imposed by Branz and the anti competitive actions of monopoly suppliers are gouging the market. Funny the same products are imported into Europe to their standards which are at least comparable to NZ so clearly NZ conditions are so different – Yeah Right!!

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  11. EAD (1,330 comments) says:

    People keep running round in circles knowing something is wrong about these “rising prices” and it drives them mad like a splinter in your mind trying to find “explanations” or “solutions” to problems they don’t really understand. How can prices stay flat for centuries then all of a sudden explode on an exponential curve over the last 40 years??

    Even if you do nothing to your house to improve it, it just keeps going up up up an away!!

    It is all explained in the video I posted in recent Kiwiblog general debate. Worth watching the whole lot but if you want to understand why prices keep going up, skip to 6.50 and watch to 10.10. To see how it all end then watch from 12.30 to 14.30.

    Plan accordingly.

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  12. RRM (10,031 comments) says:

    Oh and my wife once worked for a lighting retailer. She always recommended a certain Chinese made outside lamp with a plastic body, because they were inexpensive but were just a good well-made thing that didn’t rust and didn’t have any dicky little screws that strip out.

    Most customers instead opted for a beautiful Italian thing with a beautiful Italian price tag, because they had their own ideas about “quality”.

    Inevitably they would be back in the shop 12 to 18 months later after that beautiful Italian lamp had rusted through…

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  13. Ed Snack (1,927 comments) says:

    Plasterboard manufacturing has been a massive cash-cow for Fletcher Building for years, they have made massive profits over the years from it, so no doubt they’re right in the thick of it lobbying for restrictions on imports. And that’s why NZ’ers pay so much for plasterboard, no real competition.

    If a country subsidizes an exporter to sell overseas, then that country is basically subsidizing the consumer overseas, ban it sure, but it should be the taxpayers of the exporting country concerned, not the importing country !

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  14. Simon Lyall (60 comments) says:

    This Story is interesting, the local industry is worried that 2100 new housing corp homes will be imported as prefabs rather than being built here:

    http://www.stuff.co.nz/dominion-post/business/9310944/Prefab-imports-may-axe-timber-jobs

    I heard a friend-of-a-friend imported a prefab house in a container or two from Canada and ended up building for 2/3s the cost of a similar NZ sourced housed.

    Probably for one-off imports there will be a problem with certification and electrical standards. I would guess that small numbers would need local plumbers and electricians to do a lot more work while 100s or 100s of houses of the same design would allow things to be built and certified at the factory.

    I’ve heard that one reasons overseas houses are cheaper is the larger production runs on a few designs, whereas the NZ market is (a) smaller (b) smaller projects and (c) Kiwis like having different houses from their neighbours.

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  15. beautox (422 comments) says:

    Dumping is the reverse of scalping, another emotive term used to pour derision on an economically sensible action.

    Anti-dumping is where the government tells you what you can’t buy (because it’s too cheap). You can’t buy it because some local supplier is mates (ie has spent money lobbying) with the politicians who make the anti-dumping rules. In other words, crony-capitalism – where businesses usurp the power of government for their own ends. And it hurts the consumer. It’s just so much bullshit to pretend that it’s anything else.

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  16. The Scorned (719 comments) says:

    Dump baby dump….its freedom in action…more of it. To hell with the special interests and their protectionism…

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  17. PaulL (6,048 comments) says:

    Yup. My father once told me that if I bought a French car I shouldn’t bother coming home (this was a good 20 years ago, when that was a meaningful threat, and France was a bit more on the nose than today). My point to him was that every French car that a NZer bought cost the French taxpayer about $3000. If we all rushed out and bought French cars we’d just about bankrupt the place. I’ve never really understood why we see it as a bad thing when taxpayers in other countries want to subsidise us.

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  18. hj (7,067 comments) says:

    If everything was imported to build houses for our growing population (government policy) unemployment would increase and government policies (migration sugar rush) would be even more naked? Over all incomes aren’t increasing in response to migration (and vice versa).

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  19. lolitasbrother (751 comments) says:

    The PM visits Thailand November 18. Trade tariffs are on the agenda .
    A piece in the Bangkok Post said in discussions with the PM, the Thais would request rescinding the anti dumping policy on Thai plaster board. They seem to be pretty serious about this.
    I can not get an idea on the quality of this stuff. I have seen them building with it here, they drag it up story on pulley ropes and it bounces off concrete walls, but seems to maintain its integrity. Plaster board is not fish it doesn’t go off in transport. .

    Thailand has tariffs on imported perishable food from New Zealand but subject to winding down. The biggest tariffs are on milk products. These food products are in the middle class built up supermarkets, but never on the street. A kiwifruit here retains its beauty at about 15 bahts, 60 cents. Some NZ apples start to go off in the big stores. Enza seems best lasting

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