International expert says land supply is the reason for house inflation

August 27th, 2014 at 9:00 am by David Farrar

David Killick at The Press reports:

Former World Bank principal planner Alain Bertaud, who visited Christchurch this month, has more than 30 years’ experience in urban planning. Now based in New York City, he has worked in places as diverse as France, the United States, Central America, Yemen, and Thailand. …

Providing affordable accommodation, according to Bertaud, is not that hard.

“The solution is to increase the supply of land. I would not bother so much on the construction of the housing itself, I think that can be taken care of fairly easily by the private sector.”

The opposite of what Labour is proposing. Labour has been against increasing the urban boundary in Auckland to allow more land to be used for housing.

Let’s figure it out. Look at your latest property valuation, or that of someone you know. Compare land value and “improvements” (the house). I bet land value accounts for over 30 per cent of your total property value. In some desirable areas, like coastal areas, land value may be over 50 per cent.

That is crazy. Bertaud says the rule of thumb is that land should be no more than 30 per cent.

In Houston, Texas, it would be only 15 per cent. “It’s strange because normally when the land prices are very high it’s a very dense country like Japan or Holland. This is not a dense country.”

Exactly. Unless we expect farms to take over the whole countryside, New Zealand has plenty of space for houses. “It’s a self-inflicted problem, frankly.”

It is, primarily by local government. From the point of view of local government, they like to restrict land, as it makes life easier for their planning departments. So land supply restrictions work well for the entity which decides them, but punish those seeking to buy a home.

Restricting land supply and imposing too many controls also stifles business growth, especially in the central city, Bertaud warns.

“I think it’s so inconsistent to put restrictions on height and say at the same time we want a compact city, we don’t want sprawl. If you put a restriction on height, it means you want people to use more land but you don’t provide this land.”

You need to allow growth to be both vertical and horizontal.

Tags:

56 Responses to “International expert says land supply is the reason for house inflation”

  1. Gulag1917 (1,083 comments) says:

    Urban sprawl as in Australian cities is no solution either.

    Vote: Thumb up 1 Thumb down 9 You need to be logged in to vote
  2. tom hunter (5,134 comments) says:

    The opposite of what Labour is proposing. Labour has been against ….

    Market? Supply and Demand? WTF are you talking about. This is who they are. This is what they do.

    But the real question is what is National going to do about this, because I saw nothing of that mentioned in either the article or your comments.

    Vote: Thumb up 4 Thumb down 2 You need to be logged in to vote
  3. dime (10,213 comments) says:

    File this under the “no shit” category.

    People always blame “the rich” for their woes. They should be blaming government. In this case, shit head councils.

    Vote: Thumb up 15 Thumb down 1 You need to be logged in to vote
  4. KiwiRupes (16 comments) says:

    At which point does the high value of a few houses generate more rates revenue, than a large quantity of cheap houses? Is there an underlying notion within local government that restricting the land available will maximise rates?

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  5. EAD (1,450 comments) says:

    Nothing to do then with massive levels of nation changing immigration?

    Do economic laws not apply to housing? Normally when you increase demand artificially, the result is prices increase.

    Vote: Thumb up 5 Thumb down 3 You need to be logged in to vote
  6. mjw (401 comments) says:

    Supply and demand. Demand is increasing, supply isn’t. The solution is to increase supply, not increase demand.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  7. PaulL (5,449 comments) says:

    There’s a little more to it than it seems. Councils like to follow policies that voters like. Voters, particularly local council voters, disproportionately like: a) for their house prices to go up and nobody to be allowed to do development near them (if they’re a respectable house owner), or b) lots of feel good environmental controls (if they’re a lefty). So planning controls are a win win, most local council voters like them.

    Part of the problem is that the people who have costs imposed on them by this don’t get to vote – they are the people who’d like to move to Auckland but can’t afford a house. Apparently there are two main ways to deal with this. Either increase the size of the council to a level where controls in a suburb aren’t important enough to voters to make a difference – so voters on the north shore won’t get excited about planning changes in south Auckland, and vice versa. Whereas those people may get ancillary benefits from the city being more dense, and so would vote for it. Alternatively, by making councils really small so that within an urban area there is meaningful competition between councils – so more people would want to move to an area that was well managed. I think with the super city we’re trying the former, I haven’t seen it working as yet.

    Vote: Thumb up 5 Thumb down 0 You need to be logged in to vote
  8. EAD (1,450 comments) says:

    Why should we build up?

