The housing cost crisis affects virtually everyone. That is
pretty much the conclusion one can draw from the KiwiBuild eligibility rules
which were announced last week.
To be eligible for a KiwiBuild home, a buyer must:
- Be a first-home buyer or "second chancer" (being those who have previously owned a home but are through adverse circumstance are in a position similar to the first home buyer);
- Be a New Zealand citizen or resident;
- Intend to own and live in the home for at least three years;
- Have an income below $120,000 if a sole purchaser or $180,000 for a couple.
While KiwiBuild it is the first acknowledgement of the universality
of the housing problem, it makes a mockery of the scheme being promoted as
something especially for low income earners. Assuming they are able to afford a
KiwiBuild home, low income households will have to take their chances like everyone
else, and given the number of people that are likely to express an interest
going into the draw for an "at cost" homes, the prospect of them
getting one is slim. In the first few days following the announcement, some
20,000 people have already registered to go into the ballot.
The cost of the KiwiBuild homes will be $650,000 (including
GST) for a three-bedroom house, $600,000 for a two-bedroom one, and $500,000
for a one-bedroom place in Auckland and Queenstown; and $500,000 for houses
built elsewhere. That's a heck of a lot cheaper than the average cost of a
typical land and new home package, even in the provinces. It appears that this
cost price is only achievable because the sections are likely to be "spare"
land obtained from other state agencies at less than market value, and the houses
are small.
Housing and Urban Development Minister Phil Twyford, said 1,000
KiwiBuild residences would be built in 2018/19, 5,000 in 2019/20, 10,000 in
2020/21 and 12,000 a year average through to 2028. At least 50,000 of these
homes will be in Auckland.
Ironically the three years that the homes must be kept is
two years less than the five-year timeframe for the Brightline test, which treats
gains on the resale of rental properties or second homes and baches as income
for tax purposes. Five years was set on the presumption that those who sell
within that period are deemed to have purchased with the intention of resale,
and therefore should be taxed. From this one can conclude that the government
does not mind people buying a KiwiBuild home with a short-term (and tax free)
profit motive in mind. Buying a KiwiBuild home at cost, and selling it three
years later, will be a nice earner, from yet another irrational government
policy.
The Minister acknowledges that keeping the costs within the KiwiBuild
cap will be a challenge - the cap has already increased $50,000. He said the
major challenges are: "land availability, workforce constraints,
consenting time frames, development and build times, and growth capacity
constraints".
Yes Minister, these are major challenges. They are the very
same "challenges" that all developers and builders are facing and are
the things that have caused housing costs to skyrocket.
In truth, the "housing crisis" is really a
"land and building cost crisis". If it were described as such then
the focus of attention could be directed at a practical solution rather than a
political one.
If the Housing Minister really wanted to provide affordable
housing he would tackle the issues that are causing the private sector to
increase land and building costs. Here's what he could do:
- Cut local council red tape and make planning rules more permissive. Even getting a building consent has become a nightmare and now usually requires a resource consent. It seems a granddad can't even build a tree house nowadays without the council getting involved!
- Bring back on the job apprenticeships and require fit and able unemployed people to do labouring work. If that's not enough to deal with the labour shortage then allow all builders to hire migrant workers to do the job. Is that really any different from buying cheap goods from China?
- Get rid of the over-protective health and safety regulations which are adding tens of thousands of dollars to jobs.
- Make sure councils zone sufficient ‘affordable’ land to meet local housing needs.
Frank
Newman, an investment analyst and former councillor on the Whangarei
District Council, writes a weekly article for Property Plus.
3 comments:
The so-called housing crisis is really an immigration crisis. Open borders as an irresponsible economic policy is flooding the country with foreign groups who require housing. Many locals, those who cannot compete at the $180,000 per family income level are pushed out of the housing and other markets and down the socio-economic ladder, probably never to rise again.
This phenomenon of population increase through open borders is a deliberate and destructive practice for it erodes the cohesion and unity previously established in our neighbourhoods and communities.
What's worse we Kiwis were never consulted by the politicians and their globalist cronies who have set this Juggernaut of mass migration into motion.
So please wake up to the facts and stop referring to the consequences of such unbridled immigration as a housing, teacher, roading, education , healthcare, or any other immigration-influx related crisis.
I don't understand why we are not building upwards, rather than outwards. Isn't it time we were more realistic. Sure multi storey apartment blocks are not aesthetically pleasing. Let's be realistic however. Hasn't urban sprawl destroyed enough productive land. Isn't it time to forget the 1/4 acre pavlova paradise of last century? How many sections are used for the productive gardens of the past. Use the streets for parking and look at Britain's new towns policy of the 1960s .
@Chris NewmanChris Newman, You are right on the button!
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