Bridges Billion dollar bungle

Written By: mickysavage - Date published: 8:42 am, November 23rd, 2018 - 126 comments
Categories: housing, labour, national, phil twyford, Politics, same old national, Simon Bridges, spin, the praiseworthy and the pitiful, you couldn't make this shit up - Tags: KiwiBuild

What is it with National and grandiose claims of billion dollar deficits?

During the past election Steven Joyce claimed infamously that there was a $11.5 billion deficit in Labour’s budget numbers. No one, including all the country’s leading economists, could find it. But this did not stop National repeating it and repeating it and repeating it and repeating it …

Bridges has decided to get in on the act and has claimed that there is an $18 billion deficit in Labour’s Kiwibuild, at least if it wants to build ten thousand houses a year.

From the Herald:

National Leader Simon Bridges said as Labour’s pre-election policy was for the Crown to build the homes, MBIE’s data shows Labour undercosted KiwiBuild by $18 billion.

He said the $2 billion Labour had promised for the Crown to build 10,000 houses a year would only be enough to build 1000 homes and therefore the policy had been undercosted.

The promised funding, according to MBIE, would mean a 9000 home shortfall and the estimates to reach 10,000 homes a year were $18 billion off, Bridges claimed.

Because of this, he said the Government shifted its focus from building KiwiBuild homes to underwriting private developers to build them.

“Labour had nine years in Opposition to come up with policies. It’s unbelievable that one of its flagship policies that it campaigned on in the election was miscalculated by such a huge amount.”

He said rather than increasing the budget tenfold, Labour shifted the policy from “KiwiBuild to KiwiBuy.”

But the reality is somewhat different. There was never an intention for the Government to build the houses all by itself. From Henry Cooke at Stuff:

National Party leader Simon Bridges has used the advice, released to his party under the Official Information Act, to claim the “original model” of the housing policy was $18b underfunded at the election. This is achieved by taking the assumption that only 1000 homes a year could be built solely by the Government with the $2b and then multiplying the $2b by ten to come up with 10,000 homes a year.

But this assumes that Labour’s election policy never involved “buying off the plans” and interviews published prior to the election suggest Twyford had always seen private sector developments as part of the plan, although it was not very clearly promoted.

Twyford explains it in these terms:

“It was never the intention of KiwiBuild that the Government would nationalise the property development industry and build all the houses ourselves,” Twyford said.

“We have always been committed to working with the private sector.”

His office pointed to a pre-election interview where Twyford said “Many of the KiwiBuild homes are going to be delivered in private developments, where a developer will come to us and say, ‘we think 30% of the homes we’re going to build could well meet the KiwiBuild price requirements.’ Then we’ll buy them off the plan, thereby de-risking and speeding up developments and guaranteeing a certain percentage of affordable homes.”

Let’s dumb the situation right down. Kiwibuild is a $2 billion dollar fund. The idea is to build as many houses as possible, sell them at cost, then repeat as many times as possible.

Let’s assume that the average cost of a Kiwibuild house is $650,000 and that it takes on average three years from acquisition of the land through subdivision consenting and building and then sale of the property. To build a thousand houses using this model you would need $650,000,000 and multiply that by three and the fund is pretty well used up.

Using this model you would need $20 billion to build 10,000 houses a year and hence the claim that the fund is $18 billion short.

But wait.

What if you could persuade private developers to shoulder the cost of construction, build to your specifications and then sell them to you allowing you to onsell them. Then lots and lots more houses could be built and you would not need to sink all that capital into getting them constructed. And what if you could buy houses in the process of being constructed thereby shortening the turn around time and releasing your capital earlier? Then again you could sell lots more units and quicker as well as allow developers the certainty needed to go ahead with development projects.

There is nothing new in the proposal. Labour’s housing policy from last year’s election said that it would “partner with the private sector to build 100,000 affordable homes”.

Bridges’ claims show either a fundamental misunderstanding of the policy or a complete indifference to reality or both. But expect claims of an $18 billion deficit to be repeated for a while.

126 comments on “Bridges Billion dollar bungle ”

Comments are now closed

Antoine 1

23 November 2018 at 9:04 am

> What if you could persuade private developers to shoulder the cost of construction, build to your specifications and then sell them to you allowing you to onsell them.

At this point can you not just leave the private developer to build and sell the home? I’m not seeing how the Government’s involvement actually adds value here.

A.
- Nick 1.1
  
  23 November 2018 at 9:12 am
  
  The Govt are lessening risk for the developer by pre-purchashing.
  - Antoine 1.1.1
    
    23 November 2018 at 9:17 am
    
    Because it was so hard to sell new houses in Auckland before? There was the risk that no buyers would be found and they would just sit empty?
    
    A.
    - patricia bremner 1.1.1.1
      
      23 November 2018 at 3:10 pm
      
      Yes, buyers from overseas who were paid more could buy them, NZers couldn’t.
      Those buyers were using them for equity gains, not for a home, shutting Aucklanders out.
      - Antoine 1.1.1.1.1
        
        23 November 2018 at 11:53 pm
        
        So don’t let buyers from overseas buy houses
        
        A.
- mickysavage 1.2
  
  23 November 2018 at 9:18 am
  
  Because Kiwibuild houses are different specifications. Instead of being big mcMansions they are usually one and two bedroom units more suited for first home buyers.
  - Antoine 1.2.1
    
    23 November 2018 at 9:20 am
    
    Could there not have been some easier solution involving saying “for every McMansion you build, you must also build a 1-2 bedroom unit” or “we will pay you a $10k bounty per 1-2 bedroom unit you sell” or something?
    