    New Zealand is one of the last places in the developed world where people could actually own their own piece of land rather than being forced to live like sardines in tiny apartments. It is all very Agenda 21 http://www.breitbart.com/Big-Government/2012/02/09/agenda-21-is-repackaged-socialism-unsustainable-development

    Sure, for some people it makes sense to live in an apartment but this trend of apartment building only began when previous governments opened up the door for mass immigration which is also incidentally when house price inflation really got going.

    Well, that and the sale of NZ Banks to Australian Banks who used their license to literally “print money”

    Vote: Thumb up 4 Thumb down 4 You need to be logged in to vote
  9. PaulL (5,449 comments) says:

    @kiwirupes: as I understand it the houses make no difference to rates. The local council set their total rates budget (say, $300m). They then apportion that across the houses based on valuations etc. So changing the number of houses or value of the houses doesn’t change the amount of rates paid in total, it just changes who pays how much of those rates.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  10. Colville (2,318 comments) says:

    A good start to housing land supply issues would be banning lifestyle blocks within say 10 kms of town boundary.

    But in a lot of cases the horse has well and truely bolted on that one. Pretty hard to buy up a bunch of $2mil lifestyle blocks and demo the 800 M2 houses to do brownfields developments.

    Vote: Thumb up 3 Thumb down 1 You need to be logged in to vote
  11. redqueen (596 comments) says:

    @ Dime

    Well said. It’s the councils, but we blame everyone else for it. When will people learn that government (local and central) is actually the problem, rather than the solution? I’m not planning to hold my breath…

    Vote: Thumb up 5 Thumb down 1 You need to be logged in to vote
  12. Gulag1917 (1,083 comments) says:

    Cut immigration and any housing problem would be solved. Immigration costs the taxpayer $200,000 per immigrant.

    Vote: Thumb up 3 Thumb down 7 You need to be logged in to vote
  13. hj (7,166 comments) says:

    Bertaud, in one of his papers talks about a rule in China where each window had to get some sun during the winter. The brilliant mind soon fixed that.
    At the end of the day the economic benefit has to justify population growth; after 20 years of growth the expected benefits haven’t occurred. What’s more the Government’s own Savings Working group said that because of the amount of infrastructure we need to provide the capital available for business investment has been soaked up and it “appears to have worked almost directly against the adjustments we needed to make”

    Vote: Thumb up 3 Thumb down 3 You need to be logged in to vote
  14. unaha-closp (1,067 comments) says:

    Colville,

    But in a lot of cases the horse has well and truely bolted on that one. Pretty hard to buy up a bunch of $2mil lifestyle blocks and demo the 800 M2 houses to do brownfields developments.

    If all non-conservation land within Auckland were made open for development, those $multi-million lifestyle blocks would become $multi-thousand lifestyle blocks overnight. This would be the first thing that would happen.

    Since this includes our fornicating mayor’s lifestyle block, the chances of any reform in this direction are very slight.

    Vote: Thumb up 4 Thumb down 2 You need to be logged in to vote
  15. flipper (4,331 comments) says:

    This fellow and the World Bank have obviously never consulted our resident “expert”, and immigration nutter – hj.

    hj, and that fellow, Campit, could set him right.

    Vote: Thumb up 1 Thumb down 3 You need to be logged in to vote
  16. Caleb (480 comments) says:

    I call BS

    If you drive down house prices by increasing land,
    without addressing immigration and foreign ownership,
    the demand will just increase.

    Governments see immigration as easy growth.
    They want growth desperately so that they can pay for their spending promises.

    We are fools, do we want unmitigated immigration?
    http://www.stuff.co.nz/world/europe/60877854/1400-children-exploited-in-UK-town-report

    Vote: Thumb up 5 Thumb down 7 You need to be logged in to vote
  17. hj (7,166 comments) says:

    The lie of regulation
    Regarding the Page One story on Jan. 8 “Lanier puts his weight behind builders / Ex-mayor joins campaign against development regulations he says hurt city”: As I have asked different builders and developers time and time again: How much money do you need?
    For 14 years, I have had to listen to the frustration and disbelief of professionals with major companies who are transferring to Houston ask me, “What do you mean you don’t have zoning?” Incoming homebuyers have become increasingly cautious about their purchases because our regulations are weak. To suggest that Houston is in danger of overregulation in development is laughable if not an outright lie.
    When potential buyers see three- and four-story town-homes and four- to five-story midrises adjacent to and crowding one- and two-story single-family homes, they take a pass. It then becomes a challenge to find a relatively “safe” neighborhood with deed restrictions, or a separate city such as West University or Southside with a property that meets my customers’ needs.
    Unregulated residential construction on top of active railroads, freeways and busy commercial streets is the norm at this time, not the exception.
    Excessive regulation is an economic danger? If I may quote the great poet, John Milton, “License they mean when they cry liberty!”
    DORIS MURDOCK
    Realtor, Houston

    Vote: Thumb up 3 Thumb down 3 You need to be logged in to vote
  18. JC (951 comments) says:

    Its a funny thing, but I’ve never seen the land take a dump or pee against the side of a house, take a drive to go visit some neighboring land or even read a library book… but I sure have seen people doing these things.

