13 February 2007

Housing costs probe suggested

The Economic Development and Sustainable Business Committee yesterday heard that industry comparisons put the average cost of building a small house in Auckland at 85 per cent higher than Australian cities. A large house costs, on average, 91 per cent more.

A report to the committee also contained government figures that showed building costs in the Auckland region had increased by 65 per cent for small houses and 60 per cent for large houses from 1999 to 2006.

A paper from committee chairperson, Councillor Richard Northey, said councillors had been told it was cheaper to import and construct kitset homes from Queensland than to construct them "from scratch" in New Zealand.

"These issues require further investigation, including the possibility that housing costs are impacted by effective near monopolies on building materials and possible excessively high construction requirements, in part following the leaky buildings issue," he said.

"The argument that anti-sprawl urban development policies are pushing up land prices is countered by high property prices outside the urban limits.

"The proportion of families who are able to realise the classic New Zealand dream of home ownership is dropping dramatically. This is particularly so in Auckland where nearly 40 per cent of people live in rental accommodation. The average price of residential property has risen to about six times the average family income.

"Reserve Bank interest rate hikes are not taking the heat out of the housing market because of the almost guaranteed high capital gains."

Possible alternatives, he said, included: * a capital gains tax on all property, or investment property only * a ban on house sales to foreigners who live overseas and rarely visit here * government controls on prices of building materials or greater competition * inclusionary zoning ensuring a minimum of affordable housing in all significant urban developments.

The committee agreed to call on neighbouring councils, Local Government New Zealand and the government to address construction costs including a study, to which the council would contribute, on high housing costs and developing policies for ensuring affordable housing in metropolitan areas.

Councillor Northey will also ask the Commerce Commission to investigate monopolistic practices in building material supply.

"Housing is one of our essential, basic needs and its cost is one of the most pressing challenges facing Auckland," he said.

ENDS

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