    A.
    - Rapunzel 1.2.1.1
      
      23 November 2018 at 6:41 pm
      
      Why? Explain what that would achieve.
      - Antoine 1.2.1.1.1
        
        23 November 2018 at 11:54 pm
        
        It would achieve MickySavage’s goal of producing more 1- and 2-bedroom houses
        
        A.
  - Antoine 1.2.2
    
    23 November 2018 at 9:23 am
    
    Also whats wrong with McMansions? Is it better to build small houses (housing 2 people) than large houses (housing 4, 5 or more people on the same block of land)? After all a young couple can move into a large house and get flatmates in to cover the mortgage…
    
    A.
    - mickysavage 1.2.2.1
      
      23 November 2018 at 9:27 am
      
      The market delivers too many mcmansions and they are too expensive for first home buyers not to mention far too big for reasonable purposes.
      - BM 1.2.2.1.1
        
        23 November 2018 at 9:31 am
        
        First home buyers do not buy new homes unless they’ve got huge incomes or they’ve come from money.
        
        I just can’t believe how out of touch with reality this Labour government is.
        
        ScottGN 1.2.2.1.1.1
        
        23 November 2018 at 10:41 am
        
        First home buyers can’t afford to buy the large stand-alone houses that developers like because that’s what they’re able to get most profit off.
        First home buyers certainly could afford brand new homes if they’re smaller terrace style and mid rise apartment type developments for example. And if Kiwibuild can help to push those sorts of developments along then it’s a win-win.
        
        BM …
        
        23 November 2018 at 10:50 am
        
        What’s wrong with buying an older home and adding value? it’s how home buying has operated in NZ for the last 50 years.
        Start small, pay your debt off, add some value, sell and move up the ladder.
        
        Why does Labour want young New Zealanders up to their eyeballs in debt for the next 30 + years?
        
        ScottGN …
        
        23 November 2018 at 11:03 am
        
        There’s nothing wrong with buying an older and/or smaller home and adding value except, of course, that in much of the country even those homes have become severely unaffordable. Evidence of market failure which Kiwibuild is hopefully going to help ameliorate.
        I honestly don’t know if Kiwibuild is going to work, it’s a big ask really and a problem that seems intractable. But at least we have a more interventionist government now that’s going to have a go. Which surely beats the ostrich-like behaviour of the last lot.
        
        Antoine …
        
        23 November 2018 at 11:17 am
        
        > But at least we have a more interventionist government now that’s going to have a go. Which surely beats the ostrich-like behaviour of the last lot.
        
        Only if it works!
        
        A failed intervention is worse than doing nothing.
        
        A.
        
        ScottGN …
        
        23 November 2018 at 11:59 am
        
        I disagree. We had years of doing nothing in housing and urban planning and infrastructure in our largest city and the outcomes have been terrible. Auckland is a mess.
        
        Antoine …
        
        23 November 2018 at 12:06 pm
        
        I don’t disagree with you, but I still maintain that a failed intervention is worse than doing nothing.
        
        (Not saying that all this Government’s interventions have failed, either – I took note of your comment on the Unitary Plan below. But Kiwibuild seems to be heading that way)
        
        A.
        
        patricia bremner …
        
        24 November 2018 at 12:21 pm
        
        ‘A failed intervention is worse than doing nothing”
        
        Well Antoine, many bad laws would still be on the books, many lessons would not have been learned if everyone believed that.
        Are you saying, “Don’t try anything unless you are sure of success.”
        Wow.!!
        Business success is very unpredictable so… no new businesses? Don’t build as you might not sell?
        All operations are somewhat risky, so no operations?
        
        Nothing truly fails. Lessons can be learned. Life is a risk.
        That is not one of your better arguments.
        Further, when lessons are learned and plans tweaked… I don’t think you should say it is a failure, rather being flexible, which is better than being rigid Cheers.
        
        BM …
        
        24 November 2018 at 12:26 pm
        
        Typical left wing, complete disregard for taxpayers money.
        It’s not mine so who cares.
        
        BM …
        
        23 November 2018 at 11:19 am
        
        KiwiBuy is so far removed from the original concept it’s not funny, which is probably because it was conceived within a left-wing know all bubble.
        
        Now that reality has punched Labour hard in the face they realise the original concept is bollocks but they’re too far along the road to stop and will continue blundering along coping blow after blow until they get kicked out in 2020.
        
        Winston Peters had the far better idea of Kiwiland.
        
        Government buys land, develops land and then gets out of the way, shame they didn’t go with that.
        
        solkta …
        
        23 November 2018 at 11:22 am
        
        KiwiBuy is so far removed from the original concept it’s not funny
        
        Really? Looks to me that they are doing what they always said they would do.
        
        Muttonbird …
        
        23 November 2018 at 11:33 am
        
        Government as developer? But according to you the government shouldn’t be in the business of doing business.
        
        Antoine …
        
        23 November 2018 at 11:33 am
        
        > Looks to me that they are doing what they always said they would do.
        
        Have a look back at
        
        https://thestandard.org.nz/phil-twyford-the-future-of-housing-in-new-zealand/
        
        The reality seems underwhelming compared to the 2017 promises.
        
        For some real rabble-rousing, look further back to:
        
        https://thestandard.org.nz/is-the-labour-housing-policy-even-possible/
        
        Can the man who wrote this be pleased with the 2018 reality? Hard to see it.
        
        A.
        
        Enough is Enough …
        
        23 November 2018 at 12:14 pm
        
        “Through Kiwibuild we are going to build 100,000 affordable homes for first home buyers, half of them in Auckland.”
        
        As said by Phil Twyford in 2017
        
        Sort of gives you the impression that the Government would be building houses, that the average wage earner in Auckland might be able to afford.
        
        What we have is the government buying houses from private developers and on selling them at prices that are affordable to people who earn a lot of money.
        
        Disappointing to say the least.
        
        Patricia Bremner …
        
        23 November 2018 at 2:48 pm
        
        BM Bollocks
        
        patricia bremner …
        
        24 November 2018 at 12:27 pm
        
        BM you are trying to mislead.
        