    But even more strange is that only people who have title to land actually shit and piss and go to the library, the other 60% apparently show admirable restraint all their lives and like cats one day they are simply no longer there so there’s nothing to bury or cremate.

    In short, charging only people who own a bit of dirt seems a pretty dumb way to raise money and conserve resources like water and general services.. particularly when you allow that other 60% to vote in la la Councillors who want to increase social spending and buy shiny new toys for Council and themselves.

    JC

    Vote: Thumb up 4 Thumb down 1 You need to be logged in to vote
  19. wreck1080 (3,999 comments) says:

    “You need to allow growth to be both vertical and horizontal”

    While this makes sense I don’t think kiwis are ready to live in apartments. And, to build a quality apartment block in New Zealand costs a lot more than in say the USA because of council/product costs.

    Building material prices in NZ are astronomical.

    The primary option will be to expand outward but this will worsen the already congested transport system so you need billions more to widen motorways etc.

    Vote: Thumb up 3 Thumb down 1 You need to be logged in to vote
  20. hj (7,166 comments) says:

    Although agreement between observable national and regional results would give greater
    confidence, it is possible to have large effects at the national level that are hard to identify
    at the regional level. On balance, the available evidence suggests that migration, in
    conjunction with sluggish supply of new housing and associated land use restrictions, may
    139
    have had a significant effect on house prices in New Zealand.

    http://www.treasury.govt.nz/publications/research-policy/wp/2014/14-10
    Migration and Macroeconomic
    Performance in New Zealand:
    Theory and Evidence
    Julie Fry
    New Zealand Treasury Working Paper 14/10

    ACKNOWLEDGEMENTS This paper has benefited greatly from discussions and comments,
    many of which have been substantive. My thanks to Rienk Asscher,
    Anne-Marie Brook, David Brown, Nick Carroll, Enzo Cassino,
    Linda Cameron, Andrew Coleman, Paul Dalziel, Graeme Davis,
    Shamubeel Eaqub, Matthew Gilbert, Michael Hampl, Christine
    Hyndman, Natalie Jackson, Tracey Lee, Geoff Lewis, Geoff Mason,
    Mario di Maio, Dave Maré, Vinayak Nagaraj, Ganesh Nana,
    Jacques Poot, Roger Procter, Michael Reddell, Paul Rodway,
    Mark Smith, Steven Stillman and Phil Veal for helpful suggestions. I am
    also grateful to Hannah Benbow, Rietta Barnard and Bradley Rose for
    assistance with accessing documents, Frédérique Bertrand for help
    with data queries, and Kelly Shen for formatting the paper. All
    remaining errors are my own.

    Vote: Thumb up 1 Thumb down 4 You need to be logged in to vote
  21. Jack5 (5,278 comments) says:

    The problem is about to solve itself. The economy is about to pop, thanks to slumping export-commodity prices, and our high debt and high currency. People will be leaving rather than coming to NZ. Housing demand will ease somewhat.

    Vote: Thumb up 2 Thumb down 5 You need to be logged in to vote
  22. Ross12 (1,484 comments) says:

    I agree on the land issue but there is still room to reduce the cost in building. Firstly as someone noted the other day the size of houses in NZ has increased significantly in the last 20 years. Starter homes can be made smaller ( not necessarily apartment size ).
    The cost of materials is still too high –I was talking to a guy in the weekend who was reglazing –he got triple gazed high spec PVC windows shipped from Austria for 30% less than double glazed windows in NZ. ( he did not need triple glazing but the comparison made it worthwhile). If it is not already happening I think it is only a matter if time before prefab housing as imported, especially for starter homes.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  23. hj (7,166 comments) says:

    Shamubeel Eaqub ?

