@miket12, you work in the industry.
What would help bring house prices down in your opinion?
Increasing sector capacity (labour & materials, more capacity in alternative building methods - modular)?
Would MDRS have helped?
Do we need to break up Fletchers?
Land tax?
All of the above.
Increasing capacity would definitely help but we also need to change the ways we access new building products. When the Building Act/Building Code was devised, the major suppliers/manufacturers supplied MBIE with their construction details which formed the ”acceptable standards”. The amount of money required for new products outside of that has put a number of people wanting to bring oversea products to market off.
Take asphalt shingle roofing (ASR) on plywood substrates for example. Over in the States, it’s one of the cheapest forms of roofing while it's one of the most expensive here because there a huge number of manufacturers there producing the products but only a handful supply to NZ because the compliance costs are too high and, because our acceptable standard for the exterior envelope for a building deals with concrete tiles, metal tiles and metal roofing, they require larger flashings than is typically used for ASR roofs in the States. Only a limited number of producers have been prepared to manufacture wider flashings for the NZ market.
While MDRS was a move in the right direction, it only removed the need for a Land Use resource consent (covering things like building and landscape coverage, building height, HIRB requirements, living and service courts) but compliance for these was still needed to be accessed by a town planner at building consent stage. A number of people think they can now build three houses, as off right, without worrying about the compliance. They also don’t realise they still need to apply for a subdivision resource consent which covers things like maximum driveway gradients, connection to public drainage or a private sanitary joint system.
What a lot of people also didn’t realise is that they already had the right, provided the land area was large enough, to put two houses on a site without applying for a land use consent and a number of councils already allowed for three within certain residential zones.
In terms of Fletchers, it’s hard to know what to do. Most years, a number of their divisions don’t make money (typically their commercial building and some manufacturing) and are subsidised by their retail, development and residential arms. Maybe the best move would be to separate the retail from their manufacturing.
Land Value Taxes are currently used in six counties: Denmark (96), Estonia (70), Lithuania (51), Russia (24), Singapore (28) and Taiwan (15). The number in brackets is where the country ranks out of 106 countries in terms of the housing affordability index (HAI) the higher the number, the more affordable the housing is i.e. Taiwan is the 15th ranked country with a HAI of 22.1 while Denmark is ranked 96 with a HAI of 6.7. Based on what is being achieved overseas, it’s hard to tell whether a land value tax would make a difference.
BTW, California has recently brought in a form of land value tax charged when property over a certain value is sold. California has one of the highest HAI numbers in the States at over 16 while the whole of the States is ranked 102 in the world with a HAI rate of 4.2. It will be interesting to see if the land tax in California drops their HAI down.
And a second BTW, Australia and NZ are ranked 73 equal out of 106 countries in terms of housing affordability with a HAI of 9.9.
Maybe we need to look at pulling more resources out of the ground, drilling for more oil or becoming more capitalist because most affordable countries in the world are: 102 United States 4.2, 103 South Africa 3.3, UAE 3.3, Oman 3.2 and Saudi Arabia 2.9.
Oh, and for those who think that we should follow the examples of South-East Asian countries by investing in the economy outside of housing and that would bring down the cost of housing in NZ, think again. Nine or ten (depending on if you count Mongolia as a SE-A country) of the twenty most expensive counties in terms of housing affordability are found in SE-A.
The figures for the housing affordability index are from this website:
Property Investment Index by Country. Contains comparison of indicators for residential property investment. Apartment price to income ratio, price to rent ratio, gross rental yield, loan affrodability index, ...
www.numbeo.com