        Tricledrown …
        
        24 November 2018 at 11:58 pm
        
        Badly informed Moner with initial capital input from govt when the kiwibuild home is occupied the money is returned to the govt when the Bank finances the new owner freeing the capital for the next build. Banks don’t finance Builds to risky they are happy to finance complete houses.
        So for 1/10 of the total capital to build the 100,000 houses the govt is using taxpayers money wisely so wisely Backwards Monetarist you will be choking on the fact that when these houses are complete the $2 billion startup fund will come back to the govt
        Plus all the GST at $3 billion plus income tax on wages $3 billion profit taxes on business and materials another $1 billion +.
        BM you are a pathetic Troll go back to Troll school.
        
        patricia bremner …
        
        24 November 2018 at 3:30 am
        
        ‘We have a more interventionist government’ Yes ScottGN
        
        They are tackling 1st homes and Social housing.
        They are actively planning to rebalance investor behaviour through tax and regulations.
        They are intervening to change behaviours towards carbon.
        They are intervening when their departments or forces get it wrong. eg Pike River/ Historic child abuse/ Army actions/sexual .harassment/Micoplasma bovis
        They are working towards fairer work and pay negotiations.
        They are making us look good on the international stage.
        They have improved health and education.
        They are examining the behaviour of our banking and financial systems.
        They are looking into our poor record with prisons.
        In 12 months they have altered the landscape of despair with kindness in small acts and have vowed to improve NZers’ lives.
        NZers are beginning to believe we can change things, we can intervene in our society through a responsive and active government.
        
        When Simon has to canvas pensioners for opinions and cash, you know he is targetting Winston’s gold card crowd. They remember who put a raised surcharge on their pensions. Doubt they will listen
        
        Rapunzel …
        
        23 November 2018 at 6:45 pm
        
        Were you missing in action over the 3-4 years prior to 2017? My brother is a builder in Tauranga, do you want a detailed run-down on how houses were increasingly sold in that period for what they were “fetching” and not what they cost to build which pretty much, except to pay higher wages to staff who could finally get them, when it came to materials that did not move anywhere at the rate the selling price did.
        
        Tricledrown …
        
        24 November 2018 at 11:45 pm
        
        Boring Moner Older houses in Auckland are dearer than new houses you would have deaf dumb and blind not to know this fact. Then doing up old houses is not cheap these days. Even just a basic paint job can cost $20,000 + unless you have the time after a full week then stuck in traffic for 10 to 20 hrs.
      - Antoine 1.2.2.1.2
        
        23 November 2018 at 9:33 am
        
        Someone must be buying these McMansions or they wouldnt be built, and quite a lot of people are presumably then living in them. I fail to see a problem here.
        
        Personally, when I think of singles and couples trying to find accommodation in a major city, I naturally think of centrally located high rise apartments. That is where I would prefer to live if I was a young couple working in Auckland. Is no one building these?
        
        A.
        
        BM 1.2.2.1.2.1
        
        23 November 2018 at 9:36 am
        
        It’s where I’d be living.
        
        Auckland apartment building is booming, with 2700 new units rising in the city this year and a further 3300 under construction due to be completed next year, according to a new report.
        
        https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12089654
        
        Apart from waste billions of taxpayers dollars, what is the point of KiwiBuy?
        
        ScottGN …
        
        23 November 2018 at 10:15 am
        
        There are about the same number of units proposed in the CBD that are either stalled, postponed or been cancelled for a variety of reasons. A couple of which are the reluctance of banks to offer mortgages for these units and the somewhat fragile financial state of some developers and construction companies. Partnering up with Kiwibuild can help to get some of these developments moving.
        
        ScottGN …
        
        23 November 2018 at 10:23 am
        
        I agree with you though about the lifestyle choice though. A well built apartment (sadly that’s not always been the case in Auckland) in the central city or, even better, Takapuna (which I think will be one of the best places to live in Auckland within the next decade) is a way better option than a brick-and-tile in some far flung greenfields sub-division. It’s shame that the previous government never seemed to understand that, they seemed content to tarmac from Whangarei to Hamilton. And judging by some of Judith’s recent comments that’s still their view.
        
        mickysavage 1.2.2.1.2.2
        
        23 November 2018 at 9:58 am
        
        Someone must be buying these McMansions or they wouldnt be built, and quite a lot of people are presumably then living in them. I fail to see a problem here.
        
        Well read the various reports or go for a trip through Auckland. Failure to build entry level houses and builders concentrating on maximising returns has been a problem for years. The Government is moving to address a major weakness in the housing market.
        
        Tricledrown 1.2.2.1.2.3
        
        25 November 2018 at 12:06 am
        
        Capital gaingster’s Antione no capital gains on private homes build one the more expensive the more gain while prices are going up good when the prices stall or fails these speculators all get caught out as is happening because policies are finally stopping this Ponzi tax dodging scheme.
    - BM 1.2.2.2
      
      23 November 2018 at 9:29 am
      
      There’s little difference in price between building a 2/3 bedroom house than a 4 bedroom house, still need a lounge, kitchen, toilet and bathroom/bathrooms,
      
      Building a smaller place is actually bad value for money.
      - ScottGN 1.2.2.2.1
        
        23 November 2018 at 11:17 am
        
        The average cost is about $3000 per square metre to build in NZ now, that 4th bedroom could add a surprising amount to build price.
        
        BM 1.2.2.2.1.1
        
        23 November 2018 at 11:21 am
        
        No, it doesn’t, I’ve worked with spec builders, which is why they always build 4 bedroom places.
        
        Far better return for money spent.
        
        You have to remember that $3000 per square metre includes kitchens/bathrooms which are the most expensive part of the house.
        
        Bedroom space is the cheapest part of the build.
        
        ScottGN …
        
        23 November 2018 at 12:02 pm
        
        Bedrooms may well be the cheapest part of the building, but if that 4th bedroom is surplus to requirements then where’s the advantage?
        
        Dennis Frank …
        
        23 November 2018 at 12:40 pm
        
        When I sold my place in Ak a couple of years ago, it was for 753k. It was sold to me by B&T 7.5 years earlier as a 4 brm house. Them & other agencies I tried said they could no longer sell it on that basis, due to the 4th brm downstairs having been once part of a garage.
        