    2.3 Changing policy expectations
    While useful, models do not capture all the effects policymakers expect from immigration.
    When New Zealand moved to increase the numbers and skills of immigrants in the 1980s
    and 1990s, policymakers appear to have considered that these changes had the potential
    to have major beneficial impacts on the New Zealand economy, reinforcing the gains from
    22
    the other liberalising and deregulating economic reforms undertaken during that period.
    At that time, it was considered that skills-focused inward migration could: improve growth
    by bringing in better quality human capital and addressing skills shortages; improve
    international connections and boost trade; help mitigate the effects of population ageing;
    and have beneficial effects on fiscal balance. As well as “replacing” departing
    New Zealanders and providing particular help with staffing public services (for example,
    medical professionals), it was believed that migration flows could be managed so as to
    avoid possible detrimental effects (such as congestion or poorer economic prospects) for
    existing New Zealanders.

    Since then, New Zealand has had substantial gross and net immigration, which has been
    relatively skill-focused by international standards. However, New Zealand’s economic
    performance has not been transformed. Growth in GDP per capita has been relatively
    lacklustre, with no progress in closing income gaps with the rest of the advanced world,
    and productivity performance has been poor. It may be that initial expectations about the
    potential positive net benefits of immigration were too high.

    Based on a large body of new research evidence and practical experience, the consensus
    among policymakers now is that other factors are more important for per capita growth
    23
    and productivity than migration and population growth. CGE modelling exercises for
    Australia and New Zealand have been influential in reshaping expectations.

    He obviously didn’t read that bit (maybe he was the punch bag)?

    Vote: Thumb up 1 Thumb down 4 You need to be logged in to vote
  24. chwaga (2 comments) says:

    All ok to include LB’s property but a simple look at the Auckland Council GIS would show that his property is mainly native bush and an extemely steep gully. Probably part of the protected bush and water catchment control area. So while I agree with the sentiment it is probably a bit rich to throw stones at him over his property.

    If his land was flat and ok for intensive subdivision it would be another matter.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  25. flipper (4,331 comments) says:

    Just a simple, impertinent question….

    A few months ago I saw smallish (about 800 M2) housing blocks just outside the AC boundary for sale at $200,000 (+ in a couple of cases).

    Anyone care to guess the cost of a 200 -250M2 house on those blocks??? Try 700-800K plus – and then add in the landscaping, floor coverings, light fittings, and drapes.

    Anyone who believes the problem for housing costs is NOT land availability (and Council imposed development fees) is , well, like hj and campit, a nutter.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  26. polemic (460 comments) says:

    He (Alain Bertaud)is exactly right, increase land availability and remove the draconian resource consent minefields that generate huge costs for no other benefit than to feed the resource planners self serving little world of pen pushers, who actually create a choke hold on growth.

    Like wise immigration. If NZ wants to keep growing let more people come in (yes the right sort obviously) :-D but people who will contribute and work actually greatly increase an economy’s earning potential and increase the tax take for the Govt thereby easing the burden on everyone.

    That’s why Winston first is deluded as he doesn’t understand how much increasing immigration can help us all.

    Vote: Thumb up 5 Thumb down 2 You need to be logged in to vote
  27. polemic (460 comments) says:

    Hugh Pavelitich this is your hobby horse isnt it – Urban Planning etc

    Vote: Thumb up 0 Thumb down 1 You need to be logged in to vote
  28. hj (7,166 comments) says:

    A policy based on an immigration sugar rush of cashed up buyers buying property, cars, TV’s is just a PONZI > follow the money (and dirty tricks). It is based on the unfounded assumption that we will (God -knows – How) evolve into some strong manufacturing or service based economy. The principle of one foot for the wharf and one for the boat isn’t being applied. What happens if we have a bigger population and a smaller economy: we are like an over loaded lifeboat?
    Michael Reddell talks some commonsense:

    When a family falls on hard times, and has to devote lots of energy to stabilizing the
    situation, and then decides to have another child (whatever the other merits of the
    case) that will almost invariably worsen the family’s economic position. It is a folksy
    comparison and breaks down at some points, but NZ is in some respects that family:
    choosing to have lots more kids, as it were, just when were in a position to capitalize
    on the good positioning reforms put in place by successive governments in the late
    1980s and early 1990s. In that story, housing is more than a symptom but less than a
    cause.

    http://www.treasury.govt.nz/downloads/pdfs/mi-jarrett-comm.pdf
    You wont hear the Greens say that. The Greens would say the extra child is a cause for celebration.

