Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


House Prices: Focus on Land Mr Sewell

HOUSE PRICES: FOCUS ON LAND MR SEWELL

Hugh Pavletich
Performance Urban Planning
Christchurch
New Zealand

30 May 2014

Rather astonishingly, Tony Sewell, Property Manager with Ngai Tahu, outlines the high costs of building processes and materials in New Zealand, within a recent New Zealand Herald article by Phil Taylor “House Of The Rising Sun”.

Mr Sewell notes California pricing. He should have instead focused on Texas, as the Annual Demographia International Housing Affordability Surveys clearly illustrate the latter is the best performer in the United States, with its open land markets and sound infrastructure financing arrangements.

California is generally regarded as a “basket case”.

The major issue is land supply … affordable land supply.

There is a well-known saying in the development business “If you get the land price wrong everything else is wrong”.

Since the release of the first Demographia Survey early 2005, there have been numerous Inquiries and extensive academic research, but remarkably, no simple structural “nuts ‘n bolts” research, as (again) outlined mid last year with “Focus on Restoring Housing Affordability”.

That is …

1. Clearly setting out the current unnecessary artificial land scarcity values on the fringes of our metros. These are roughly $2 million per hectare on the fringes of Auckland, a million dollars on the fringes of Christchurch and remarkably about half a million dollars per hectare on the fringes of tiny Rolleston. They need to be eliminated with open zoning as outlined within Section 4 of “Christchurch: The Way Forward”.

2. Detailed cost breakouts of the price of fringe starter housing in Houston with the detailed costs of development / construction on the fringes of the New Zealand metros … as illustrated by the Andrew Atkin THE REAL DEAL poster.

Basic … but essential structural research.

What Mr Sewell omitted to mention within the otherwise excellent and helpful New Zealand Herald article, is that with artificially inflated land prices, the structures and performance of the New Zealand house-building industry is understandably degraded as well.

In essence … the industry has been bureaucratically bludgeoned back in to the Stone Age of a cottage industry. Even the remaining so-called production builders are “marketeers” who farm out the work to inefficient cottage builders… and clip the ticket on the way through.

The reason why this has happened, is because with the artificially inflated raw land values, it is too risky for larger builders to put in place more efficient production systems.

Artificially inflated housing markets are more volatile and hugely risky.

For example, when the Irish bubble burst, housing production on an annual basis slumped from 90,000 units a year to just 8,000. They just sent the Polish workers back home.

The young Irish bailed soon after when unemployment hit 14%. Again Ireland had failed its young … as Paddy Reilly the Irish folk singer illustrates with Flight of Earls (Youtube) .

Recently, Australian Federal Senator-elect Bob Day (formally one of Australia’s largest production home builders and National President of the Housing Industry Association) made it clear within a Business Spectator (video) interview, that the problems are land supply and infrastructure financing … Business Spectator interviews Bob Day .

The issues were further discussed by this writer with …

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

Christchurch Failure – The Long History | Hugh Pavletich | Scoop News

Christchurch Housing Accord a Joke | Hugh Pavletich | Scoop News

Mr Sewell of Ngai Tahu and other favoured land bankers on the fringes of the New Zealand metros need to be asked by the media, what part they are playing in encouraging the Authorities to open up fringe urban land, so that normal market pricing can be restored as soon as possible.

And too, get the Texas type Municipal Utility District infrastructure bond financing model in place as soon as possible.

When land supply and infrastructure financing are sorted out, Mr Sewell will learn that with normal land markets restored, the builders will have the confidence to “lift their game” and perform much better.

Competition will see to that. New home buyers will then support the efficient builders and let the inefficient fail.

That’s how open and honest markets work Mr Sewell … so the consumer gets a “fair go”.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Two Dead, One Injured – Suspect Arrested:

Police apprehended Russell John Tully just after 5pm this evening following the armed incident in Ashburton this morning.

Canterbury dog section and AOS apprehended Tully not far from Lake Hood. No shots were fired although Tully will be treated for minor dog-bite injuries.

Tully is now in custody at Ashburton Police Station. More>>


  • 3 News Out-Link - Livestream: Ashburton shooting press conference from 5pm

  •  

    Parliament Today:

    John Key Press Conference: Ashburton Shootings, Judith Collins Inquiry

    Prime Minister John Key has delayed the release of Nationals’ fiscal policy in light of this morning’s shooting at a Work and Income office in Ashburton... Key also answered questions about Judith Collins, and confirmed that independent inquiry will be held with regard to allegations made against Collins. More>>

    Gordon Campbell:
    On John Key’s ‘Blame It On Judith’ Strategy

    Right now, Prime Minister John Key seems intent on limiting the scope of any inquiry into his government’s dealings with Cameron Slater. The declared aim is to make that inquiry solely about Judith Collins’ behavior with respect to the Serious Fraud Office. More>>

    ALSO:

    Gordon Campbell: On The Debate, And The Collins Accusation

    Debating is a peculiar discipline in that what you say is less important than how you’re saying it. Looking poised, being articulate and staying on topic generally wins the day – and on that score, Labour leader David Cunliffe won what turned out to be a bruising encounter with Prime Minister John Key last night on TVNZ. More>>

    ALSO:

    Gordon Campbell: On Winston Peters' Latest Bout Of Immigrant Bashing

    It is only one poll, but rather than cannibalising each other's vote, Colin Craig and Winston Peters do seem to be managing to find the room to co-exist... Few are questioning how Peters got to this happy place, and what it says about the mood of the electorate. More>>

    ALSO:

    More Immigration News: First People Trafficking Charges

    The first people trafficking charges in New Zealand have been brought by Immigration New Zealand (INZ)... The defendants have been charged under the Crimes Act 1961 for arranging by deception the entry of 18 Indian nationals into New Zealand. More>>

    Collins 'Misinterprets Media Reports': "Too Compromised To Remain Justice Minister"

    Bizarre claims by Judith Collins this morning that she had been cleared of inappropriate behaviour by the Privacy Commissioner demonstrates she is too compromised to remain Justice Minister, Labour MP Grant Robertson says. More>>

    ALSO:

    Labour On Climate Change: Focus On The Now For The Future

    A Labour Government will put in place a comprehensive climate change strategy focusing on both mitigation and adaptation, establish an independent Climate Commission and implement carbon budgeting, says Labour Climate Change spokesperson Moana Mackey. More>>

    ALSO:

    Gordon Campbell: On National’s Housing Assistance Plan

    So, as many as 90,000 people could derive some benefit from National’s housing assistance plans for low and middle-income earners... Yet in reality, the benefits seem likely to be insignificant, and they will be skewed towards those at the top end of the income group that’s supposedly the target. More>>

    ALSO:

    Election Data Consortium: National’s Worst Case Scenario At Stage One?

    A month out from the general election and ipredict traders are still forecasting National’s vote to slip below current polling levels and there is potential for it to fall further. More>>

    ALSO:

    Get More From Scoop

     

    LATEST HEADLINES

     
     
     
     
     
     
     
     
    Politics
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news