        Nothing had changed since physically, just their perception of the law. So it sold as a 3 brm house. Market valuation, both by my research and those of the agents I consulted, was that the current differential between three & four bedroom houses in my suburb at the time was around 100k.
        
        So, to answer your question, to sell a house you must meet current market expectations, and a builder knowing this will factor in the likelihood of getting it sold for the extra 100k (or whatever) by adding the fourth bedroom to the plan. The fact that this strategy is widely used implies that it works; they do sell on that basis.
        
        Antoine …
        
        23 November 2018 at 12:54 pm
        
        > Them & other agencies I tried said they could no longer sell it on that basis, due to the 4th brm downstairs having been once part of a garage.
        
        Interesting
        
        A.
        
        OnceWasTim …
        
        23 November 2018 at 3:37 pm
        
        > mmmmmmmmmm. Ponder ponder, sophisticated look…..
        
        Interesting
        
        OWT.
        
        Dennis Frank …
        
        23 November 2018 at 6:07 pm
        
        Yeah, I was interested enough to email the manager of the B&T branch to get a response on record. After sufficient time to get legal advice from Barfoot’s head office, I got a polite reply declaring that he had no idea why Barfoot’s sold it to me as 4 brm and couldn’t do likewise to someone else 7.5 years later.
        
        I vaguely recall that he added some kind of disclaimer such as that each branch office is a separate business. Can’t argue with that, eh? I did surmise that either council regs had tightened in the interim or some court case had established case law precedent perhaps. Those who have a permit for the conversion need not worry, but in my case the permit covered the stairs down to it and the deck on top of it, somehow without including it, itself!
        
        I reminded myself I’d never been a greedy person, and the sale would enrich me sufficiently regardless due to retiring to my old hometown city & paying less than half as much for double the size (in both house & land). So losing the 100k was worth it really. I didn’t even get irritated when a younger brother called me a capitalist (he’s to the right of the Nats & has had to tolerate me criticising capitalism most of our lives). 😎
        
        Tricledrown …
        
        25 November 2018 at 12:09 am
        
        They find a border to help pay the extravegent mortgage for the extra bedroom.
        
        Jim …
        
        23 November 2018 at 4:09 pm
        
        BM I work with spec builders to. Intensive development on smaller sections with smaller houses can be just as profitable as large 4 bedroom homes.
      - Patricia Bremner 1.2.2.2.2
        
        23 November 2018 at 2:50 pm
        
        But much better for the planet.
    - joe90 1.2.2.3
      
      23 November 2018 at 1:10 pm
      
      Also whats wrong with McMansions?
      
      Lots, apparently.
      
      http://mcmansionhell.com/
- NZJester 1.3
  
  23 November 2018 at 9:30 am
  
  The government is giving them a guarantee that they will get the money in their hand as soon as the house is completed and they can concentrate on just building and not having to also sell the house taking a bit of doubt out of the time between completing the building and have the cash to reinvest in getting the next one started. I estimate it would make them getting a loan for the next one easier and cut downtime and cost for the developer.
  - Antoine 1.3.1
    
    23 November 2018 at 9:34 am
    
    Is that what this Government is all about? Guaranteeing cash in the hand for property developers?
    
    A.
    - Gareth 1.3.1.1
      
      23 November 2018 at 9:54 am
      
      No, this is not what this Government is all about. It is about a lot of things.
      
      One of their priorities is making more first homes available. Property developers have said that one of the key things blocking them from building these themselves is the uncertainty of being able to sell something different from their usual McMansions. Government has addressed that concern buy guaranteeing sales.
      
      Your alternative is what exactly? Government doing the whole job themselves? Requires scaling up from scratch something the Government hasn’t done for decades. Also, it would upend the existing construction and development industry. All the chaos and upheaval from that would be far worse than developers making money doing what the Government wants them to do.
      - Antoine 1.3.1.1.1
        
        23 November 2018 at 10:17 am
        
        > Your alternative is what exactly?
        
        (a) Cancel the entire Kiwibuild programme
        (b) Go build some actual social housing
        (c) and push for changes allowing greater intensification in the central city
        
        A.
        
        ScottGN 1.3.1.1.1.1
        
        23 November 2018 at 10:32 am
        
        The changes allowing greater intensification have already happened in the Unitary Plan. And we’re starting to see real evidence of that change in the CBD and all over the metro area where TOD is being encouraged. Even in suburban Glen Eden there are two 10 storey apartment buildings going up now alongside the train station. That wouldn’t have been possible without the change to the Unitary Plan.
        
        Antoine …
        
        23 November 2018 at 10:33 am
        
        Well that’s good! That sounds like a good change.
        
        A.
        
        Patricia Bremner 1.3.1.1.1.2
        
        23 November 2018 at 2:52 pm
        
        They are building social housing.
        Read Housing NZ.
        
        Antoine …
        
        23 November 2018 at 11:56 pm
        
        They should cancel Kiwibuild and use the money to build more social housing
        
        A.
NZJester 2

23 November 2018 at 9:09 am

What can you expect from a party that has never been able to balance the NZ budget while in office. Every time we have had a National Government they have managed to start running this country into debt and underfunding every essential service. Labour Governments then have to pick up their mess and spend ages fixing what they have broken. It is amazing how much extra money the NZ government has to spend once you cut out all the pork barrel money wasting and start investing in New Zealand and its people. One big Pork Barrel project that bleed public cash like crazy was Charter Schools. That was money that would have been much better spent resourcing public schools.
Ankerawshark 3

23 November 2018 at 9:40 am

National used inflating costs to make labour look bad a la Stephen Joyce’s 11 billion dollar hole. It lost labour votes last election but hey who cares if it’s a lie, as long as it means national win. This misrepresenting how kiwi built work s is the same strategy (refer Crosby Textor manual). It is bull shit and just like the fiscal hole has been proved vs so will this
- You_Fool 3.1
  
  23 November 2018 at 12:02 pm
  
  To be fair, there was a $11B hole, it was just from National’s mismanagement which they hadn’t told anyone about and thus there was a bigger mess for Labour to clean up…
  - ankerawshark 3.1.1
    
    23 November 2018 at 12:08 pm
    
    If there was an 11 billion $ hole how come Labour has delivered a surplus?
    