    Vote: Thumb up 1 Thumb down 5 You need to be logged in to vote
  29. Tarquin North (400 comments) says:

    Monolithic domes are an interesting way of building a cheap house. A major problem up here and probably everywhere else is the council charges. They are really getting out of control. I hate to think how many people are employed by the Whangarei council, most of them seem to have title I’ve never heard of. The real reason Marsden City hasn’t taken off like it should do is not the land cost it’s the compliance and contributions. Could be worse I suppose, going by the number of economic refugees moving up from the big smoke things must be real bad down there.

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  30. EAD (1,450 comments) says:

    Wow – the “must support National regardless of what they do brigade” has taken over this thread!!

    They’ve had 6 long years to reform the RMA and they’ve done SFA.

    All these deluded souls now believe that immigration/population size is the elixir of economic growth because John Key said so. For all the National Party fanboys about to give me red arrows, if you believe a big population is the key to growth, what country is wealthier – Singapore or India which has a much, much higher GDP?

    Vote: Thumb up 7 Thumb down 2 You need to be logged in to vote
  31. hj (7,166 comments) says:

    flipper (3,804 comments) says:
    August 27th, 2014 at 9:41 am

    This fellow and the World Bank have obviously never consulted our resident “expert”, and immigration nutter – hj.

    “Immigration and tax breaks for investment in residential property are being cited as the underlying causes of steep increases in the cost of housing over the past decade.
    New Zealand now boasts one of the highest rates of home unaffordability in the world as a result of prices rising far faster than incomes, and the government’s Savings Working Group blames that squarely on the policies of successive governments.
    Although “the favourable tax treatment of property investment” accounted for about 50% of house price increases between 2001 and 2007, the working group said, there was also strong evidence that rapid swings in immigration brought about price-rise “shocks”.
    There was a sharp spike in immigration in 2001, 2002 and 2003 and, said working group committee member Dr Andrew Coleman, it appeared that property prices did not fall anywhere near as greatly when immigration fell again.
    The report added that there was little evidence that immigration boosted local incomes. In fact, the need to build roads and schools meant that net migration contributed to the national deficit.

    http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices

    Savings working group
    August 24, 2010/in New Zealand Economics /by Matt Nolan

    I am a bit tied down at present (which should be obvious by my lack of response to comments). However, I just had to pop around to say that I approve of the team for the savings working group – bunch of great thinkers that will look at the issue objectively, and come up with some genuinely useful solutions/analysis.

    Looking forward to their reports.

    Vote: Thumb up 1 Thumb down 2 You need to be logged in to vote
  32. hj (7,166 comments) says:

    polemic (413 comments) says:

    hat’s why Winston first is deluded as he doesn’t understand how much increasing immigration can help us all.
    ……
    Paul krugman
    Notes on Immigration

    Like all research results, the conclusions of these papers may have to be revised in the light of future research. But I’m afraid that the three negative conclusions I stressed in the column are fairly robust.

    http://krugman.blogs.nytimes.com/2006/03/27/notes-on-immigration/?_r=0

    Vote: Thumb up 1 Thumb down 3 You need to be logged in to vote
  33. hj (7,166 comments) says:

    What is a ‘House’? Critiquing the Demographia International Housing Affordability Survey

    Demographia’s International Housing Affordability Surveys are widely cited in popular media and used by planning professionals to compare cities’ housing affordability and evaluate urban development policies. This is not surprising since they are the only freely-available surveys of their type.

    These surveys are part of Demographia’s political agenda to support land use policies that favor lower-density urban fringe development. Their main conclusion is that smart growth policies that encourage compact development are the main constraint on housing affordability. There are good reasons to question both the surveys’ methodologies and conclusions.
    http://www.planetizen.com/node/70829
    “Wendell Cox and Hugh Pavletich, please respond to this column: provide specific information on how you define and measure house prices, and make your data available for independent review. This will allow planning professionals and policy makers to have confidence in your analysis. Such clarity, transparency and independent peer review are the hallmarks of good research.”

    They haven’t….

