Anne Gibson

Anne Gibson is the Property editor of the NZ Herald

High price of land thorny issue

The last part in the Business Herald's week-long investigation into housing affordability takes a look at solutions

Photo / APN
Photo / APN

Land. As they say, they're not making any more of it.

The Productivity Commission's inquiry into affordability and Fletcher Building sing with one voice on the issue: freeing up more land is the key to solving issues, particularly in Auckland and Christchurch, they say.

Auckland Council disagrees and cites 18,500 sections, ready and waiting, wanting to be lived on, all services ready to go, all zonings in place. But the developers do not come.

The Sallies want to solve this with more bureaucrats - a new agency with deep pockets and good intentions.

In Adding It all Up: the political economy of Auckland's Housing, Salvation Army social policy analyst Alan Johnson advocated an affordable housing agency with meaningful and long-term budgets.

First, he says, inequality must be recognised and measured, then the tax system examined and people penalised for getting rich from the city's housing stock with "betterment levies on value uplift from rezoning".

His indepth paper is just the latest to propose solutions.

Other ideas are a capital gains tax to punish rampant speculation, reducing local government and utility fees and levies to bring down costs, changing urban planning laws to make it easier to build, relaxing building regulations, allowing more public private partnerships for large-scale housing with state involvement, freeing up some of the $15 billion of our state housing land for intensification and encouraging more integration in community housing groups.

Philip King, Fletcher's investor relations manager, cited his company's submission to the Productivity Commission as the solution to the dilemma, saying land prices made up almost half the cost of new houses so it made sense to make more land available.

"Land price rises have outstripped other building costs by a factor of more than two to one over the past two decades.

"Construction materials have increased by around 70 per cent whereas section prices have gone up fourfold in nominal terms or threefold in CPI adjusted terms," King said, citing the Real Estate Institute and Statistics NZ as also having found land the biggest driver.

Fletcher critics hold the firm partly responsible, blaming costs of materials in sectors where it holds dominant market positions.

The critics say Fletcher can hike prices because it exerts such a strong degree of control in crucial building product categories like cement and concrete, wallboards, insulation, roofing and steel via many subsidiaries such as Golden Bay Cement, Firth Industries, Winstones, Fletcher Insulation, AHI Roofing and Pacific Steel, products sold to builders directly from Fletcher's own PlaceMakers.

Under the Commerce Commission regime these days, Fletcher would be banned from acquiring such a wide range of businesses in one sector, the critics say.

A Government response to the commission's report is widely expected by state officials and industry experts next month.

Tenders

Housing New Zealand has 24 redevelopment projects across Auckland to build and refurbish at least 150 houses for $45 million. House builders/developers shortlisted to tender for up to six of the projects are:
* Stebo Holdings
* Stonewood Homes
* Signature Residential
* McConnell Property
* Creating Communities
* New Zealand Housing Foundation
* Lundo Holding
* Classic Builders
* Greenstone Group
* Woodview Construction
* Accent on Construction
* Jennian Homes Auckland

[Source: Housing NZ Corporation]

- NZ Herald

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