    I agree though, lots of unforeseen expenses e.g for Middlemore, because National tucked it under the carpet.
    - You_Fool 3.1.1.1
      
      23 November 2018 at 12:27 pm
      
      SJ never said there would be a $11B deficiet, just that there was $11B missing in Labour’s calculations… the $11B was Nationals surprises… it just so happened that Labour is so good at managing an economy they are able to deal with National’s shit and still keep a surplus (even if they should run at a deficit)
- Nic the NZer 3.2
  
  24 November 2018 at 10:31 am
  
  Congratulations, you have been completely had by the neoliberals in both Labour and National. They particularly love the surplus/deficit narrative.
  
  There is a time when running a surplus is a good goal. Its when the country is running sustained external surpluses, NZ does not do this. Otherwise running a surplus means reducing public funding and running down the public sector, in favour of growing the economy on the back of growing indebitedness and a dearth or savings. In practice this almost certainly drives inequality up.
  
  But both political sides are happy for you to focus on their on going political game.
DJ Ward 4

23 November 2018 at 10:41 am

This has to be the most inept policy on housing in our history in regards to direct government intervention.

Firstly Kiwibuild is not affordable housing. $650,000 for a crapy little house with minimal yard is not affordable.
The private sector such as Pokeno is achieving better results for the same price.

Kiwibuild is handicapped by 3 things. Land price and building costs and compliance/developement costs.
Land in Auckland can go for $500,000 for 400m2 sections.
Building costs are about 1/3 higher than Australia (not 100% on that figure)
Compliance/developement costs in NZ are exorbitant.

So land price.
Present high value farm land is about $40,000 a hectare.
If you put only 10 houses on a hectare that’s $4,000 a section at 1,000m2 less roading.
Obviously you can put more than 10 houses on a hectare of land.

Building costs.
It would be cheaper to bulk buy and ship from Australia.
I have heard figures saying its $3,000 m2 for a house.
When I think about that figure I consider a m2 of floor, ceiling, roof and a wall. I can’t see $3,000.
Not so many years ago (Clarke era) I looked at the old rectangle style 90m2 basic 3 homes. They were $100,000 at the time.

Compliance/developement costs.
There is no logical reason why a large 1000 home project couldn’t be put under 1 umbrella. Rather than a every house con.

Lastly the issue of urban sprawl, vs intensification.
To increase intensification large apartment buildings should be added within the larger project. For, single people, retired who can’t look after property, students, emergency housing, young couples saving for a deposit. Families with kids should be avoided in that environment. They should also be stand alone and not in groups.

I cannot see why the government can’t create policy to build houses at the bottom end of the market for well less than $300,000. Actually $200,000.
- Fireblade 4.1
  
  23 November 2018 at 11:22 am
  
  Waffly verbose bollocks DJ.
  - Muttonbird 4.1.1
    
    23 November 2018 at 11:26 am
    
    Yeah. I couldn’t make sense of it because he actually says nothing.
    - ScottGN 4.1.1.1
      
      23 November 2018 at 11:44 am
      
      It is pretty incoherent.
      - Antoine 4.1.1.1.1
        
        23 November 2018 at 11:48 am
        
        It seems really straightforward to me (not saying that any of it is actually correct, but it seems pretty easy to read)
        
        A.
        
        ScottGN 4.1.1.1.1.1
        
        23 November 2018 at 12:07 pm
        
        Spelling? Grammar? Syntax? Who needs ‘em, eh?
        
        DJ Ward …
        
        23 November 2018 at 12:20 pm
        
        Comprehension is the important one Scott. Antoine seems to have managed it easily.
        
        Antoine …
        
        23 November 2018 at 12:24 pm
        
        Though there are a couple of commenters on the Standard that I just cannot make head or tail of (e.g. Gabby). Sometimes they write in a strange sort of dialect
        
        A.
        
        Wensleydale …
        
        23 November 2018 at 1:08 pm
        
        Probably because Gabby’s usually mocking you.
        
        Antoine …
        
        23 November 2018 at 1:28 pm
        
        Normally mocking other people.
        
        A.
        
        Rapunzel …
        
        23 November 2018 at 6:49 pm
        
        I’d probably give you a “B”.
        
        ScottGN …
        
        23 November 2018 at 12:51 pm
        
        Oh I got the gist of it alright. Call me old-fashioned though, but I quite like a nicely constructed (or at least correctly constructed) sentence.
        
        DJ Ward …
        
        23 November 2018 at 1:39 pm
        
        Yeh it was on the fly, one eye on the Rugrat.
    - DJ Ward 4.1.1.2
      
      23 November 2018 at 11:50 am
      
      Ok I’ll help since your struggling.
      
      If you buy land cheaply as stated, then look at ripoff building costs, then look at new ways of removing compliance costs, then you could build affordable houses.
      
      Most of the reason kiwi build is a dog, is land prices. The other issues are $20,000 there, and $10,000 there, and another con there.
      - ScottGN 4.1.1.2.1
        
        23 November 2018 at 12:12 pm
        
        Kiwibuild isn’t a dog because of land prices. Land prices are expensive in NZ because we’re so wasteful of it. We could pretty much double the population of Auckland inside the city’s current boundary and still be comfortable.
        
        DJ Ward 4.1.1.2.1.1
        
        23 November 2018 at 12:21 pm
        
        Yes you could but you can’t build affordable houses, because of the land prices.
        
