Government risks barking up the wrong tree

June 18, 2007

Government risks barking up the wrong tree

The Government's recent announcement that it might consider limiting immigration levels to tackle the housing affordability issue, risks confusing two joined-but-separate parts of the housing market - construction and real estate says Chief Executive of the Registered Master Builders Federation, Pieter Burghout.

"Unless properly thought through, any remedial measures Government takes will adversely and unduly impact the construction sector - which has been a key contributor to the levels of economic growth New Zealand has benefited from over the last five years and needs to remain on a steady, sustainable footing - when its proper target should be the real estate sector.

"The Government should look at those measures it can take to cool the real estate market without adversely impacting the home construction market. Otherwise, it risks constricting a core engine of the New Zealand economy and undoing a range of industry achievements of late - for example, the trebling of apprenticeship numbers over the last four to five years. The impact could have an adverse economic effect for some time," Mr Burghout says.

The Registered Master Builders Federation's recent submission to the Commerce Select Committee Inquiry shows that the current housing un-affordability issue has been driven by rising land costs, increased infrastructure levies/fees charged by local authorities, and rising construction compliance costs.

"We feel that more Government focus is required to address the core drivers affecting home construction costs and the rising price of new and existing homes. Given the fall off in net immigration levels in the last two years, we actually recommend higher immigration levels at this time and that measures be taken that directly relate to the real estate market, not the home construction market."

ENDS

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