10,000 new houses a year? …yeah, nah says industry

Labour says they are going to build 10,000 houses per annum for the next ten years.

The industry says good luck with that according to NBR:

Over the next three years, Labour’s next housing minister, Phil Twyford, plans to ramp up to 10,000 high-quality homes affordable residences for first home buyers being built every year.

Half of the new homes will be in Auckland and, under Mr Twyford’s grand KiwiBuild ambition, 100,000 new houses will be built over the next decade across areas of New Zealand where first home buyers are struggling to get a foot on the property ladder.

The new coalition government’s plans include using the Hobsonville Point formula to roll out similar precincts across Auckland. Hobsonville is a mixture of apartments, terraced houses and standalone homes on postage stamp size sections with green pocket parks built into the development. It has been lauded as the way of the future, particularly for Auckland housing.

Included in Mr Twyford’s plans are an Affordable Housing Authority, Urban Development Agency and a Housing New Zealand subsidiary building one new house a day for 4500 residences.

The government will use KiwiBuild to buy units in new Auckland CBD apartment blocks that are in the planning stages, create its own sites for development by group builders and use its clout to secure a large number of new homes in projects such as Hobsonville.

While apartment and terraced house builders are struggling under tighter bank criteria to secure funding, the new coalition government will buy 30-40% of new residences off the plan in developments like Hobsonville and Housing New Zealand land redevelopments and then on-sell them to first home buyers.

And then what happens? Those first home buyers will have just scored a cheaper house than anyone else in the neighbourhood…and could easily flip it for a cool profit thanks to a foolish government scheme run by muppets like Twyford.

The government wants to build medium-density townhouses and terraced homes for $500,000 for first home buyers. It expects stand-alone houses in the less populated areas to sell for $600,000 but doesn’t expect there will be many.

Where? There are some medium-densisty townhouses just gone on the market in Whangaparaoa which start at $825,000…god knows where they will do it for $500,000.

In any case, can it even be done?

While the government is planning to go full tilt at housing, AUT construction management professor John Tookey says there are a huge number of complex issues to sort out.

He says a quote from WW11 General Bernard Montgomery is apt, “Amateurs talk about strategy, professionals talk about logistics.” This is a logistics issue writ large, Profesor Tookey says.

The big issue is the capacity to build 10,000 new homes a year as Mr Twyford is promising.

“The principal way to get around labour shortages is looking at prefabrication, particularly if immigration is going to be cut. The construction industry relies on transient international labour and it could be badly affected by new immigration policies.” (There has been talk of 1500 coming in on a “KiwiBuild” visa, but that number could pale against the size of the project.)

Oh dear, and Labour/NZ First are going to clamp down on immigration.

As for driving down building costs, Mr Twyford claims offsite manufacturing and panelised construction will be able to achieve that through bulk procurement by giving multiple contracts to firms that can scale up and build thousands of homes a year, such as Fletcher Building and Mike Greer Homes, which has a $14 million joint venture Concision factory with Spanbuild using computer technology to make panelised components.

Mr Tookey says prefabrication has enormous benefits associated with productivity against the flatline the country has seen for the past 30 years but he says there are problems with it.

“At the moment there is no advantage for a house builder to invest in prefabrication because they rapidly build themselves out of the market. Also, the overhead costs of keeping a factory fully occupied on a long-term basis is a significant mission.”

Professor Tookey says among other issues there are few incentives for using prefabricated housing as a builder needs to go through the same amount of consenting as a traditionally built house.

The chances of Labour building anything like 10,000 house a year seems remote. I predict they will come up with some sort of Nick Smith-eque counting rort to claim progress.

I can’t wait for question time where Twyford is asked to stand by all his statements and then has to tell us how many houses were completed last month, and how many more to reach 10,000 this year.



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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

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