        You_Fool …
        
        23 November 2018 at 12:28 pm
        
        There is always legislation…. that land is ours now, and the current owners get $0… now lets build some houses and sell them at cost or less…
        
        yay! no need to build them so far away from jobs that they end up providing a negative benefit to society….
        
        Antoine …
        
        23 November 2018 at 12:53 pm
        
        > There is always legislation…. that land is ours now, and the current owners get $0…
        
        Buzz off back to Soviet Russia
        
        A.
        
        You_Fool …
        
        23 November 2018 at 2:31 pm
        
        Was just an option comrade… and if it pleases more people than it upsets, won’t it be worthwhile? From a market point of view (where smiles are valued)
        
        DJ Ward …
        
        23 November 2018 at 1:02 pm
        
        Auckland is a big issue but there is no obligation to build in Auckland. It could be 100 hectares at Napier, 100 hectares at Levin, 100 hectares at Stratford. Anywhere predictions of job growth with housing shortfalls.
        
        They have committed to bulldozing and intensification in Auckland so no going back on those projects. But it’s not affordable housing.
        
        When people realise it’s cheaper to live in other towns. Wages may be lower but costs of housing is lower, resulting in a higher standard of living.
        
        It was cheaper to buy in Huntly East, pay petrol to drive to Auckland for work, than buy an Auckland house close to work. Plus the person buying in Huntly becomes freehold quicker, resulting in far greater long term wealth.
        
        You_Fool …
        
        23 November 2018 at 2:30 pm
        
        You do lose hours of your life though, which should be costed… plus the additional stress placed on the environment due to the commute… Balanced by lower stress lifestyle, and maybe lower environmental costs of living outside the big city… Everything should be costed
        
        ScottGN …
        
        23 November 2018 at 12:58 pm
        
        So you mitigate the cost of the land by building more intensively and putting more dwellings on it.
        This is a problem faced by every growing city the world over. Look at Sydney for example, its population has just ticked over 5.1 million and now something like 75% of new dwellings built in that city are apartments. It ain’t rocket science.
        
        DJ Ward …
        
        23 November 2018 at 1:18 pm
        
        I did put in my comment that apartment buildings had to be included.
        
        The other way is setting a minimum height requirement for new builds. Like must be 6 floors in this zone, 3 in that zone, etc.
      - Muttonbird 4.1.1.2.2
        
        23 November 2018 at 1:06 pm
        
        I’m not struggling. You just aren’t saying anything of value.
        
        Just on point one. You blithely add, “less roading” to your $4K per house land cost. Most people in the real world know that it is roading, design, earthworks, surveying and environmental impact, water and wastewater services, electrical services, community infrastructure and services, and wider transport solutions including arterial roads and rail infrastructure to actually get people to work some distance away.
        
        The conversion from rural land to residential land adds significantly to the cost of a section which you have estimated at just $4000.
        
        Your ignorance of what is required to launch a suburb from scratch in the middle of pastural and cropping land is astounding but typical for a sound bite heavy, zero thought libertarian.
        
        Perhaps you’ve been living in the boondocks for too long.
        
        DJ Ward 4.1.1.2.2.1
        
        23 November 2018 at 1:25 pm
        
        Read Muttonbird, please!
        
        Land cost was talked about separately.
        
        Compliance/developement costs was talked about separately.
        
        Add it up Muttonbird in regard to my comment.
        
        $4,000 for the land, let’s say the house is $200,000.
        
        That leaves $96,000 for compliance/developement costs.
        
        Result $300,000 home.
        
        Less roading.
        10,000 m2 / 10 = 1000m2 less land for roading.
        
        Muttonbird …
        
        23 November 2018 at 1:36 pm
        
        You didn’t talk about compliance/development costs at all. You glossed over them/didn’t know about them/ignored them.
        
        In addition I doubt very much whether a rural land owner close to Auckland would sell for $40K/hectare if it were to be converted to industrial/commercial/residential.
        
        That person would have rubbish advice if they did.
        
        DJ Ward …
        
        23 November 2018 at 1:46 pm
        
        Sorry but I don’t see how savings could be made in that area in large sums. So I didn’t really comment.
        I assumed you would know that developement costs exist and have some idea of the sums involved.
        
        Turns out I was correct.
        
        Muttonbird …
        
        23 November 2018 at 2:05 pm
        
        You are understating just about all of your costs except bizarrely the cost of build which you have overstated and is in fact $2K per square meter average.
        
        Nothing about what you say is credible. And the way you say it is messy and incomplete.
        
        I mean, importing finished materials from Australia? You are just trolling there.
        
        DJ Ward …
        
        23 November 2018 at 9:37 pm
        
        A 100 ha Farm costs about $4 million or at 10 sections a Hectare. $4,000.
        I was bang on. You can’t do maths.
- ScottGN 4.2
  
  23 November 2018 at 11:24 am
  
  Apart from the usual small market price gouging that we often see in NZ, there is, at least, one good reason building costs are higher here than in Australia. Our building code is more rigorous across a bunch of measurables, for example earthquake strengthening, insulation and double glazing etc that Australia doesn’t need to consider. Bulk buying and importing housing from Australia isn’t really going to work in our conditions.
  - DJ Ward 4.2.1
    
    23 November 2018 at 12:17 pm
    
    Good look at the subject.
    
    https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12062945
    
    So as long as an order is put in for materials (from any nation manufacturing) for 10,000 homes, small number of designs or designs based on the material, then costs could be 1/2 for Jib, roofing, ceilings, sinks, floors, insulation, showers etc.
  - KJT 4.2.2
    
    9 December 2018 at 10:49 am
    
    Not. Correct. It is cheaper to buy a kitset complete house, specified to New Zealand standards and import it from Australia, than it is to buy the materials in NZ.
    
