Blocks to affordable housing

By - , Build 165

I HAVE BUILT hundreds of homes over 40 years and watched the market progressively tilt towards larger homes on smaller expensive lots along with building timeframes lengthening. Unfortunately, that is what our current system and market dictates, but it is woefully underdelivering on what we need to house everyone.

High-cost land keeps house costs high

Currently, there are worthy political aspirations to ramp up affordable housing by 10,000 units per annum. However, we have an underlying system inadvertently skewed to create higher-cost land and accordingly higher-cost homes. It is a pipe dream to think that the current system or market will produce affordable housing without intervention, especially in major urban areas.

If we want affordable housing, we need affordable land with less-restrictive covenants. That will only come by side-stepping the market and the niceties of planning and getting on with pragmatically producing the housing and centrally funding the infrastructure.

To solve this crisis, we need a different approach, new rules and political fortitude as local authorities will need curbing and in some cases over-ruling.

Many stumbling blocks

We need more standardisation and modular building and the consumer conditioned to not expect a bespoke home if they want affordability. The social and health costs of not solving this problem will outweigh the cost of providing good housing.

Is the Resource Management Act (RMA) helping? Although well intentioned, it has morphed into a major stumbling block. Currently, it is project-specific with no recognition of what is needed or its impacts on the financial viability of a project. It’s a cost-plus model, with the first person purchasing paying the bill for infrastructure, GST and other local authority fees. The RMA with multiple individual council district schemes is an unsustainable model.

In addition, since the introduction of the Building Act 2004, construction costs have soared and productivity has plummeted.

Why? Considerable administrative process has been implemented, but it is adding little material value. Risk-averse behaviour has turned once helpful local authorities into gun-shy organisations slowing construction and planning down to absolve themselves of liability.

The industry often gets held up by the speed that local authorities can issue and administer consents, and that is impacting on productivity and costs.

In the last 15 years, the cost of building has increased 110% while the cost of living has increased 44%. Much of this extra cost is the result of compounding regulatory change, council fees and unfairly imposed infrastructure cost.

Many good operators have been worn down by the incessant regulatory creep. They are exiting and taking skills away.

We need strong leadership, meaningful change and a complete overhaul of the RMA, Building Act and Local Government Act so that the drivers and outcomes result in efficient, affordable and sustainable housing.

We may be at the tipping point

Change will only happen with collaboration between industry and policy makers, but there must be a catalyst. I believe we have reached that tipping point. One would also hope housing can be depoliticised and an across-party accord reached.

Here’s hoping the new government’s admirable housing agenda can become reality and bring about the much-needed correction in the current system.

Download the PDF

More articles about these topics

Articles are correct at the time of publication but may have since become outdated.

Advertisement

Advertisement