Going for housing growth plan a gamebreaker

Monday, 19 June 2023

Brent Slater is a past lecturer in architectural design, a past president of the Wellington branch of the Property Council and has been directly involved with the design, construction and sale of 23 commercial buildings and around 1550 dwellings in 12 local authorities.

OPINION: Over the past 50 years the ratio of land cost to property purchase price has increased from around 25% and is now often nearly half of the property purchase price. This has happened because councils have consistently under zoned land, giving it a scarcity value.

This has made New Zealand one of the least affordable housing markets in the world and means that fewer families are able to buy their own home or even secure habitable accommodation.

If parents don’t fund their children in to a home, few are able to get together the required deposit and to fund high mortgages at the currently increasing interest rates. Families are putting off having children so they can stay financially afloat.

The Labour Government introduced a “KiwiBuild” programme, promising 100,000 new houses. It never took realistic steps to achieve this target and only 1700 have been built.

Even apart from the land cost, the other costs of design and construction have gradually spiralled as successive councils put more and more compliance costs on the builder.

Examples of these changes are: scaffolding costs, vermin proofing requirements, smoke alarms, retaining walls (the code has recently been changed to make new walls 35% stronger than previously required and a $400,000 retaining wall cost is not uncommon), stormwater neutrality (where the developer pays for the cost of dealing with stormwater because the council has not upgraded its pipes for the past 50 years), geotechnic reports (not previously required), consent fees (60-page resource consent applications), upfront landscaping costs (previously met by the purchaser but now by the developer), insulation (the only change that is really warranted), traffic management plans with stop and go people at $1000 per day, new health and safety requirements.

It is nigh on impossible for architects, engineers, builders and developers to reverse this trend, but something needs to happen for the good of society and for the huge unsatisfied demand for families wanting to own a home.

It is therefore refreshing to read the National Party’s Going for Housing Growth Plan. This could be a gamebreaker, with councils being forced by the government to immediately zone sufficient residential land to supply the demand for the next 30 years. Land supply up hugely – section prices drop significantly. Simple economics.

The Medium Density Residential Zone law introduced by a Labour/National accord, whilst well meaning, has not been acted upon. This is possibly because its implementation means that existing homeowners adjacent to new six-storey developments would lose their sunshine, not just during the winter months but all year. Sufficient sunshine hours are important to the enjoyment of life.

National’s policy advocates the creation of a fund to help councils create the infrastructure required to service all this newly zoned land. Applications to the fund are to be standardised, speeding up and streamlining the application process.

Finally, under the National plan, the government would financially incentivise councils to the tune of $25,000 for every new house erected in their district over a base criterion. This is an unusual proposal in that councils have always been given the stick by governments, not the incentive of a carrot.

The new policy contains some radical suggestions – overzoning land to bring down section prices, government-funded infrastructure meaning lower borrowing rates over longer terms. It deserves a chance.

The new National policy offers an alternative to the Medium Density Residential Standards – that is, build up or out, rather than build up not out.

Individual cities have different circumstances. Wellington and Lower Hutt have few greenfield opportunities and need to accumulate large inner city sites to build multi-storey housing hopefully with generous decks for indoor/outdoor living.

Most homeowners want individuality, sunshine, abundant natural light and indoor/outdoor living. These requirements are difficult to satisfy in multi-storey residential blocks where too often rooms have little natural light, there are restricted sunshine hours and minute decks that don’t prove useable.

The MDRS goes some way towards enabling more homes to be built to better standards, but the real case is that the reverse is true. Few builders have the capital to build multi-storey and those that do generally turn out an inferior product than can be offered in greenfield housing.

So, if you want to see your children being able to obtain their own accommodation it would be worthwhile giving the new National policy a chance.