    Vote: Thumb up 1 Thumb down 2 You need to be logged in to vote
  34. Hugh Pavletich (425 comments) says:

    There is nothing clever about housing bubbles … some helpful reading …

    New Zealand’s Bubble Economy Is Vulnerable | Hugh Pavletich | Scoop News

    http://www.scoop.co.nz/stories/HL1404/S00166/new-zealands-bubble-economy-is-vulnerable-hugh-pavletich.htm

    China: Big Bubble Trouble | Scoop News

    http://www.scoop.co.nz/stories/WO1401/S00034/china-big-bubble-trouble.htm

    … reporting on MacroBusiness Australia today …

    China’s growth oxymoron | | MacroBusiness

    http://www.macrobusiness.com.au/2014/08/chinas-growth-oxymoron/

    Chinese developers slash and burn prices | | MacroBusiness

    http://www.macrobusiness.com.au/2014/08/chinese-developers-slash-and-burn-prices/

    Losers riot over falling Chinese house prices | | MacroBusiness

    http://www.macrobusiness.com.au/2014/08/losers-riot-over-falling-chinese-house-prices/

    Huge scale in Chinese property bubble and bust | | MacroBusiness … Note Pavletich extensive comments …

    http://www.macrobusiness.com.au/2014/08/huge-scale-in-chinese-property-bubble-and-bust/

    Vote: Thumb up 0 Thumb down 2 You need to be logged in to vote
  35. Colville (2,318 comments) says:

    unaha-closp.
    A $2mil lifestyle is valuable because it is close to town, not because they are scarce, it wont make SFA diff if you rezone a fuckton of other land.

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  36. Fentex (1,136 comments) says:

    From the point of view of local government, they like to restrict land, as it makes life easier for their planning departments. So land supply restrictions work well for the entity which decides them, but punish those seeking to buy a home.

    I’m not sure if it was on Kiwiblog but a few years ago I remember some discussion of councils being blamed for housing prices because of their fees for utilities – which is obviously something that is going to be higher for new properties built away from existing infrastructure, in a world of freedom to build further away where one presumes a concordant responsibility to pay for it attaches.

    I wonder if anyone has researched the relative amounts of users paying for new road, water, sewerage and power infrastructure compared to the cost of plugging into existing infrastructure? I seem to remember that’s a sizeable justification claimed in city planning for increased density.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  37. labrator (1,851 comments) says:

    @PaulL You left out c) They want their kids to be able to buy cheaply near by. d) They want to maintain ‘heritage’.

    Growing a city is hard. People don’t like change. Take a look at the trouble Bunnings had trying to build a store in Grey Lynn. “Lower house prices are just the beginning” is one of the posters. Councils are trying to please every one and it’s no easy task.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  38. unaha-closp (1,067 comments) says:

    I wonder if anyone has researched the relative amounts of users paying for new road, water, sewerage and power infrastructure compared to the cost of plugging into existing infrastructure? I seem to remember that’s a sizeable justification claimed in city planning for increased density.

    Sort of, the cost of increasing capacity in an intensely populated area is much higher than putting in new greenfield capacity.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  39. dubya (245 comments) says:

    Very true Labrator – I happen to live a few hundred metres from the Grey Lynn Bunnings site (which I’m glad is going ahead, spa pool chemicals are so expensive at Ponsonby Mitre 10!)

    My street is mostly all Edwardian villas, bar the house I live, which was subdivided behind a villa in 1988, illegally insofar it was built as a garage and minor dwelling for the front house, then extended and eventually got retrospective consent and became a house in it’s own right (with a good architect to redesign the place and extend to 150m2). It’s built right against two boundaries, and the 600m/2 sections common down the street are considered ‘too small’ to allow infill housing according to the council and various local nimbys (most of whom have Labour and Greens signs whinging about ‘inequality’ on the front fence of their $1.5m villas at the moment!).

    Now I could be biased, but I think my house is the best in the street. It’s warm, uses the land cleverly, and has excellent privacy and a view of the Waitemata and Waitakeres. However, unless some overzealous regulations are scrapped, the likes of it will never be built again.

    Vote: Thumb up 7 Thumb down 0 You need to be logged in to vote
  40. OneTrack (3,362 comments) says:

    Tell Len Brown to get out of the way and zone some land for housing.

    Oh, that’s right he has his country estate. Everybody else has to live in high rise ghettos.

    Vote: Thumb up 4 Thumb down 1 You need to be logged in to vote
  41. RRM (10,099 comments) says:

    Well I still think vested interests are behind it.

    No-one who already owns property, is going to support anything that will reduce their property’s value.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  42. unaha-closp (1,067 comments) says:

    Colville,

    Land in Auckland is expensive, because we restrict the size of Auckland. Land close to Auckland is expensive, because it is the next parcel of land expected to be slowly added to Auckland at or near current prices.

    If we increase the size of Auckland overnight to include damn near everything north of Bombay’s and south of Wellsford, it will reduce the price of land in the city dramatically. A lifestyle block is about 70% by value derived from land value.