    Using materials exported from New Zealand!
- joe90 4.3
  
  23 November 2018 at 1:12 pm
  
  Mighty fine word salad there, dude.
  - DJ Ward 4.3.1
    
    23 November 2018 at 1:29 pm
    
    Yep, resulted in healthy debate.
- Patricia Bremner 4.4
  
  23 November 2018 at 2:55 pm
  
  Families with kids should be stand alone What???
  - ScottGN 4.4.1
    
    23 November 2018 at 3:02 pm
    
    I think in a clumsy way he was saying that apartments are not suitable for families with young kids. It’s such a dumb argument I ignored it.
    - DJ Ward 4.4.1.1
      
      23 November 2018 at 3:16 pm
      
      Yes it was clumsy.
      My comment was based on big foreign complexes having bad outcomes for kids.
      That’s not to say they couldn’t work well for kids.
      I guess that fits in the my opinion basket, in that I think it’s good for kids to have a yard to play in and garden to help with.
      - ScottGN 4.4.1.1.1
        
        23 November 2018 at 5:04 pm
        
        The outcomes have more to do with the amount invested into the buildings and the socioeconomic circumstances of the occupants though wouldn’t you say?
        Think of those little tykes happily growing up in the gilded apartment buildings on New York’s Upper West Side?
        
        DJ Ward 4.4.1.1.1.1
        
        23 November 2018 at 5:35 pm
        
        There is some perspective to the result of city living however.
        
        My children’s enviroment is the complete opposite of theirs. They see the reality of life. Births and deaths of animals, pet dog, cats, miniature pony. Help in the garden, go hunting with me, go fishing in our ponds, go for walks looking for frogs, and spiders, and make rest stops to enjoy the native bush on our walks. Collect mushrooms and watercress, feed calves and help getting the cows in. Watch their mother work harder than men in conditions that would make a towny puke.
        
        Could you imagine a New Yorker putting there arm up a cows rear end so they can pull out the rotting bits of a stillborn calf, to save the cows life. Or plucking a possum, or gutting and skining a rabbit for dinner.
        
        A freind just returned to the UK. She worked on a farm for a few years. On one occasion a cow broke through a fence, fell in a drain and broke its leg, which she discovered when getting the cows in. She went and got a gun and shot it, which is the humane thing to do. Her towny UK freinds where shocked and appalled that she could be so cruel to the cow. She asked where does your steak come from, they replied “the supermarket”
        
        People raised in cities are separated from the reality of life. They live a version of life but it’s artificial.
      - Draco T Bastard 4.4.1.1.2
        
        25 November 2018 at 1:11 am
        
        My comment was based on big foreign complexes having bad outcomes for kids.
        
        [citation needed]
        
        https://www.scarymommy.com/family-tiny-apartment/
        https://playgroundconfidential.com/2016/10/18/raising-kids-apartment/
        
        I guess that fits in the my opinion basket, in that I think it’s good for kids to have a yard to play in and garden to help with.
        
        Your best bet there is actually the park for both you and the kids. The kids play with other kids and you get to meet the neighbours.
        
        IMO, stand alone houses are really bad for building community. I’d go so far as to say that it destroys that necessary sense of community.
- Tricledrown 4.5
  
  25 November 2018 at 12:14 am
  
  They are building houses for $200,000 to $300,000 DJ it’s the land and services that cost $300,000 to $400,000. Apartments are the only way to build cheap in big Cities and the govt is encouraging developers to invest in this area where builds are well up.
Dennis Frank 5

23 November 2018 at 10:47 am

Looks to me as if they are using the `my bean-counter is better than yours’ strategy again. The basic idea is that it didn’t work first time, so give it a tweak & try again. There’s a flawed premise involved: oppose a leftist government by creating an impression in the public mind that govt is incompetent with finance, voters lose confidence in govt via contagion.

Has worked in the past, but perhaps not recently enough to be influential. Also presumes public service analysis is wrong, or can be made to seem wrong. Currently that seems thin ice to be skating on. Again, as soon as media gets economists to comment on how right they are, or not, we’ll have a reality check. Inasmuch as a consensus from any gaggle of economists can seem realistic. If there’s consensus..
ianmac 6

23 November 2018 at 11:03 am

Bridges cynically knows that headlines matter.

“$18 billion deficit in Labour’s Kiwibuild plan.”
So it is a poorly based claim. But dirt sticks don’t you know? And Bridges can fuzz it up with tricky figures. Politics!
- tc 6.1
  
  23 November 2018 at 11:45 am
  
  When your msm shills parrot the BS rather than challenge it why bother with peksy facts and reality.
  
  My what a charmed political life the boy wonder gets to live.
- Rapunzel 6.2
  
  23 November 2018 at 6:52 pm
  
  I’d like to see him fuzz up that in his home town of Tauranga that on Mon night, according to our local reporter, he had 20 people turn up to see him at a widely pre-advertised Q&A with him.
  - Cinny 6.2.1
    
    23 November 2018 at 9:22 pm
    
    Shame… LMFAO !!!!!
- Tricledrown 6.3
  
  25 November 2018 at 12:37 am
  
  Rabid dog continues to bark at cars Bridges boy who barks at cars obsessively desperate last stand before he gets impounded.
Michelle 7

23 November 2018 at 11:33 am

Soimon said there is no housing crisis , there is no housing crisis
Muttonbird 8

23 November 2018 at 11:39 am

I think Simon went too big. Was he just trying to have a bigger number than Joyce?
Michael 9

23 November 2018 at 1:11 pm

Who cares what Bridges thinks (or whether he thinks at all)? He’s a dead man walking.
- DJ Ward 9.1
  
  23 November 2018 at 1:34 pm
  
  No decent replacement, so they are stuck with him.
  
  I think the female MP he didn’t expose for having an affair and telling JLR to go and die is probably a better option at this point.
OnceWasTim 10

23 November 2018 at 1:34 pm

“What is it with National and grandiose claims of billion dollar deficits?

