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Opinion
Better thinking needed
Auckland University of Technology’s John Tookey says that one way to get on top of the intractable Auckland housing crisis might be for government to back investment in prefabrication.
IN JANUARY 2014, I penned a piece titled Impossible dream for Build 140 (pages 42–44). Its thesis was that the best way to increase housing a ordability is for politicians to manipulate the market by bringing into circulation more state houses on the one hand while simultaneously discouraging property speculation.
Problem only getting deeper
Scroll forward more than a full election cycle, and we are in the same place that we were then with, if anything, a deeper and more complex problem to extricate ourselves from.
On the up side, the two elements I previously outlined have apparently been addressed. Finally, government seems to be listening. Restrictive LVRs have had a signi cant e ect in the de-escalation of Auckland house prices.
Over recent months, we have seen stag ation. House price increases have stalled and slightly retreated. Under pressure to expand social housing, the government has oated a proposal for some 34,000 new council homes over the next 10 years.
Builders can’t meet the demand
But the problem it is not addressing is simple and glaring. All the house builders I know are at out. Getting basic works done is a mission. Skills are in short supply. Do we, as an industry, have the capacity to build the extra 2,400 or so new homes annually on Crown land?
We are still seeing an under build compared to consents – last year, only 7,200 properties were completed in Auckland, barely 50% of the number required to address the shortfall.
As an industry, we are close to the top end of what we can collectively deliver – short of a decree compelling builders to work double shifts. The voice of govern- ment appears to be saying ‘You lot, work harder! Work longer! Make selling prices cheaper – in spite of taking more risk and running lower margins.’
Building wrong types of houses
Will the 34,000 new homes make a di erence in the absence of capacity growth? This is a tough ask given the lack of scalability we have as an industry. There is too much expectation for customised, bespoke homes in our economy, which equates to an accompanying reliance on ‘from rst principles’ construction.
To meet the shortfall, we have to recognise that we are building the wrong types of houses. Most new houses consented are
4–5 bedrooms. We need more 2–3 bed a ordable types. In addition, to deliver the volumes required, we need to seriously consider prefabricated and factory-built housing solutions.
The problem is, who in the private sector will take on the risk of investment in this technology and capability? Inevitably, the market will correct and prefabrication will be less attractive, so investment in prefabrication will be challenging to sustain in the long term.
It is pointless to expect an under-resourced industry in fear of economic bust to invest in capacity growth, when that very growth will hasten the downturn in the cycle. Will government step in to provide in the short to medium term a facility that the free market in the long term would struggle to justify in investment terms? I would like to make this request for 2020.
A plea to politicians
Politicians, please, please, please think about how government can support and incentivise investment in prefabrication to address our housing capacity shortfall.
The market will not x the problem on its own. Present solutions see more development land as the panacea. This is awed thinking, reminding me of Captain Blackadder guessing the strategy of the coming o ensive ‘because it was the same plan we used last time and the 17 times before that’. The crisis is now so deep and dangerous we need better thinking than Blackadder Economics.
8 — August/September 2017 — Build 161