Bad maths put house contrast way out

By Bernard Orsman

Economic maestros at Auckland City last night admitted they got their sums wrong and overstated the cost of building houses between Auckland and Australian cities by nearly 50 per cent.

A new study by the council's economic development group said the cost of building a small house in Auckland was 85 per cent more than in Australian cities, and 91 per cent for a large house. The correct figures were 60 per cent and 65 per cent respectively.

The error occurred when the study's author, economic analyst Kerry Craig, failed to convert the Australian figures to New Zealand dollars to compare like-for-like between different building costs. The report was reviewed and approved by two members of the economic development group and general manager of city development John Duthie.

Economic development group manager Ross Wilson, who failed to pick up the error when he reviewed the study, last night acknowledged and regretted the error but said it did not fundamentally alter the conclusion of the report. "The amended figures still appear to illustrate a marked difference between the cost of building houses in New Zealand compared with Australian cities."

On Tuesday, the report was rubber-stamped by the economic and sustainable business committee and used by chairman Richard Northey to call for a probe into housing costs.

Councillors were told the study did not include comprehensive data on raw materials, labour and compliance costs for New Zealand and Australia - and getting this information would be time-consuming and costly. Officers recommended ditching the work but councillors decided to press on and spend an unspecified amount of ratepayers' money on a further local/central government study of high housing costs.

Officers relied on the Rawlinson construction handbooks for Australia and New Zealand to compare building costs between Auckland and the Australian cities of Sydney, Melbourne and Brisbane - but said the comparison was only "indicative" because the countries had different definitions for materials and size for each class of building.

The editor of the Rawlinson New Zealand handbook, quantity surveyor Cathy Giddens, yesterday produced figures that were lower still than the council's revised figures.

The cost of building a small house in Auckland was $1225 per sq m, 26 per cent higher than the $883 per sq m cost in Brisbane. The difference was 33 per cent higher in Auckland for a medium house, but when it came to building a large brick-veneer house, the cost of $1900 per sq m cost in Brisbane edged out the $1875 per sq m cost in Auckland, she said.

She said generally building costs were more expensive on this side of the Tasman.

Tougher controls under the building code for things like weathertightness, insulation and seismic controls were one reason.

Other reasons included economies of scale in Australia that allowed more prefabrication and cheaper materials from things like ample aggregate and cement supplies meaning concrete sold for $120 per cu m in Brisbane.

The Auckland price was $210.

Cathy Giddens said Australian building costs differed by 50 per cent between cities but the council study used an average figure for Australia.

Yesterday, the Registered Master Builders Federation joined Building and Construction Minister Clayton Cosgrove to pan the study as flawed and "comparing apples with oranges".

"I would be surprised if there was such a marked difference in housing costs," said federation chief executive Pieter Burghout. "Given the competitive nature of the housebuilding market in New Zealand, both in terms of building companies and building suppliers, I doubt there is any fat in the system at all."


Moving Feast

What to believe - different price comparisons between building a small house in Auckland and Brisbane.
* 85 per cent: Auckland City study, Tuesday.
* 60 per cent: Auckland City study, Wednesday.
* 26 per cent: Rawlinson publication, Wednesday.

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