    Lifestyle blocks will fall in price. Lifestyle blocks will fall in price second quickest of all property types (only bare sections will perform worse).

    Vote: Thumb up 1 Thumb down 1 You need to be logged in to vote
  43. Paulus (2,707 comments) says:

    On hearing Cunliffe today reiterating the building of 100,000 low price houses “at cost” where are you going to find a New Zealand builder who will build a house “at cost”. – ie, no profit. A good Tui advert.
    Bring in the Philippine builders – they will do it ???”at cost”.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  44. Fost (84 comments) says:

    @Flipper
    “A few months ago I saw smallish (about 800 M2) housing blocks just outside the AC boundary for sale at $200,000 (+ in a couple of cases).
    Anyone care to guess the cost of a 200 -250M2 house on those blocks??? Try 700-800K plus – and then add in the landscaping, floor coverings, light fittings, and drapes.”

    You are well out of the ball park – we are building a 290m2 5-bed house on a sloping hill site – so looking at $50K – $80K for the earthworks alone and the estimates is $500K all up (our builder is still nailing down the last of the costs) – and that is a high spec home, underfloor heating, ducted heat pumps throughout, granite in the kitchen, etc. and with an ‘all in’ contract – so that includes landscaping and floor covering (but not drapes/ligh shades – but does include the fittings).

    A house of 200m2 – 250m2 you’ve mentioned can easily be built for $350K – $400K unless you want a gold-plated spec. Our previous house (we built that as well) was a 185m2 4-bed and quite roomy. The total build cost was $260K and was built only 3 years ago – throw in $130K for the section and we did the whole thing for a bit less than $400K.

    Some of the prices and expectations I see thrown around in these sorts of dicsussion can be wildly inflated – I’ve spent quite a lot of time looking into this as my wife and I intend to build at least 1 more house. Also the size expectation for a first home seems unrealistic to me – why aren’t people building their first as a 150m2 3-bed house? On a small section? Build it, live in it for a few years and put some of your own time to landscape and move up later. That is what my parents did – most of my own childhood family homes and that of most my friends were houses that would have only been 90m2 – 120m2 – although with separate garages, and I was one of 3 kids. Too many seem to want run before they are even crawling.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  45. mikemikemikemike (334 comments) says:

    Great…so who pays to put the infrastructure there?

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  46. UrbanNeocolonialist (315 comments) says:

    The cost of building a house in Auckland now is land + ~$250k house build, + $200k effective council imposed compliance costs (including interest over the 1-2 years it takes to do a build now due to council’s kafkaesque planning dept.

    Planning depts and rules needs to be reigned in and cut back to perhaps 10-20% of their existing size.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  47. Redbaiter (10,417 comments) says:

    More Chinese surnames than any other in Auckland but this is a change that has no effect at all on demand for houses.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  48. Mark (1,502 comments) says:

    Supply and demand, who wudda thunk, mans a genius.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  49. Hugh Pavletich (425 comments) says:

    The UK is marching to another mortgage fueled banking crisis:

    http://www.bloomberg.com/news/2014-08-14/housing-debt-bulge-as-wages-shrink-hurts-u-k-mortgages.html

    A condensed version of this article appeared in the Press, C9, 27 August 2014.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  50. Mark (1,502 comments) says:

    In the 1970’s an entry level house for a first home buyer typically was 90 m2 to 100 m2. Now an entry level house is 130 – 150 m2. Perhaps this part of the problem?

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  51. hj (7,166 comments) says:

    I sees ACT want to gut the RMA , but not in Epsom
    http://publicaddress.net/hardnews/the-ides-of-epsom/

    What I’m arguing is that the people of Epsom have bought into certain property rights and the character of their community …

    What I’m arguing is that NZ’s quality of life is a property right not to be undermined by Labour Progressives or National Party Real estate developers. It’s the people at the base of the pyramid who loose their quality of life first.
    Name somewhere in Aotwearoa where immigration has improved the quality of life?

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  52. PhilBest (4,757 comments) says:

    To all the immigration-is-to-blame nutters:

    If every immigrant bought an NZ made recreational boat, would this drive up the price of recreational boats, or would it be good for the NZ economy, provide jobs and economies of scale for the boat builders?

    No reason housing can’t be the same.

    HJ: we know Houston and other affordable US cities do have a KIND of zoning; actually it is more like what we call “covenants”. There is actually no legal reason these can’t be done in NZ cities too, and residents opposing zone changes (eg to allow intensification) need to smarten up their act on this. All they need to do is arrange a legal covenant or two; all they need for this is a bit of unanimity among the local residents in whatever street or block decides to do it.