During the past election Steven Joyce claimed infamously that there was a $11.5 billion deficit in Labour’s budget numbers. No one, including all the country’s leading economists, could find it. But this did not stop National repeating it and repeating it and repeating it and repeating it …”

Yep, well (as I said before somewhere on this TS thingy), they’ve decided on a policy of targeting – looking for a vulnerable spots, and going through all the possibilities one by one.
Worse still, they don’t understand hypocrisy.
(such as all those accusations of I L-G throwing ‘officials’ under the bus, whilst at the same time wanting to do the exact same thing to NZTA ‘officials’ over Warrants of Unfitness). In both cases a bloody steam roller might have been more appropriate.

It’s a bloody shame Labour and partners were probably a little bit too nice to understand the extent to which the gNats will play dirty – and in among the new breed, that playing is seen as normal.

Oh well…..next
- KJT 10.1
  
  9 December 2018 at 10:52 am
  
  If you are going to lie. It may as well be a big one.
Patricia Bremner 11

23 November 2018 at 2:59 pm

As Labour clean up, they will be accused of “throwing officials under the bus”
Those carefully placed officials…..
JustMe 12

23 November 2018 at 8:14 pm

Where was Simon Bridges voice of concerns whilst all these financial expenditures were made by the previous National government?:
$20billion allocated to the NZ military.
$26million spent on a flag referendum for a flag change no-one but John Key wanted.
$6million spent on a mansion in Hawaii and about $8million(perhaps more) on an apartment in New York.
$64million spent on beemers with bum warming back seats.
$10million donated by National to the Clinton Foundation.
$12million approximately given to a Saudi businessman in a bribe.
$600,000 spent on doors in parliament.

National have achieved an exceptional track record of blaming everyone else but themselves.

Bridges will always want to give NZers he is the champion of the common person in the street but he never gave a toss about anyone especially whilst he was traipsing around NZ and then sent the NZ taxpayers the bill for his travel costs, accommodation etc.

I think we all should be aware Bridges is on the way out as leader of the NZ National Party. His days are numbered and he knows it. But a coward will always try to gain headway and Bridges will always come across as a coward.
- DJ Ward 12.1
  
  23 November 2018 at 9:21 pm
  
  What the. Hillary was getting donations from a foreign government. Forget the pointless Russia probe. We have proof, lock her up!
  
  If you take out the military spend, doors, cars, that total of dodgy stuff is not bad for 9 years. Wait to Shane Jones is finished.
  - Cinny 12.1.1
    
    23 November 2018 at 9:25 pm
    
    JustMe gave a few examples of dodgy spending during the nine long years national was in government djward.
    
    We all know full well the list is so much longer than that.
    - DJ Ward 12.1.1.1
      
      23 November 2018 at 9:44 pm
      
      I’m sure there is. I wouldn’t myself know what they are however.
      
      I couldn’t help but do the Hillary dig. Sorry.
      
      Some of those like the doors are arguably something that benifits everybody at parliament. Expensive. Kind of like the recent $20,000 table.
Cricklewood 13

23 November 2018 at 8:24 pm

Either way 650k to get in is a really big stretch. I got into Auckland at 450k a few years ago and it’s tight with a combined income around 115k. No way I could cover 650 kiwibuild or not.
This is a scheme for the upper middle-class NZ just like free uni fees.

Doesn’t do shit for those that Labour purports to represent it’s just another wealth transfer.

Dissapointed.
patricia bremner 14

23 November 2018 at 11:40 pm

First home Kiwibuild buyers move out of their rental, then someone moves in who would still be waiting without this scheme.
patricia bremner 15

24 November 2018 at 3:31 am

‘We have a more interventionist government’ Yes ScottGN

They are tackling 1st homes and Social housing.
They are actively planning to rebalance investor behaviour through tax and regulations.
They are intervening to change behaviours towards carbon.
They are intervening when their departments or forces get it wrong. eg Pike River/ Historic child abuse/ Army actions/sexual .harassment/Micoplasma bovis
They are working towards fairer work and pay negotiations.
They are making us look good on the international stage.
They have improved health and education.
They are examining the behaviour of our banking and financial systems.
They are looking into our poor record with prisons.
In 12 months they have altered the landscape of despair with kindness in small acts and have vowed to improve NZers’ lives.
NZers are beginning to believe we can change things, we can intervene in our society through a responsive and active government.

When Simon has to canvas pensioners for opinions and cash, you know he is targetting Winston’s gold card crowd. They remember who put a raised surcharge on their pensions. Doubt they will listen
Observer Tokoroa 16

24 November 2018 at 8:19 am

Hi Patricia Bremner

Thanks again for your excellent Post. Is always a pleasure reading your work.

The Trolls have tied their necks to the mad caucus of Simon Bridges. They don’t realise he will trample all over his own Party with his Lies and his hatred of the ordinary New Zealand man and woman.

He, like Judith Collins has given his neck to the Chinese Government and Donors. He has allowed Paula Bennett to deny there is a crisis in housing, when even The Herald shouted out in 2017 – Don’t be so dumb Bennett. Don’t be so dumb Billy English.

For me the stupidity of the Trolls – I include Farrar, Hooten , James, BM and Mrs Boag – is demonstrated by greed for Oil and Gas. Also their demand to allow Farmers to poison every stream and river in New Zealand.

Oil is Lethal, as is Gas. It Pollutes our Air. Diesel Fuel is highly Carcinogenic. So is Petroleum. So is Gas.

Water is essential to all living creatures. Nitrate saturation of our streams and rivers is a crime. It will not be long before Farmers and Industry who pollute our water will be imprisoned for long Sentences.

People such as the Greens. who give our clean water away to their friends will also find themselves in prison. We simply cannot afford Troll stupidity.

NZ is Not for Sale. Bye Bye National
patricia bremner 17

24 November 2018 at 10:30 am

Thanks Observer Tokoroa, I like to support Micky’s many good posts. We need to be supportive of the reasonable voices and briefly rebut the trolls, calling out trolling or repetitive slogans.
I make no excuse for being a Labour/Green Supporter. We get some things wrong, but fundamentally we like people and the planet .