The alleged crisis over the cost of buying a home is more about expectations being too high rather than feasibility.

A sense of automatic effortless entitlement to everything has evolved. Housing affordability is topical, more so following Finance Minister Bill English's relaxation of land development rules, which, however, he admitted would make little beneficial difference.

Contrary to all that is being said, newly-built houses have never been more affordable, but that assertion requires explanation.

But first, compare today's situation with what occurred in the 1960s, that decade being a golden age of house-building in New Zealand, carried out mainly by many hundreds of small operation spec' builders, designing the houses themselves on their kitchen tables.

In those pre-pill days, for that reason, people married in their late teens or early twenties. House mortgages were mainly available only from life insurance companies which would lend a maximum 65 per cent of the total land and building cost at 6.5 per cent interest, but, with the added sizeable financial burden of insisting on the purchase of a costly whole-of-life insurance policy.


But no one complained for values were different then. People did not expect anything for nothing or see everything as a natural human right. Instead it was common-place for newlyweds to obtain higher interest rate, second and third mortgages to make up the shortfall, then both work at part-time evening and weekend jobs for several years to pay off these supplementary debts. Only then would they start families, albeit still in their twenties. Also back then, those first homes were simple one level structures with a single bathroom. Home-seekers' housing ambitions, particularly for their first home, were realistic and matched their financial capability. None of this is the case now.

Today, people mostly marry in their thirties. Time for them is therefore of the essence regarding starting a family. At that age, understandably, the thought of part-time and weekend supplementary jobs is untenable. The homes sought are much larger than yesteryear, often architecturally designed, frequently two-storeyed and therefore more expensive, and with larger rooms and en suite bathrooms. In short, they are superior in line with modern standards and thus cost a great deal more. Significantly offsetting these higher values is the availability today of cheap mortgage money for as much as 95 per cent of the total cost.

The wrong suspicion that house construction costs are unduly expensive, apart from the reasons I have given to disprove that, ignore reality. A house is constructed by diverse tradespeople totalling thousands of man-hours of work. Are there wealthy carpenters, electricians, plumbers, painters et al? - No. Are there rich architects? Again, no. All of these people are, if competent, financially comfortable, but they're certainly not rich.

The physical materials involved, as with all material items, have never been cheaper in relative terms. And as for residential land developers, history shows nearly all of them go broke. So, no one is profiteering. Consequently, the cost of a new house today is exactly as it reasonably should be.

When I put these propositions to people they say it simply proves that wages and salaries are too low in relative intergenerational terms. But again, that is nonsense for if, for example, everyone's' incomes were lifted by 30 per cent , the house construction cost would also rise by 30 per cent , unless we can persuade carpenters, electricians et al to take very low wages - a highly improbable prospect.

So, why, given all of the above, is there a clamour on this subject? Well, for starters, 70 per cent of the public do own their homes. Of the remaining 30 per cent, lots for diverse reasons have no interest in doing so. Many others, perhaps 20 per cent, could never dream of owning their own homes as they can't survive now without a hefty taxpayer input through welfare.

But mostly this alleged problem gets back to a behavioural change in which over recent decades with some people, a sense of automatic effortless entitlement to everything has evolved, without regard to the cost of delivering these wants.

My company has an employee who gripes that he can't afford a house. His wife is a professional and together their income is circa $500,000 a year and rising. Obviously he can afford a house but anything less than a $3 million Remuera mansion he would consider beneath his dignity. The purported housing construction cost crisis is simply a beat-up. Rather, it's about too high expectations than feasibility.


I'm picking we're about one generation away from protesters marching in the street with placards proclaiming it's a natural human right for annual luxury world cruises for everyone, just as they do now about housing.

I probably shouldn't mention that for when John Minto reads this - and I'm reliably informed he's an avid fan of this column and secretly supportive of my varying assertions on this and that - in line with his general progressive outlook, he'll be out pronto with his megaphone and rag-tail mob demanding precisely such cruises. And fair enough, too.

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