    BUT the BIG difference, which is decisive for housing affordability, is that Houston and the other affordable cities have no regulatory constraints reducing the elasticity of the rate at which rural land can be converted to urban use.

    “The Woodlands” would be IMPOSSIBLE to do in NZ.

    https://www.youtube.com/watch?v=SPENmPxafgc

    http://www.thewoodlands.com/

    With the right reforms, it would be possible to do the same: that is, where there was nothing but grass and cows, 20 miles from an existing city; within a decade there can be 100,000 people, nice new McMansions for $180,000 to $300,000 (and luxury homes for more but excellent value, and indeed townhouses for around $100,000 for those who want them); and jobs-housing balance.

    You are an intransigent twit if you don’t “get it” about the decisive character of this factor.

    You also don’t actually give a toss about “the poor”, other than as captive constituents for Nanny-State-only “solutions” required because of contrived political distortions to markets. You absolutely hate the “property owning democracy” nature of a city like Houston, don’t you? A poor person being able to get the same house for $100,000 that would cost him $500,000+ in Dorkland, averting any “need” for Nanny-Statist pollies to come riding to the rescue with subsidised State dog-boxes.

    Vote: Thumb up 0 Thumb down 3 You need to be logged in to vote
  53. Reid (16,700 comments) says:

    To the morons who don’t understand basic supply and demand. If land supply is the issue then how come house prices in Auckland have only got right out of whack with the rest of the country when immigration started going through the roof?

    If you have 40,000 families most of them WITH MONEY not to mention all the PR students who are another 40,000 all moving into a single NZ city every single year, WTF do you think is going to happen?

    It’s not rocket science but apparently supply and demand morons don’t believe anything unless politicians tell them what to think. And apparently supply and demand morons haven’t yet worked out the very simple equation that if any politician did tell them what to think on this then it would piss off every single property owner in Akld and thereby lose them the election. And since when did a politician tell the truth if said truth was going to boot them out?

    Duh.

    Vote: Thumb up 3 Thumb down 1 You need to be logged in to vote
  54. RRM (10,099 comments) says:

    Duh.

    It must be a great burden, being a lone genius in a world of

    morons.

    But you always bear it with such good grace ;-)

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  55. Reid (16,700 comments) says:

    But you always bear it with such good grace

    I just seek inspiration RRM. Like this:

    To all the immigration-is-to-blame nutters:

    Then I get all poetic.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  56. hj (7,166 comments) says:

    n the 1950s, China established a regulation requiring that at least one room in each apartment receive a minimum of one hour of sunshine on the day of the winter solstice, December 21. Though well-intentioned, the rule resulted in wasteful use of scarce urban land. Planners applied the rule to government and enterprise housing built between 1950 and the mid 1980s. That housing, built during the pre-reform period, is still largely intact. So even though the rule no longer applies, its impact on the spatial structure of Chinese cities remains.

    At first glance, China’s sunlight requirement seems innocuous. Nobody can be against sunlight. For Marxist planners, replacing the messy and unpredictable outcomes of unfettered housing markets with scientific rationalism must have held strong appeal. What’s more, a uniform rule for the entire country gives the impression of equality under the law. Every household would enjoy a minimum of one hour of sunlight every day, whatever their latitude.

    The rule boiled down to a simple mathematical formula: distance d between buildings is determined by the height of building h multiplied by the tangent of the angle α of the sun on the winter solstice at 11:30 in the morning using solar time.

    The regulation, expressed through a mathematical formula linked to the movement of the sun, appears to have scientific legitimacy. In reality, it was only pseudo-scientific. Though the height of the sun at noon is an indisputable fact, the notion that each apartment needs one hour of sunlight is hardly an established scientific necessity.

    After the market reforms of the 80s, Chinese municipalities rapidly abandoned the allocation of land through design rules, replacing it with a more pragmatic approach that relied on market prices generated in auctions of land use rights. Because post-reform cities derived a large part of their revenue from selling land use rights to developers, they had a strong incentive to abandon rules that resulted in wasteful uses of urban land. But, in spite of its abandonment, the solar rule had an enormous impact on the structure of Chinese cities—the sort of unintended consequence that is too often typical of well-intentioned land use regulations.

    http://urbanizationproject.org/blog/markets-vs.-design-regulating-sunlight-in-pre-reform-china#.U_2xeWOKXpc

    Clever bastard!!!!!!

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote